CPA AUD Engagement Terms, Documentation & Quality Practice Questions
Engagement Terms, Documentation & Quality makes up 4 of every 50 questions on a Tigertest CPA AUD practice test. Here are 10 of the 16 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on the AICPA's 2026 AUD blueprint. Original multiple-choice questions; simulations not included. Not affiliated with the AICPA, NASBA or the PCAOB.
1. Professional skepticism means the auditor:
- A.Tests every transaction
- B.Critically assesses the evidence
- C.Assumes management is dishonest
- D.Assumes management is always honest
Answer: B. Skepticism is a questioning mind and a critical assessment of audit evidence. It assumes neither dishonesty nor unquestioned honesty.
2. Before accepting an audit of a nonissuer, the auditor must confirm that management acknowledges responsibility for:
- A.Setting the auditor's fee level
- B.Choosing the items the auditor tests
- C.Detecting all fraud in the entity
- D.Internal control over reporting
Answer: D. A precondition for an audit is management's acknowledgment of its responsibility for the statements, for internal control relevant to their preparation, and for giving the auditor access.
3. A precondition for accepting an audit engagement is that management uses:
- A.An acceptable reporting framework
- B.A recent outside valuation
- C.Audited prior-year statements
- D.An internal audit function
Answer: A. The auditor must determine that the financial reporting framework management applies is acceptable, such as U.S. GAAP or a suitable special purpose framework.
4. A successor auditor of a nonissuer wants to speak with the predecessor before accepting the engagement. The successor must first:
- A.Review the prior workpapers
- B.Sign the engagement letter
- C.Ask the client for permission
- D.Notify the state board
Answer: C. Inquiry of the predecessor is required before acceptance, and the successor must ask the prospective client to authorize the predecessor to respond fully.
5. Which matter should a successor auditor ask the predecessor about before accepting a nonissuer audit?
- A.The names of the predecessor's staff
- B.The predecessor's plan for next year
- C.Disagreements with management
- D.The predecessor's fee for last year
Answer: C. Inquiries cover the integrity of management, disagreements over accounting or auditing matters, communications about fraud and control matters, and the reason for the change.
6. The agreed terms of an audit engagement for a nonissuer must be:
- A.Documented in writing
- B.Filed with the state board
- C.Set by the predecessor
- D.Agreed orally at a meeting
Answer: A. AU-C 210 requires the terms to be documented in an engagement letter or other suitable written agreement, including the objective, responsibilities and framework.
7. During an audit, the client asks to change the engagement to a review. A reasonable justification for agreeing is:
- A.Management refused representations
- B.The audit found misstatements
- C.A lawyer refused to reply
- D.The client's needs have changed
Answer: D. A change in circumstances or a misunderstanding about the service can justify a change. A request that follows a scope restriction or adverse findings is generally not reasonable.
8. Audit documentation should be enough for an experienced auditor with no connection to the audit to understand:
- A.Management's business plan
- B.The work done and conclusions
- C.The firm's billing rates
- D.Each staff member's hours
Answer: B. Documentation shows the nature, timing and extent of procedures, the results and evidence obtained, and the significant findings and conclusions reached.
9. For an audit of a nonissuer, the final audit file should be assembled no later than how long after the report release date?
- A.90 days
- B.60 days
- C.14 days
- D.30 days
Answer: B. AU-C 230 sets the documentation completion date at no more than 60 days after the report release date. After that, documentation may be added but not deleted.
10. Documentation for an audit of an issuer must be kept for at least how long from the report release date?
- A.Three years
- B.Ten years
- C.Five years
- D.Seven years
Answer: D. The Sarbanes-Oxley Act and PCAOB AS 1215 require audit documentation to be retained for seven years. The AICPA standard for nonissuers sets at least five years.
Practice all 16 engagement terms, documentation & quality questions, and the rest of the 200-question bank, in the free CPA AUD training sets. Questions you miss come back until you have mastered them.
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