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Exam AUD topic 1 question 961 discussion

Actual exam question from AICPA's AUD
Question #: 961
Topic #: 1
[All AUD Questions]

Reporting standards for financial audits under Government Auditing Standards (the Yellow Book) differ from reporting under generally accepted auditing standards in that Government Auditing Standards require the auditor to:

  • A. Provide positive assurance that control activities regarding segregation of duties are consistent with the entity's control objectives.
  • B. Present the results of the auditor's tests of controls.
  • C. Provide negative assurance that the auditor discovered no evidence of intentional override of internal controls.
  • D. Describe the scope of the auditor's principal substantive tests.
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Suggested Answer: B 🗳️
Choice "B" is correct. The report on the audit of financial statements should describe the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting, and present the results of those tests.
Choice "A" is incorrect. The auditor's report on internal controls indicates whether or not material weaknesses were found, but it does not provide assurance that specific internal control activities are consistent with the entity's objectives.
Choice "C" is incorrect. The auditor is not required to provide negative assurance regarding the override of internal control, although the audit report will provide negative assurances regarding internal control over financial reporting and its operations that may involve a material weakness.
Choice "D" is incorrect. There is no requirement that the auditor describe the scope of substantive tests. However, under Government Auditing Standards, the report on the audit of financial statements should describe the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting. Communication with Those Charged with Governance
by gemazyni at April 5, 2025, 5:22 p.m.

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