Try 10 focused Certified Public Accountant Auditing and Attestation (CPA AUD) questions on ethics, professional responsibilities, independence, due care, confidentiality, and engagement principles.
CPA means Certified Public Accountant. AUD means Auditing and Attestation. This topic page isolates the professional-responsibility part of AUD before you return to mixed practice.
| Field | Detail |
|---|---|
| Exam route | CPA AUD |
| Issuer | American Institute of Certified Public Accountants (AICPA) |
| Topic area | Ethics, Professional Responsibilities and General Principles |
| Blueprint weight | 20% |
| Page purpose | Rule-application practice for independence, due care, confidentiality, engagement acceptance, and professional responsibilities |
This topic tests whether the auditor should accept the engagement, continue the engagement, protect client information, maintain independence, apply due care, or follow the right professional framework. The best answer often turns on the relationship, service, standard, exception, or reporting context rather than on a memorized ethics label.
First identify the engagement type and governing requirement. Then ask whether the fact pattern creates a threat, a prohibition, a documentation requirement, or an exception. If the answer choice ignores the most specific rule in the stem, it is usually too broad.
Use this page to isolate Ethics, Professional Responsibilities and General Principles for CPA AUD. Work through the 10 questions first, then review the explanations and return to mixed practice in Mastery Exam Prep.
| Pass | What to do | What to record |
|---|---|---|
| First attempt | Answer without checking the explanation first. | The fact, rule, calculation, or judgment point that controlled your answer. |
| Review | Read the explanation even when you were correct. | Why the best answer is stronger than the closest distractor. |
| Repair | Repeat only missed or uncertain items after a short break. | The pattern behind misses, not the answer letter. |
| Transfer | Return to mixed practice once the topic feels stable. | Whether the same skill holds up when the topic is no longer obvious. |
Blueprint context: 20% of the practice outline. A focused topic score can overstate readiness if you recognize the pattern too quickly, so use it as repair work before timed mixed sets.
These questions are original Mastery Exam Prep practice items aligned to this topic area. They are designed for self-assessment and are not official exam questions.
Topic: Ethics, Professional Responsibilities and General Principles
An audit senior is evaluating a year-end revenue cutoff item for a nonissuer. The signed sales agreement and carrier bill of lading have not yet been inspected.
| Workpaper item | Note |
|---|---|
| Recorded sale | $2.4 million invoice dated December 30; amount is material to pretax income. |
| Invoice terms | FOB shipping point. |
| Sales VP email dated December 29 | Product will remain in our warehouse until Apex arranges freight after the holidays; please book this month if possible. |
| Warehouse shipping log | Carrier pickup recorded on January 3. |
| Customer confirmation received directly | Apex received the goods on January 5 and stated it had no obligation until shipment. |
| Controller explanation | Title transfers when the invoice is generated; the email was only a logistics note. |
Which auditor response best demonstrates professional skepticism?
Best answer: A
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: Professional skepticism requires the auditor to question contradictory evidence rather than accept an overly persuasive management explanation. The email, shipping log, and customer confirmation conflict with the recorded year-end sale, so additional corroborating cutoff evidence is needed before concluding.
When audit evidence is inconsistent, the auditor should investigate the inconsistency and obtain sufficient appropriate evidence to resolve it. Here, several facts suggest the goods may not have shipped or transferred before year-end: the sales email indicates a hold, the warehouse log shows January pickup, and the customer says it had no obligation until shipment. The controller’s explanation is not enough by itself, especially for a material year-end transaction. A skeptical response is to inspect the signed sales agreement and independent shipping evidence, then evaluate whether revenue was recorded in the proper period and whether fraud-risk procedures or proposed adjustments are needed.
Inconsistent evidence and an unsupported management explanation require corroboration before accepting the recorded revenue.
Topic: Ethics, Professional Responsibilities and General Principles
In a nonissuer audit, the team concluded that revenue recorded during the last three business days of the year was recognized in the proper period. The workpaper currently states only, “Cutoff testing performed; no exceptions.” Which documentation would best support the conclusion and allow an experienced auditor with no prior connection to understand the work performed and basis for the conclusion?
Best answer: D
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: Audit documentation must be detailed enough for an experienced auditor to understand what was done, what evidence was obtained, and how the conclusion was reached. A completed cutoff testing schedule directly documents the procedure, evidence, results, and conclusion.
For audit documentation to be sufficient, it should identify the nature, timing, and extent of procedures performed; the evidence obtained; significant findings; and the basis for conclusions and professional judgments. A bare statement such as “Cutoff testing performed; no exceptions” does not show which items were tested, what documents were inspected, what attributes were compared, or how exceptions were evaluated. A completed testing schedule that links invoices, shipping documents, shipment dates, terms, amounts, exceptions, and the auditor’s conclusion provides the support an experienced auditor would need to understand and reperform the logic of the workpaper.
This documentation shows the nature, timing, extent, evidence obtained, results, and conclusion for the cutoff procedure.
Topic: Ethics, Professional Responsibilities and General Principles
North & Lake, CPAs, was engaged to audit the financial statements of the Delta Tools 401(k) Plan for the year ended December 31, 20X5. The audit report will be included with the plan’s Form 5500 filing. During planning, the firm noted that a North & Lake partner served throughout 20X5 and continues to serve as a voting member of the plan’s investment committee, which has fiduciary authority to select the plan’s investment options. The planning memo says this relationship can be cured by disclosing it to the plan administrator and assigning an engagement quality reviewer. What is the best correction to the memo?
Best answer: B
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: The firm has a prohibited independence relationship because one of its partners served as a plan fiduciary during the period under audit. For an ERISA plan audit filed with Form 5500, this cannot be fixed merely by disclosure, additional review, or more audit procedures.
Department of Labor independence rules for employee benefit plan audits are strict because the auditor must be an independent qualified public accountant. A firm member serving as a voting member of the plan’s investment committee has a fiduciary role connected to plan management and investment decisions. Because that relationship existed during the plan year under audit and continues during the engagement, the firm should not issue the DOL-required independent auditor’s report. The appropriate response is to decline or withdraw so the plan administrator can engage an auditor that is independent under the applicable DOL requirements.
A firm member’s fiduciary role with the plan is a prohibited DOL independence relationship that cannot be cured by disclosure or review safeguards.
Topic: Ethics, Professional Responsibilities and General Principles
A CPA firm was engaged to audit the financial statements of a nonissuer because management expected to submit audited statements to a prospective lender. Before substantial audit procedures were performed, management informed the CPA that the lender withdrew its audit requirement because the financing plan was cancelled. Management asks the CPA to change the engagement from an audit to a review. No audit findings suggest misstatement or a scope limitation. What is the CPA’s appropriate response?
Best answer: D
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: Management’s financing need changed, and there is no indication that the request is intended to avoid a modified opinion or unresolved audit issue. In that situation, the CPA may accept a change to a lower level of service if the new engagement terms are properly established.
A request to change an audit to a review, compilation, or other service may be acceptable when there is reasonable justification, such as a change in circumstances affecting the client’s need for the audit or a misunderstanding about the nature of the original service. The CPA should consider the reason for the request and the work already performed. A change generally would be inappropriate if it is requested because of audit evidence problems, management-imposed scope limitations, or likely misstatements that management wants to avoid addressing. Here, the lender no longer requires audited statements, little audit work has been performed, and no audit problem triggered the request. The CPA may accept the review engagement but should document and agree to the revised terms and issue only the appropriate review report.
A change in circumstances affecting the need for the audit is reasonable justification for changing the engagement when the request is not made to avoid an audit problem.
Topic: Ethics, Professional Responsibilities and General Principles
An engagement partner for a CPA firm is auditing a nonissuer client’s financial statements. The audit team has concluded that U.S. GAAP requires disclosure of a material related-party guarantee. The CEO, a longtime personal friend of the partner, says the client will not pay the final audit bill or renew future tax work if the disclosure is required. The partner plans to issue an unmodified opinion if management signs a representation letter accepting responsibility for omitting the disclosure. Which response is the best correction to preserve the CPA’s objectivity?
Best answer: A
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: The partner has already concluded that a material GAAP disclosure is required. Preserving objectivity means following that professional judgment despite client pressure, fee concerns, and the personal relationship, not accepting management’s preferred treatment merely through a representation letter.
Under the AICPA Code, a CPA must maintain objectivity and integrity and must not knowingly misrepresent facts or subordinate professional judgment to others. Here, the omitted disclosure is material and required by GAAP, so issuing an unmodified opinion solely because management signs a representation letter would not cure the misstatement. The appropriate correction is to require proper disclosure and, if management refuses, consider the reporting consequences, such as a modified opinion. Fee collection, future work, and familiarity with the CEO are threats to objectivity, not reasons to change the audit conclusion.
Objectivity requires the CPA to apply professional judgment and not subordinate that judgment to client pressure, fees, or familiarity threats.
Topic: Ethics, Professional Responsibilities and General Principles
A quality reviewer is evaluating whether the engagement file for a nonissuer audit supports the engagement partner’s conclusion that required communications about planned scope and timing were made to those charged with governance. Which item in the file provides the best support for that conclusion?
Best answer: D
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: The strongest support is direct documentation that the auditor communicated planned scope and timing matters to those charged with governance. Audit committee minutes showing discussion of overall strategy, significant risks, timing, and specialist use provide that evidence.
Auditors are required to communicate an overview of the planned scope and timing of the audit to those charged with governance. Appropriate matters include the overall audit strategy, timing of audit work, significant risks, and planned use of specialists or other auditors, while avoiding excessive detail that could reduce audit effectiveness. Evidence that the audit committee received and discussed these matters is stronger than internal planning documents or communications only with management.
Minutes of a meeting with those charged with governance directly document communication of appropriate planned scope and timing matters.
Topic: Ethics, Professional Responsibilities and General Principles
A registered public accounting firm audits the financial statements of an SEC issuer. The issuer’s audit committee has preapproved the firm to help implement a new revenue system by configuring the software, converting existing revenue data, and creating automated reports that will be used to prepare the issuer’s financial statements. Management selected the vendor and will make all operating decisions. What is the appropriate independence conclusion?
Best answer: A
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: Issuer audit independence rules prohibit certain non-audit services regardless of audit committee preapproval. Configuring and converting data for a revenue system used to prepare the financial statements is a prohibited financial information systems implementation service.
For SEC issuer engagements, the audit committee must preapprove audit and permissible non-audit services, but preapproval cannot authorize services that SEC/PCAOB independence rules prohibit. Financial information systems design or implementation services are prohibited when they relate to systems that generate information significant to the financial statements or accounting records. Here, the auditor would configure the revenue system, convert existing revenue data, and create reports used in financial statement preparation. Those activities go beyond permissible advice and would impair independence if performed by the issuer’s auditor.
For an issuer audit, audit committee preapproval does not permit a prohibited financial information systems design or implementation service.
Topic: Ethics, Professional Responsibilities and General Principles
A CPA is the engagement partner for the audit of a nonissuer. Management disputes a proposed adjustment to defer revenue recorded before year-end. The CFO is a longtime friend of the CPA and says the firm will lose both the audit and planned consulting work unless the adjustment is withdrawn; the client also has overdue fees. The firm’s ethics reviewer concludes that the CPA’s final handling of the issue preserved objectivity. Which audit file item best supports that conclusion?
Best answer: B
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: Objectivity is best supported by evidence that the CPA identified and mitigated the pressure, familiarity, fee, and advocacy threats before reaching the final audit conclusion. Independent consultation, resolution of overdue fees, and insistence on a supported adjustment show the CPA did not subordinate professional judgment to the client.
Under the AICPA Code, a CPA should maintain objectivity and should not let conflicts, client pressure, fee concerns, familiarity, or advocacy incentives impair professional judgment. When such threats exist, persuasive support includes documented safeguards and a conclusion based on appropriate evidence. An uninvolved technical partner’s review provides independent challenge, while resolving overdue fees addresses a financial pressure. Requiring the client to record the supported revenue deferral demonstrates that the CPA’s final action followed the audit evidence rather than the CFO’s preference or the firm’s business interests.
This documentation shows the CPA addressed the threats and based the conclusion on independent review and corroborating evidence rather than client pressure.
Topic: Ethics, Professional Responsibilities and General Principles
An audit senior is reviewing the electronic file for a nonissuer audit. A staff auditor documented a revenue cutoff procedure with this note: “Tested year-end shipping documents; no issues.” The senior asks the staff auditor to revise the workpaper so it would constitute sufficient appropriate engagement documentation. Which revision best presents the required documentation elements?
Best answer: B
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: The best revision includes the essential elements of audit documentation: what was done, the extent of the work, which items were tested, the results, the conclusion, and who performed and reviewed the work. A brief note such as “no issues” is not sufficient by itself.
Engagement documentation may be in physical or electronic form, but it must be detailed enough for an experienced auditor with no previous connection to the engagement to understand the nature, timing, and extent of procedures performed; the results and evidence obtained; and the significant conclusions reached. When specific items are tested, the workpaper should identify their characteristics, such as document numbers or dates. Documentation also should identify who performed the work, the date completed, who reviewed it, and the date reviewed. Merely attaching documents, relying on unexplained tick marks, or using oral explanations does not satisfy the documentation objective.
Sufficient appropriate documentation should allow an experienced auditor to understand the work performed, items tested, results, conclusions, and performer/reviewer information.
Topic: Ethics, Professional Responsibilities and General Principles
A CPA firm is evaluating whether to continue as auditor of a nonissuer. The engagement partner concluded that the preconditions for an audit are not present and that the firm should decline continuance unless management changes its position. Which item in the client continuance file best supports that conclusion?
Best answer: B
What this tests: Ethics, Professional Responsibilities and General Principles
Explanation: The strongest support is the documented refusal to agree to required audit terms. Management must acknowledge responsibility for the financial statements, internal control, and providing the auditor access to necessary information and personnel before an audit can be accepted or continued.
Audit preconditions include management’s agreement to its fundamental responsibilities. These include preparing the financial statements under the applicable framework, designing and maintaining internal control, providing access to relevant information, and allowing unrestricted access to persons from whom the auditor determines evidence is needed. If management refuses to acknowledge those responsibilities in the engagement terms, the auditor generally should not accept or continue the engagement unless required by law or regulation. Control exceptions, fee pressure, and unusual analytical relationships may affect risk assessment or audit planning, but they do not by themselves show that required audit preconditions are absent.
Management’s refusal to acknowledge required responsibilities and provide unrestricted access means the audit preconditions are not met.
Use the CPA AUD Practice Test page for the full practice route, mixed-topic practice, timed mock exams, and explanations.
Read the CPA AUD guide on CPAExamsMastery.com, then return to Mastery Exam Prep for timed practice.