CPA AUD Practice Exam 2

An auditor is performing an audit of a nonissuer's financial statements. During the engagement, the auditor encounters a situation involving a threat to compliance with the Integrity and Objectivity Rule of the AICPA Code of Professional Conduct. The threat is not explicitly addressed by the Code's rules or interpretations. According to the Conceptual Framework for Members in Public Practice, which of the following steps should the auditor take FIRST?

A CPA firm is auditing the financial statements of an issuer, TechGlobal Inc. The lead audit partner, Sarah, has served in that capacity for five consecutive years ending December 31, Year 5. Under PCAOB rules and the Sarbanes-Oxley Act, which of the following roles may Sarah perform for the TechGlobal audit for the year ending December 31, Year 6?

An auditor is conducting an audit of a nonissuer in accordance with GAO Government Auditing Standards (the Yellow Book). The auditor has been asked to perform a non-audit service: preparing the entity's indirect cost proposal for a federal grant. Which of the following statements BEST describes the auditor's independence responsibilities?

During the audit of a nonissuer, the auditor identifies a significant risk of fraud related to revenue recognition. The auditor decides to incorporate an element of unpredictability into the audit procedures. Which of the following procedures would BEST satisfy this objective?

An auditor is accepting an engagement to audit the financial statements of a new nonissuer client. The predecessor auditor's response to inquiries indicates that there were significant disagreements with management regarding accounting principles and audit procedures. Which of the following is the auditor's MOST appropriate initial course of action upon receiving this information?