CPA Exam — AUDForming Conclusions and ReportingEasy
A CPA is engaged to perform an examination of internal control over financial reporting. Which of the following is a characteristic of an examination engagement?
- AThe engagement includes performing inquiry and analytical procedures.
- BThe practitioner provides a conclusion in the form of negative assurance.
- CThe practitioner's report limits distribution to specified parties.
- DThe practitioner obtains sufficient appropriate evidence to express an opinion.
Show answer & explanationAnswer & explanation
Correct answer: D. The practitioner obtains sufficient appropriate evidence to express an opinion.
An examination engagement provides a high level of assurance, which requires the practitioner to obtain sufficient appropriate evidence to express an opinion on the subject matter or assertion.
Why the other options are wrong
- A. Inquiry and analytical procedures are primary procedures in review engagements, while examinations involve more extensive procedures.
- B. Negative assurance is provided in review engagements, not examinations.
- C. Distribution is limited in agreed-upon procedures engagements, not typically in examinations unless specified by the client.
Examination Engagement
An attestation engagement in which the practitioner obtains a high level of assurance and expresses an opinion on the subject matter or assertion.
- Provides a high level of assurance.
- Results in an opinion (positive assurance).
- Involves extensive evidence gathering procedures.
Memory trick: ARE You Sure? (Assurance, Review, Examination)