Question 1 :

While reviewing County of Orange's prior-year service list, Marcus Reed notes that Lakeview Assurance LLP designed the capital asset classification workbook the current team plans to use as audit evidence. Which threat is most directly created?

A self-review threat from auditing a tool the firm created

A bias threat from advocating for a preferred client outcome

A management participation threat from authorizing client transactions

An undue influence threat from client pressure over conclusions

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Question 2 :

On February 11, 2026, Stephanie Wu of Cornerstone Harbor CPAs reviews New Hire Memo NH-2 for Tacoma Rescue Mission, a nonprofit. It shows Jonah Reed joined the firm on October 1, 2025 and was first assigned to GAGAS work on November 15, 2025. The readiness checklist flags him because he does not have 80 hours and only has 9 qualifying hours in 2025. What is the best correction?

Keep the exception because all GAGAS participants must always have the full 80 hours before starting.

Reevaluate the requirement on a prorated partial-period basis and remove the automatic annual 20-hour test if that basis is properly documented.

Clear the issue automatically because first-year staff are fully exempt from GAGAS CPE.

Convert general onboarding hours to directly related hours so the annual minimum is met.

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Question 3 :

In the support file for Willow Creek Water District, a water district, Meredith Flynn at Ironcliff Audit Group, P.C. reads the 2027 quality objectives tracker, which shows inspection findings, but the owner column for follow-up testing says "office team" with no individual named. Which issue most directly indicates a leadership responsibilities weakness?

The tracker lacks prior-year objective ratings for the district's cash testing area.

The tracker omits the date the engagement letter was countersigned by management.

The tracker should attach the planning materiality worksheet for the district file.

The tracker leaves accountability for follow-up testing undefined at the leadership level.

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Question 4 :

A cleared-note history on INV-11 for North Creek Charter Buses LLC shows Sophie Bennett of Northfield Pierce LLP requested re-performance of a price test on part AX-44, but the history now says only 'done' and no revised schedule is attached as of February 26, 2026; what best proves the issue was resolved?

A status email saying the recalculation tied after a quick check.

An updated memo saying the exception was minor and did not affect the sample.

A revised schedule showing the recalculation, support cross-reference, and follow-up sign-off.

A final index showing INV-11 was marked complete before wrap-up.

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Question 5 :

A tie-out of the July 2025 fuel card report for Red Cedar Transit Cooperative, a nonprofit, shows 12 charges totaling $6,940, but Garrett Sloan of Meridian Peak Advisors LLP finds 3 receipts missing and receives only an email stating all trips were program related. What is the best next step before a finding is drafted?

Treat the report total as sufficient because it came from the card administrator.

Draft a finding that all unsupported fuel purchases were improper program costs.

Request alternative support or expand testing because the missing receipts leave the evidence incomplete.

Accept the email because the client has explained the purpose of the charges.

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Yellow Book (GAGAS)

While reviewing County of Orange's prior-year service list, Marcus Reed notes that Lakeview Assurance LLP designed the capital asset classification workbook the current team plans to use as audit evidence. Which threat is most directly created?

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