Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

A CPA can accept a separate engagement to audit a client's?

1. Schedule of accounts receivable.

2. Schedule of royalties.

3. Both accounts receivable and royalties.

4. Neither accounts receivable nor royalties.

The correct answer is: Both accounts receivable and royalties.

A CPA can indeed accept a separate engagement to audit both a client's schedule of accounts receivable and a schedule of royalties. This is permissible because the auditing standards allow for certain specific engagements that do not require a full financial statement audit. When a CPA is engaged to audit specific schedules or financial data, such as accounts receivable or royalties, they are able to provide an examination of the assertions related to those particular areas. This can be of great value to a client who may seek to provide assurance on these components for various stakeholders, such as lenders or investors. By examining the schedules separately, the CPA can focus their attention and procedures on the relevant transactions and balances in those areas, giving a detailed viewpoint on accuracy, completeness, and presentation according to the applicable financial reporting framework. Therefore, accepting separate engagements for these specific items aligns with the CPA's ability to provide attestation services beyond just full audits of financial statements.