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

Which statement regarding planning an audit is always true?

1. An inventory count must be observed at year-end

2. Final staffing decisions must be made prior to planning completion

3. An engagement should not be accepted after the client's year-end

4. It is acceptable to perform part of the audit at interim dates

The correct answer is: It is acceptable to perform part of the audit at interim dates

The assertion that it is acceptable to perform part of the audit at interim dates reflects a fundamental aspect of audit planning and execution. Auditors are allowed to conduct certain audit procedures before the year-end, particularly when effective controls are identified or when it is practical to do so. This can be advantageous as it allows auditors to address potential issues early on and also helps in managing time and resources efficiently. Audits often involve significant amounts of work, and by performing some procedures at interim dates, auditors can reduce the workload closer to the year-end. This approach can also facilitate the timely issuance of the financial statements and allow for a smoother overall audit process. However, the auditor must ensure that any interim work is still relevant and properly integrated into the final fiscal year audit conclusions. The other options do not reflect universally applicable practices in all audit engagements. For instance, while observing an inventory count at year-end is often a critical procedure, it is not a strict requirement in every case, particularly if alternative auditing procedures can effectively address inventory assertions. Similarly, final staffing decisions may vary based on the specifics of an engagement and could be adjusted even later in the process. Accepting an engagement after year-end is also subject to specific circumstances and local regulations and is not categorically