Question 1

Which of the following is explicitly included as a part of the description of management's responsibility in an unmodified audit report?

Accepted Answer

A)  Management is responsible for making a judgment on which misstatements are material vs.immaterial.
B)  Management is responsible for providing auditors with all relevant evidence.
C)  Management is responsible for the design, implementation, and maintenance of internal control.
D)  Management is responsible for listing all illegal acts with a direct effect on financial statement amounts and disclosures.E) All of the above
F) A) and B)

Question 2

Which of the following is not included as a part of the description of the auditor's responsibility in a nonpublic company unmodified report?

Accepted Answer

A)  The audit was performed in accordance with generally accepted accounting principles.
B)  An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
C)  The procedures selected depend on the auditor's judgment.
D)  An audit includes evaluating the appropriateness of accounting policies used.E) None of the above
F) All of the above

Question 3

Indicate whether you agree or disagree with the following statements concerning a financial statement audit conducted in accordance with generally accepted auditing standards.

Accepted Answer

A.Disagree
B.Disagree
C.Agree
...

Question 4

A procedure in which a quality control partner periodically tests the application of quality control procedures is most directly related to which quality control element?

Accepted Answer

A)  Engagement performance.
B)  Human resources.
C)  Leadership responsibilities for quality with the firm.
D)  Monitoring.E) A) and B)
F) B) and C)

Question 5

Which of the following is not an element of quality control?

Accepted Answer

A)  Documentation.
B)  Engagement performance.
C)  Monitoring.
D)  Relevant ethical requirements.E) A) and C)
F) None of the above

Question 6

A peer review is generally performed by employees of the AICPA.

Accepted Answer

A) True 
 B)False

Question 7

The auditors' report on a corporation's financial statements usually is addressed to the president of the company.

Accepted Answer

A) True 
 B)False

Question 8

Within the context of quality control,the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide personnel within the firm with:

Accepted Answer

A)  Technical training that assures proficiency as an auditor.
B)  Professional education that is required in order to perform with due professional care.
C)  Knowledge required to fulfill assigned responsibilities and to progress within the firm.
D)  Knowledge required in order to perform a peer review.E) C) and D)
F) A) and B)

Question 9

An audit performed in accordance with generally accepted auditing standards generally should:

Accepted Answer

A)  Be expected to provide absolute assurance that noncompliance with all laws will be detected where internal control is effective.
B)  Be relied upon to disclose violations of truth in lending laws.
C)  Encompass a plan to actively search for all illegalities which relate to operating aspects.
D)  Not be relied upon to provide absolute assurance that all noncompliance with laws will be detected.E) A) and C)
F) C) and D)

Question 10

A CPA firm establishes quality control policies and procedures for deciding whether to accept a new client or continue to perform services for a current client.The primary purpose for establishing such policies and procedures is:

Accepted Answer

A)  To enable the auditor to attest to the integrity or reliability of a client.
B)  To comply with the quality control standards established by regulatory bodies.
C)  To minimize the likelihood of association with clients whose managements lack integrity.
D)  To lessen the exposure to litigation resulting from failure to detect fraud in client financial statements.E) None of the above
F) A) and B)

Question 11

As compared with the US public company audit report,the international audit report:

Accepted Answer

A)  Is shorter in length.
B)  Includes enhanced explanation of the audit process.
C)  Includes the name of the partner and managers on the audit, while the US report includes only the CPA firm name.
D)  Is dated as of year-end, whereas the US report is dated as of the last date of significant field work.E) None of the above
F) All of the above

Question 12

An engagement review form of peer review is least likely to include a peer reviewer's detailed analysis of:

Accepted Answer

A)  Compilation reports.
B)  Documentation of procedures followed on a review.
C)  Overall system of quality control.
D)  Review reports.E) A) and D)
F) B) and D)

Question 13

Which of the following is least likely to be directly examined in an inspection performed by the PCAOB?

Accepted Answer

A)  Audit engagements.
B)  Review engagements.
C)  Compilation engagements.
D)  CPA firm quality control system.E) A) and B)
F) A) and C)

Question 14

An audit should be designed to obtain reasonable assurance of detecting material misstatements due to:

Accepted Answer

A)  Errors.
B)  Errors and fraud.
C)  Errors, fraud, and noncompliance with laws with a direct effect on financial statement amounts.
D)  Errors, fraud and noncompliance with all laws.E) A) and B)
F) B) and D)

Question 15

To present fairly in conformity with generally accepted accounting principles the financial statements should:

Accepted Answer

A)  Be consistently applied.
B)  Inform users of all matters that could materially affect a decision.
C)  Reflect transactions and events within a range of reasonable limits.
D)  Be considered preferable to the users of those financial statements.E) A) and B)
F) A) and C)

Question 16

Which of the following statements best describes the primary purpose of Statements on Auditing Standards?

Accepted Answer

A)  They are guides intended to set forth auditing procedures which are applicable to a variety of situations.
B)  They are procedural outlines which are intended to narrow the areas of inconsistency and divergence of auditor opinion.
C)  They are authoritative statements, enforced through the Code of Professional Conduct.
D)  They are interpretations which may be useful guidance to auditors.E) A) and D)
F) A) and B)

Question 17

Which of the following best describes a portion of the auditors' responsibility regarding noncompliance with laws by clients?

Accepted Answer

A)  The auditors have a responsibility to discover all material noncompliance.
B)  If audit procedures reveal noncompliance, the auditors should take appropriate actions.
C)  If the auditors suspect noncompliance, they should conduct a legal audit of the company.
D)  The auditors' responsibility for the detection of all noncompliance is the same as their responsibility regarding material misstatements due to errors and fraud.E) B) and D)
F) B) and C) B

Question 18

In pursuing a CPA firm's quality control objectives,a CPA firm may maintain records indicating which partners or employees of the CPA firm were previously employed by the CPA firm's clients.Which quality control objective would this be most likely to satisfy?

Accepted Answer

A)  Acceptance and continuance of clients and engagements.
B)  Engagement performance.
C)  Personnel management.
D)  Relevant ethical requirements.E) C) and D)
F) A) and B) D

Question 19

Which of the following is not included in the auditors' standard unmodified audit report?

Accepted Answer

A)  The procedures selected by the auditor depend on the auditor's judgment.
B)  An audit includes evaluating the appropriateness of accounting policies used.
C)  An audit includes evaluating the overall presentation of the financial statements.
D)  Accounting principles have been consistently applied.E) A) and B)
F) None of the above

Question 20

Which of the following is a principle underlying an audit conducted in accordance with generally accepted auditing standards?

Accepted Answer

A)  The audit provides reasonable assurance the client will remain in business for at least one year.
B)  The audit report expresses an opinion on whether the financial statements are free of material and immaterial misstatement.
C)  Auditors are responsible for, among other things, maintaining professional objectivism, exercising professional engagement, and obtaining appropriate documentation.
D)  An auditor's opinion enhances the degree of confidence that intended users can place in the financial statements.E) A) and B)
F) A) and C) D

Exam 2: Professional Standards

Which of the following is explicitly included as a part of the description of management's responsibility in an unmodified audit report?

Correct AnswerverifiedShow Answer

Which of the following is not included as a part of the description of the auditor's responsibility in a nonpublic company unmodified report?

Correct AnswerverifiedShow Answer

Indicate whether you agree or disagree with the following statements concerning a financial statement audit conducted in accordance with generally accepted auditing standards.

Correct AnswerverifiedA.DisagreeB.DisagreeC.Agree...View AnswerShow Answer

A procedure in which a quality control partner periodically tests the application of quality control procedures is most directly related to which quality control element?

Correct AnswerverifiedShow Answer

Which of the following is not an element of quality control?

Correct AnswerverifiedShow Answer

A peer review is generally performed by employees of the AICPA.

Correct AnswerverifiedShow Answer

The auditors' report on a corporation's financial statements usually is addressed to the president of the company.

Correct AnswerverifiedShow Answer

Within the context of quality control,the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide personnel within the firm with:

Correct AnswerverifiedShow Answer

An audit performed in accordance with generally accepted auditing standards generally should:

Correct AnswerverifiedShow Answer

A CPA firm establishes quality control policies and procedures for deciding whether to accept a new client or continue to perform services for a current client.The primary purpose for establishing such policies and procedures is:

Correct AnswerverifiedShow Answer

As compared with the US public company audit report,the international audit report:

Correct AnswerverifiedShow Answer

An engagement review form of peer review is least likely to include a peer reviewer's detailed analysis of:

Correct AnswerverifiedShow Answer

Which of the following is least likely to be directly examined in an inspection performed by the PCAOB?

Correct AnswerverifiedShow Answer

An audit should be designed to obtain reasonable assurance of detecting material misstatements due to:

Correct AnswerverifiedShow Answer

To present fairly in conformity with generally accepted accounting principles the financial statements should:

Correct AnswerverifiedShow Answer

Which of the following statements best describes the primary purpose of Statements on Auditing Standards?

Correct AnswerverifiedShow Answer

Which of the following best describes a portion of the auditors' responsibility regarding noncompliance with laws by clients?

Correct AnswerverifiedB

In pursuing a CPA firm's quality control objectives,a CPA firm may maintain records indicating which partners or employees of the CPA firm were previously employed by the CPA firm's clients.Which quality control objective would this be most likely to satisfy?

Correct AnswerverifiedD

Which of the following is not included in the auditors' standard unmodified audit report?

Correct AnswerverifiedShow Answer

Which of the following is a principle underlying an audit conducted in accordance with generally accepted auditing standards?

Correct AnswerverifiedD

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A.Disagree
B.Disagree
C.Agree
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B

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D

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D