Question 1

An audit of the financial statements of Camden Corporation is being conducted by external auditors. The external auditors are expected to:

Accepted Answer

A) certify the correctness of Camden's financial statements. 
B) make a complete examination of Camden's records and verify all of Camden's transactions. 
C) give an opinion on the fair presentation of Camden's financial statements in conformity with the applicable financial reporting framework (e.g., GAAP, IFRS). 
D) give an opinion on the attractiveness of Camden for investment purposes and critique the wisdom and legality of its business decisions. 
A) certify the correctness of Camden's financial statements. 
B) make a complete examination of Camden's records and verify all of Camden's transactions. 
C) give an opinion on the fair presentation of Camden's financial statements in conformity with the applicable financial reporting framework (e.g., GAAP, IFRS). 
D) give an opinion on the attractiveness of Camden for investment purposes and critique the wisdom and legality of its business decisions. C

Question 2

The particular and specialized actions that auditors undertake to obtain evidence in a specific audit engagement are known as

Accepted Answer

A) Auditing Standards. 
B) audit procedures. 
C) Interpretive Publications. 
D) Statements on Auditing Standards. 
A) Auditing Standards. 
B) audit procedures. 
C) Interpretive Publications. 
D) Statements on Auditing Standards. B

Question 3

The relevant ethical requirements relating to due care, professional skepticism, and professional judgment are responsibilities of the auditor at which stage(s) of the audit?  $\begin{array}{lcc}& \text {Risk Assessment}
& \text {Audit Evidence}\\end{array}$ 
A. $\begin{array}{lcc}&&& \text { Yes } &&&&& \text { No } \\end{array}$ 
B. $\begin{array}{lcc}&&& \text { Yes }&&&&& \text { Yes } \\end{array}$
C.$\begin{array}{lcc}&&& \text { No } &&&&& \text { Yes }\\end{array}$
D.$\begin{array}{lcc}&&& \text { No }&&&&& \text { No }\
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D B

Question 4

The initial development of auditing standards was in response to

Accepted Answer

A) a scandal involving embezzlement that was not detected during an audit engagement. 
B) auditors' concerns that all components of the financial statements were not being verified. 
C) independent inquiries of the public accounting profession made by the SEC. 
D) requests by companies for greater assurance with respect to the auditors' ability to detect financial statement misstatements. 
A) a scandal involving embezzlement that was not detected during an audit engagement. 
B) auditors' concerns that all components of the financial statements were not being verified. 
C) independent inquiries of the public accounting profession made by the SEC. 
D) requests by companies for greater assurance with respect to the auditors' ability to detect financial statement misstatements.

Question 5

Which element of a system of quality control strives to provide the firm with reasonable assurance that its policies and procedures are operating effectively?

Accepted Answer

A) Human resources 
B) Leadership responsibilities for quality within the firm 
C) Monitoring 
D) Relevant ethical requirements 
A) Human resources 
B) Leadership responsibilities for quality within the firm 
C) Monitoring 
D) Relevant ethical requirements

Question 6

Which of the following section(s) references the requirement of auditors to be independent?

Accepted Answer

A) Opinion on the Financial Statements section. 
B) Basis for Opinion section. 
C) Critical Audit Matters section. 
D) Opinion on the Financial Statements section and Basis for Opinion section. 
A) Opinion on the Financial Statements section. 
B) Basis for Opinion section. 
C) Critical Audit Matters section. 
D) Opinion on the Financial Statements section and Basis for Opinion section.

Question 7

Which of the following would normally be considered earliest in the audit examination?

Accepted Answer

A) Determination of materiality levels for use during the audit. 
B) Consideration of the ability of the entity's internal control to prevent or detect errors. 
C) Preparation of a written audit plan. 
D) Evaluation of the type of audit opinion to be issued, based on the auditor's findings. 
A) Determination of materiality levels for use during the audit. 
B) Consideration of the ability of the entity's internal control to prevent or detect errors. 
C) Preparation of a written audit plan. 
D) Evaluation of the type of audit opinion to be issued, based on the auditor's findings.

Question 8

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

Accepted Answer

A) Receiving confirmation from third parties as to the existence of securities is more reliable than the auditors' personal inspection of those securities. 
B) Verbal inquiries received from the client regarding sales made to customers are more reliable than sales invoices prepared by the client for its customers. 
C) A bank confirmation received directly by the auditor is more reliable than a bank confirmation initially received by the client and forwarded to the auditor. 
D) Evidence drawn from a document prepared by the client is more reliable than evidence drawn from a document prepared by an external party that is forwarded to the auditor by the client. 
A) Receiving confirmation from third parties as to the existence of securities is more reliable than the auditors' personal inspection of those securities. 
B) Verbal inquiries received from the client regarding sales made to customers are more reliable than sales invoices prepared by the client for its customers. 
C) A bank confirmation received directly by the auditor is more reliable than a bank confirmation initially received by the client and forwarded to the auditor. 
D) Evidence drawn from a document prepared by the client is more reliable than evidence drawn from a document prepared by an external party that is forwarded to the auditor by the client.

Question 9

Which of the following is not true with respect to the auditors' report for an issuer?

Accepted Answer

A) The report title should contain the word "independent." 
B) The report provides a detailed listing of major auditing procedures performed during the examination. 
C) The opinion assesses the financial statements against an applicable financial reporting framework. 
D) The report specifically identifies the financial statements and years examined by the auditor. 
A) The report title should contain the word "independent." 
B) The report provides a detailed listing of major auditing procedures performed during the examination. 
C) The opinion assesses the financial statements against an applicable financial reporting framework. 
D) The report specifically identifies the financial statements and years examined by the auditor.

Question 10

Which of the following is most closely associated with the responsibilities principle?

Accepted Answer

A) Due care. 
B) Planning. 
C) Qualified audit opinion. 
D) Risk of material misstatement. 
A) Due care. 
B) Planning. 
C) Qualified audit opinion. 
D) Risk of material misstatement.

Question 11

Which of the following is not true with respect to the responsibilities for establishing generally accepted auditing standards?

Accepted Answer

A) Auditing standards for both issuers and non-issuers must be formally approved by the Securities and Exchange Commission. 
B) Interpretive publications are issued by the AICPA to provide guidance on the application of generally accepted auditing standards in specific circumstances. 
C) The PCAOB is the body with formal authority for the creation of auditing standards for the audits of issuers. 
D) If specific guidance is not provided by PCAOB Auditing Standards, auditors may refer to Statements on Auditing Standards that have not been amended or superseded. 
A) Auditing standards for both issuers and non-issuers must be formally approved by the Securities and Exchange Commission. 
B) Interpretive publications are issued by the AICPA to provide guidance on the application of generally accepted auditing standards in specific circumstances. 
C) The PCAOB is the body with formal authority for the creation of auditing standards for the audits of issuers. 
D) If specific guidance is not provided by PCAOB Auditing Standards, auditors may refer to Statements on Auditing Standards that have not been amended or superseded.

Question 12

Which of the following factors influences the risk of material misstatement? $\begin{array}{llc}  \text { Susceptibility of the Account}& \text { Nature, Timing, and Extent}\
 \text {Balance to Misstatement}& \text { of Further Audit Procedures }
\end{array}$ 
A.$\begin{array}{llc} &&&& \text { Yes } &&&&&&&&&&& \text { No } \\end{array}$
B.$\begin{array}{llc}&&&& \text { Yes } &&&&&&&&&&& \text { Yes } \\end{array}$
C.$\begin{array}{llc}&&&& \text { No }&&&&&&&&&&& \text { Yes } \\end{array}$
D.$\begin{array}{llc} &&&& \text { No } &&&&&&&&&&& \text { No }
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 13

Which of the following statements is true with respect to the quality of audit evidence?

Accepted Answer

A) Quality is related to the relevance of evidence, but not the reliability of evidence. 
B) Evidence is considered of higher quality when gathered prior to year-end than following year-end. 
C) Evidence obtained under environments of stronger internal control is of higher quality than evidence obtained under environments of weaker internal control. 
D) In evaluating quality, sufficiency of evidence is of greater importance than appropriateness of evidence. 
A) Quality is related to the relevance of evidence, but not the reliability of evidence. 
B) Evidence is considered of higher quality when gathered prior to year-end than following year-end. 
C) Evidence obtained under environments of stronger internal control is of higher quality than evidence obtained under environments of weaker internal control. 
D) In evaluating quality, sufficiency of evidence is of greater importance than appropriateness of evidence.

Question 14

Control risk is

Accepted Answer

A) the probability that a material misstatement could not be prevented or detected by the entity's internal control policies and procedures. 
B) the probability that a material misstatement could occur and not be detected by auditors' procedures. 
C) the risk that auditors will not be able to complete the audit on a timely basis. 
D) the risk that auditors will not properly control the staff on the audit engagement. 
A) the probability that a material misstatement could not be prevented or detected by the entity's internal control policies and procedures. 
B) the probability that a material misstatement could occur and not be detected by auditors' procedures. 
C) the risk that auditors will not be able to complete the audit on a timely basis. 
D) the risk that auditors will not properly control the staff on the audit engagement.

Question 15

Firm A performs audits of 60 issuers, while firm B performs audits of 120 issuers. How often must each firm undergo a PCAOB inspection?

Accepted Answer

A) Both firm A and firm B will be inspected every other year. 
B) Firm A will be inspected annually and firm B will be inspected every three years. 
C) Firm A will be inspected every three years and firm B will be inspected annually. 
D) Both firm A and firm B will be inspected annually. 
A) Both firm A and firm B will be inspected every other year. 
B) Firm A will be inspected annually and firm B will be inspected every three years. 
C) Firm A will be inspected every three years and firm B will be inspected annually. 
D) Both firm A and firm B will be inspected annually.

Question 16

The preparation of an audit plan prior to the beginning of field work is appropriately considered documentation of

Accepted Answer

A) planning. 
B) supervision. 
C) information evaluation. 
D) quality assurance. 
A) planning. 
B) supervision. 
C) information evaluation. 
D) quality assurance.

Question 17

Which of the following information would not be included in the auditors' standard report?

Accepted Answer

A) The names of the financial statements audited. 
B) A description of the nature of an audit. 
C) An indication that all necessary disclosures have been presented. 
D) An opinion on the entity's financial statements. 
A) The names of the financial statements audited. 
B) A description of the nature of an audit. 
C) An indication that all necessary disclosures have been presented. 
D) An opinion on the entity's financial statements.

Question 18

Which of the following presumptions is correct about the reliability of audit evidence?

Accepted Answer

A) Information obtained indirectly from outside sources is the most reliable form of audit evidence. 
B) To be reliable, audit evidence should be convincing rather than persuasive. 
C) Reliability of audit evidence refers to the amount of corroborative evidence obtained. 
D) An effective system of internal control provides more assurance about the reliability of audit evidence. 
A) Information obtained indirectly from outside sources is the most reliable form of audit evidence. 
B) To be reliable, audit evidence should be convincing rather than persuasive. 
C) Reliability of audit evidence refers to the amount of corroborative evidence obtained. 
D) An effective system of internal control provides more assurance about the reliability of audit evidence.

Question 19

When a firm decides to withdraw from an engagement, it should document all of the following except:

Accepted Answer

A) significant issues influencing the decision to withdraw from the engagement. 
B) the basis for any conclusions related to this decision to withdraw from the engagement. 
C) significant consultations related to the decision to withdraw from the engagement. 
D) significant effects the decision to withdraw from the engagement could have on the firm. 
A) significant issues influencing the decision to withdraw from the engagement. 
B) the basis for any conclusions related to this decision to withdraw from the engagement. 
C) significant consultations related to the decision to withdraw from the engagement. 
D) significant effects the decision to withdraw from the engagement could have on the firm.

Question 20

Which of the following statements is not true with respect to the responsibility for establishing generally accepted auditing standards?

Accepted Answer

A) The PCAOB issues auditing standards for the audit of issuers, subject to SEC approval. 
B) Standards issued by the Auditing Standards Board after 2003 apply to the audits of both issuers and non-issuers. 
C) The Auditing Standards Board currently issues auditing standards for the audit of non-issuers. 
D) Prior to the Sarbanes-Oxley Act, the Auditing Standards Board issued auditing standards for the audits of both issuers and non-issuers. 
A) The PCAOB issues auditing standards for the audit of issuers, subject to SEC approval. 
B) Standards issued by the Auditing Standards Board after 2003 apply to the audits of both issuers and non-issuers. 
C) The Auditing Standards Board currently issues auditing standards for the audit of non-issuers. 
D) Prior to the Sarbanes-Oxley Act, the Auditing Standards Board issued auditing standards for the audits of both issuers and non-issuers.

An audit of the financial statements of Camden Corporation is being conducted by external auditors. The external auditors are expected to:

The particular and specialized actions that auditors undertake to obtain evidence in a specific audit engagement are known as

The relevant ethical requirements relating to due care, professional skepticism, and professional judgment are responsibilities of the auditor at which stage(s) of the audit? Risk Assessment Audit Evidence A. Yes No B. Yes Yes C. No Yes D. No No

The initial development of auditing standards was in response to

Which element of a system of quality control strives to provide the firm with reasonable assurance that its policies and procedures are operating effectively?

Which of the following section(s) references the requirement of auditors to be independent?

Which of the following would normally be considered earliest in the audit examination?

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

Which of the following is not true with respect to the auditors' report for an issuer?

Which of the following is most closely associated with the responsibilities principle?

Which of the following is not true with respect to the responsibilities for establishing generally accepted auditing standards?

Which of the following factors influences the risk of material misstatement? Susceptibility of the Account Nature, Timing, and Extent Balance to Misstatement of Further Audit Procedures A. Yes No B. Yes Yes C. No Yes D. No No

Which of the following statements is true with respect to the quality of audit evidence?

Control risk is

Firm A performs audits of 60 issuers, while firm B performs audits of 120 issuers. How often must each firm undergo a PCAOB inspection?

The preparation of an audit plan prior to the beginning of field work is appropriately considered documentation of

Which of the following information would not be included in the auditors' standard report?

Which of the following presumptions is correct about the reliability of audit evidence?

When a firm decides to withdraw from an engagement, it should document all of the following except:

Which of the following statements is not true with respect to the responsibility for establishing generally accepted auditing standards?

Auditing and Assurance Services

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash 227

Revenue and Collection Cycle 279

Acquisition and Expenditure Cycle 336

Production Cycle 394

Finance and Investment Cycle 443

Completing the Audit 500

Reports on Audited Financial Statements

Filters

Exam 2: Professional Standards

An audit of the financial statements of Camden Corporation is being conducted by external auditors. The external auditors are expected to:

The particular and specialized actions that auditors undertake to obtain evidence in a specific audit engagement are known as

The relevant ethical requirements relating to due care, professional skepticism, and professional judgment are responsibilities of the auditor at which stage(s) of the audit? Risk Assessment Audit Evidence A. Yes No B. Yes Yes C. No Yes D. No No

The initial development of auditing standards was in response to

Which element of a system of quality control strives to provide the firm with reasonable assurance that its policies and procedures are operating effectively?

Which of the following section(s) references the requirement of auditors to be independent?

Which of the following would normally be considered earliest in the audit examination?

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

Which of the following is not true with respect to the auditors' report for an issuer?

Which of the following is most closely associated with the responsibilities principle?

Which of the following is not true with respect to the responsibilities for establishing generally accepted auditing standards?

Which of the following factors influences the risk of material misstatement? Susceptibility of the Account Nature, Timing, and Extent Balance to Misstatement of Further Audit Procedures A. Yes No B. Yes Yes C. No Yes D. No No

Which of the following statements is true with respect to the quality of audit evidence?

Control risk is

Firm A performs audits of 60 issuers, while firm B performs audits of 120 issuers. How often must each firm undergo a PCAOB inspection?

The preparation of an audit plan prior to the beginning of field work is appropriately considered documentation of

Which of the following information would not be included in the auditors' standard report?

Which of the following presumptions is correct about the reliability of audit evidence?

When a firm decides to withdraw from an engagement, it should document all of the following except:

Which of the following statements is not true with respect to the responsibility for establishing generally accepted auditing standards?

Auditing and Assurance Services

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash 227

Revenue and Collection Cycle 279

Acquisition and Expenditure Cycle 336

Production Cycle 394

Finance and Investment Cycle 443

Completing the Audit 500

Reports on Audited Financial Statements

Filters