Question 1

The auditors' responsibility to express an opinion on the financial statements is

Accepted Answer

A) implicitly represented in the auditors' standard report. 
B) explicitly represented in the Opinion on the Financial Statements section of the auditors' standard report. 
C) explicitly represented in the Basis for Opinion section of the auditors' standard report. 
D) explicitly represented in the Critical Audit Matters section of the auditors' standard report. 
A) implicitly represented in the auditors' standard report. 
B) explicitly represented in the Opinion on the Financial Statements section of the auditors' standard report. 
C) explicitly represented in the Basis for Opinion section of the auditors' standard report. 
D) explicitly represented in the Critical Audit Matters section of the auditors' standard report.

Question 2

Pronouncements issued by the Public Company Accounting Oversight Board are subject to formal approval by the

Accepted Answer

A) American Institute of Certified Public Accountants. 
B) Auditing Standards Board. 
C) International Auditing and Assurance Standards Board. 
D) Securities and Exchange Commission. 
A) American Institute of Certified Public Accountants. 
B) Auditing Standards Board. 
C) International Auditing and Assurance Standards Board. 
D) Securities and Exchange Commission.

Question 3

Which of the following types of auditors' reports does not require additional information to support the opinion?

Accepted Answer

A) Unmodified opinion. 
B) Adverse opinion. 
C) Qualified opinion. 
D) Disclaimer of opinion. 
A) Unmodified opinion. 
B) Adverse opinion. 
C) Qualified opinion. 
D) Disclaimer of opinion.

Question 4

The role of the Public Company Accounting Oversight Board in the standard-setting process is to develop

Accepted Answer

A) Statements on Auditing Standards for the audits of non-issuers. 
B) Auditing Standards for the audits of issuers. 
C) Governmental Auditing Standards for the audits of governmental entities. 
D) International Standards on Auditing for the audits of foreign entities. 
A) Statements on Auditing Standards for the audits of non-issuers. 
B) Auditing Standards for the audits of issuers. 
C) Governmental Auditing Standards for the audits of governmental entities. 
D) International Standards on Auditing for the audits of foreign entities.

Question 5

All of the following are examples of procedures a firm can use to monitor its system of quality control except:

Accepted Answer

A) discussions with firm personnel. 
B) conducting reviews of engagement documentation. 
C) devoting sufficient resources to developing a system of quality control. 
D) assessing compliance with independence policies and procedures. 
A) discussions with firm personnel. 
B) conducting reviews of engagement documentation. 
C) devoting sufficient resources to developing a system of quality control. 
D) assessing compliance with independence policies and procedures.

Question 6

Prior to, or in conjunction with, the information-gathering procedures for an audit, audit team members should discuss the potential for material misstatement due to fraud. Which of the following best characterizes the mind-set that the audit team should maintain during this discussion?

Accepted Answer

A) Presumptive 
B) Judgmental 
C) Criticizing 
D) Questioning 
A) Presumptive 
B) Judgmental 
C) Criticizing 
D) Questioning

Question 7

An internal evaluation of the significant judgments made by the audit team and the conclusions reached in formulating its report for engagements meeting specified criteria is known as a(n):

Accepted Answer

A) engagement quality control review. 
B) inspection. 
C) peer review. 
D) performance control evaluation. 
A) engagement quality control review. 
B) inspection. 
C) peer review. 
D) performance control evaluation.

Question 8

An independent auditor must have which of the following?

Accepted Answer

A) A pre-existing and well-informed point of view with respect to the audit 
B) Technical training that is adequate to meet the requirements of a professional 
C) A background in many different disciplines 
D) Experience in taxation that is sufficient to comply with generally accepted auditing standards 
A) A pre-existing and well-informed point of view with respect to the audit 
B) Technical training that is adequate to meet the requirements of a professional 
C) A background in many different disciplines 
D) Experience in taxation that is sufficient to comply with generally accepted auditing standards

Question 9

Which of the following is not considered a type of audit evidence?

Accepted Answer

A) The entity's trial balance. 
B) Auditors' calculations. 
C) Physical observation. 
D) Verbal statements made by client personnel. 
A) The entity's trial balance. 
B) Auditors' calculations. 
C) Physical observation. 
D) Verbal statements made by client personnel.

Question 10

The performance principle would include all of the following except:

Accepted Answer

A) the auditors' determination of materiality levels. 
B) the auditors' evaluation of independence with respect to their clients. 
C) the auditors' evaluation of the risk of material misstatement. 
D) the auditors' determination of the nature, timing, and extent of further audit procedures. 
A) the auditors' determination of materiality levels. 
B) the auditors' evaluation of independence with respect to their clients. 
C) the auditors' evaluation of the risk of material misstatement. 
D) the auditors' determination of the nature, timing, and extent of further audit procedures.

Question 11

Which of the following represent audit quality guides that remain stable over time and are applicable for all audits?

Accepted Answer

A) Auditing procedures. 
B) Auditing standards. 
C) Due care. 
D) System of quality control. 
A) Auditing procedures. 
B) Auditing standards. 
C) Due care. 
D) System of quality control.

Question 12

Which of the following is not true with respect to the concept of reasonable assurance?

Accepted Answer

A) Reasonable assurance allows for mistakes and misinterpretations by the audit team throughout the examination. 
B) The nature of many audit procedures is such that they cannot always be relied upon to detect misstatements. 
C) Audit teams should evaluate all transactions and components of an account balance or class of transactions. 
D) Auditors should control the overall risk in an audit to an acceptably low level. 
A) Reasonable assurance allows for mistakes and misinterpretations by the audit team throughout the examination. 
B) The nature of many audit procedures is such that they cannot always be relied upon to detect misstatements. 
C) Audit teams should evaluate all transactions and components of an account balance or class of transactions. 
D) Auditors should control the overall risk in an audit to an acceptably low level.

Question 13

Generally accepted auditing standards are

Accepted Answer

A) specific actions performed by auditors during an examination. 
B) standards that guide the conduct of an audit examination. 
C) legal requirements auditors must observe during the audits of issuers. 
D) standards used by entities in deciding whether to engage or retain the services of auditors. 
A) specific actions performed by auditors during an examination. 
B) standards that guide the conduct of an audit examination. 
C) legal requirements auditors must observe during the audits of issuers. 
D) standards used by entities in deciding whether to engage or retain the services of auditors.

Question 14

Which of the following situations would most likely be in conflict with the responsibilities principle?

Accepted Answer

A) Auditors perform the engagement with the performance level expected of prudent auditors, but not expert auditors. 
B) Auditors obtain expertise in their client's industry as they are conducting the audit examination. 
C) Auditors are directly involved with a client manager in a strategic decision-making capacity. 
D) Auditors fail to document their assessment of control risk following their study of internal control. 
A) Auditors perform the engagement with the performance level expected of prudent auditors, but not expert auditors. 
B) Auditors obtain expertise in their client's industry as they are conducting the audit examination. 
C) Auditors are directly involved with a client manager in a strategic decision-making capacity. 
D) Auditors fail to document their assessment of control risk following their study of internal control.

Question 15

A level of performance that would be exercised by reasonable auditors in similar circumstances is referred to as

Accepted Answer

A) due care. 
B) independence. 
C) professional judgment. 
D) professional skepticism. 
A) due care. 
B) independence. 
C) professional judgment. 
D) professional skepticism.

Question 16

Which of the following would be evaluated during the PCAOB inspection process? $\begin{array}{cc}
\text { Firm s system of quality } & \text { Financial viability } \
\text { control } & \text { of the firm }
\end{array}$
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 17

An important role of the Public Company Accounting Oversight Board is to oversee the

Accepted Answer

A) issuance of statements by the Financial Accounting Standards Board. 
B) preparation and grading of the Uniform CPA Examination. 
C) peer review of member firms of the Private Companies Practice Section. 
D) regulation of firms that audit issuers. 
A) issuance of statements by the Financial Accounting Standards Board. 
B) preparation and grading of the Uniform CPA Examination. 
C) peer review of member firms of the Private Companies Practice Section. 
D) regulation of firms that audit issuers.

Question 18

Which of the following concepts is least related to the risk of material misstatement?

Accepted Answer

A) Control risk. 
B) Detection risk. 
C) Inherent risk. 
D) Materiality. 
A) Control risk. 
B) Detection risk. 
C) Inherent risk. 
D) Materiality.

Question 19

Which of the following situations would result in the issuance of a disclaimer of opinion?

Accepted Answer

A) The audit reveals weaknesses in the client's internal control over financial reporting. 
B) The auditor is discovered to own a financial interest in the entity. 
C) The audit is performed, with limited exception, in accordance with generally accepted auditing standards. 
D) The entity's financial statements are not presented in conformity with the applicable financial reporting framework. 
A) The audit reveals weaknesses in the client's internal control over financial reporting. 
B) The auditor is discovered to own a financial interest in the entity. 
C) The audit is performed, with limited exception, in accordance with generally accepted auditing standards. 
D) The entity's financial statements are not presented in conformity with the applicable financial reporting framework.

Question 20

Which of the following is not a concept from the performance principle under generally accepted auditing standards?

Accepted Answer

A) The auditor must plan the work and properly supervise any assistants. 
B) The auditor must express an opinion in accordance with the auditor's findings. 
C) The auditor must obtain sufficient appropriate evidence about whether material misstatements exist. 
D) The auditor must determine and apply an appropriate materiality level throughout the audit. 
A) The auditor must plan the work and properly supervise any assistants. 
B) The auditor must express an opinion in accordance with the auditor's findings. 
C) The auditor must obtain sufficient appropriate evidence about whether material misstatements exist. 
D) The auditor must determine and apply an appropriate materiality level throughout the audit.

The auditors' responsibility to express an opinion on the financial statements is

Pronouncements issued by the Public Company Accounting Oversight Board are subject to formal approval by the

Which of the following types of auditors' reports does not require additional information to support the opinion?

The role of the Public Company Accounting Oversight Board in the standard-setting process is to develop

All of the following are examples of procedures a firm can use to monitor its system of quality control except:

Prior to, or in conjunction with, the information-gathering procedures for an audit, audit team members should discuss the potential for material misstatement due to fraud. Which of the following best characterizes the mind-set that the audit team should maintain during this discussion?

An internal evaluation of the significant judgments made by the audit team and the conclusions reached in formulating its report for engagements meeting specified criteria is known as a(n):

An independent auditor must have which of the following?

Which of the following is not considered a type of audit evidence?

The performance principle would include all of the following except:

Which of the following represent audit quality guides that remain stable over time and are applicable for all audits?

Which of the following is not true with respect to the concept of reasonable assurance?

Generally accepted auditing standards are

Which of the following situations would most likely be in conflict with the responsibilities principle?

A level of performance that would be exercised by reasonable auditors in similar circumstances is referred to as

Which of the following would be evaluated during the PCAOB inspection process? Firm s system of quality Financial viability control of the firm A. Yes No B. Yes Yes C. No Yes D. No No

An important role of the Public Company Accounting Oversight Board is to oversee the

Which of the following concepts is least related to the risk of material misstatement?

Which of the following situations would result in the issuance of a disclaimer of opinion?

Which of the following is not a concept from the performance principle under 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

The auditors' responsibility to express an opinion on the financial statements is

Pronouncements issued by the Public Company Accounting Oversight Board are subject to formal approval by the

Which of the following types of auditors' reports does not require additional information to support the opinion?

The role of the Public Company Accounting Oversight Board in the standard-setting process is to develop

All of the following are examples of procedures a firm can use to monitor its system of quality control except:

Prior to, or in conjunction with, the information-gathering procedures for an audit, audit team members should discuss the potential for material misstatement due to fraud. Which of the following best characterizes the mind-set that the audit team should maintain during this discussion?

An internal evaluation of the significant judgments made by the audit team and the conclusions reached in formulating its report for engagements meeting specified criteria is known as a(n):

An independent auditor must have which of the following?

Which of the following is not considered a type of audit evidence?

The performance principle would include all of the following except:

Which of the following represent audit quality guides that remain stable over time and are applicable for all audits?

Which of the following is not true with respect to the concept of reasonable assurance?

Generally accepted auditing standards are

Which of the following situations would most likely be in conflict with the responsibilities principle?

A level of performance that would be exercised by reasonable auditors in similar circumstances is referred to as

Which of the following would be evaluated during the PCAOB inspection process? Firm s system of quality Financial viability control of the firm A. Yes No B. Yes Yes C. No Yes D. No No

An important role of the Public Company Accounting Oversight Board is to oversee the

Which of the following concepts is least related to the risk of material misstatement?

Which of the following situations would result in the issuance of a disclaimer of opinion?

Which of the following is not a concept from the performance principle under 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