Question 1

What is the purpose of assurance standards issued by the AASB (Auditing and Assurance Standards Board) in Canada?

Accepted Answer

A)  to expose the newly established standards to as many groups as possible 
B)  to provide current copies of the standards in advance of being placed in the CPA Handbook 
C)  to provide supporting reference material and other resources 
D)  to set standards for engagements such as reviews and compilations 
A)  to expose the newly established standards to as many groups as possible 
B)  to provide current copies of the standards in advance of being placed in the CPA Handbook 
C)  to provide supporting reference material and other resources 
D)  to set standards for engagements such as reviews and compilations

Question 2

Gary West is a sole practitioner. He has conducted the audit of Reggie's Farm for the past 12 years. In the current year, Reggie's Farm expanded by acquiring two other farms, installed a new accounting system, and also started to export to the United States. Gary accepted the audit of Reggie's Farm for the upcoming year even though he has no experience with exports to the U.S. or companies the size of Reggie's Farm. Which element of quality control is compromised for Gary's firm?

Accepted Answer

A)  independence 
B)  client acceptance or continuance 
C)  extent of professional development 
D)  general ethical requirements 
A)  independence 
B)  client acceptance or continuance 
C)  extent of professional development 
D)  general ethical requirements

Question 3

A PA firm has an organizational structure that assures the technical review of every engagement by a partner who has expertise in the client's industry. This is an example of good

Accepted Answer

A)  entity-level controls. 
B)  adherence to professional standards. 
C)  business risk management. 
D)  quality controls. 
A)  entity-level controls. 
B)  adherence to professional standards. 
C)  business risk management. 
D)  quality controls.

Question 4

There are many elements of quality control at the firm level. Which element does the statement "management within a firm should ensure that qualified personnel monitor and address non-compliance with quality-control procedures" fall under?

Accepted Answer

A)  leadership and responsibilities within the firm 
B)  general ethical requirements 
C)  general human resource policies 
D)  engagement quality control review 
A)  leadership and responsibilities within the firm 
B)  general ethical requirements 
C)  general human resource policies 
D)  engagement quality control review

Question 5

Farah is currently auditing Software Synx, a public company. After a long day of work, Farah goes for a drink with her friend John who mentions that he owns shares of Software Synx. Farah indicates that John should hold on to his shares as they will go up next week when the financial statements are released and show an increase of 12% for revenues. Which element of quality control is compromised by Farah?

Accepted Answer

A)  general ethical requirements 
B)  independence 
C)  general human resource policies 
D)  engagement performance 
A)  general ethical requirements 
B)  independence 
C)  general human resource policies 
D)  engagement performance

Question 6

Which of the following is a typical consequence to a PA or PA firm if practice inspectors find any files or quality control procedures to be unsatisfactory? The PA

Accepted Answer

A)  will lose the right immediately to conduct audit engagements. 
B)  will no longer be allowed to sign audit reports for a period of time (such as a year). 
C)  may be required to revise processes or attend training courses. 
D)  will be required to rewrite the professional qualification examinations. 
A)  will lose the right immediately to conduct audit engagements. 
B)  will no longer be allowed to sign audit reports for a period of time (such as a year). 
C)  may be required to revise processes or attend training courses. 
D)  will be required to rewrite the professional qualification examinations.

Question 7

How do practice inspections affect the ability of a PA firm to have articling students work at the firm? Practice inspectors

Accepted Answer

A)  only permit students to work there if the quality controls are good. 
B)  review the ability of the office to provide sufficient, appropriate hours. 
C)  require that students work only on audit engagements, not reviews. 
D)  consider only work completed by qualified PAs, not students. 
A)  only permit students to work there if the quality controls are good. 
B)  review the ability of the office to provide sufficient, appropriate hours. 
C)  require that students work only on audit engagements, not reviews. 
D)  consider only work completed by qualified PAs, not students.

Question 8

There are many elements of quality control at the firm level. Which element does "adequate processes and procedures should be in place to ensure that the audit or review is conducted in accordance with GAAS, that quality control procedures are followed for each engagement, and that the audit is appropriately documented" relate to?

Accepted Answer

A)  leadership and responsibilities within the firm 
B)  general human resource policies 
C)  extent of professional development 
D)  engagement performance 
A)  leadership and responsibilities within the firm 
B)  general human resource policies 
C)  extent of professional development 
D)  engagement performance

Question 9

Large accounting firm are often limited liability partnerships (LLPs) because of their audits are conducted in accordance with GAAS,

Accepted Answer

A)  partners not on the engagement would not be liable on their personal assets. 
B)  improved quality control practices can be initiated using technical personnel. 
C)  more formal requirements are in place when reporting to federal tax authorities. 
D)  partners are liable for only a limited portion of their personal assets when sued. 
A)  partners not on the engagement would not be liable on their personal assets. 
B)  improved quality control practices can be initiated using technical personnel. 
C)  more formal requirements are in place when reporting to federal tax authorities. 
D)  partners are liable for only a limited portion of their personal assets when sued.

Question 10

What is the size of most public accounting firms in Canada?

Accepted Answer

A)  fewer than 25 employees 
B)  between 25 and 49 employees 
C)  between 50 and 75 employees 
D)  more than 75 employees 
A)  fewer than 25 employees 
B)  between 25 and 49 employees 
C)  between 50 and 75 employees 
D)  more than 75 employees

Question 11

When conducting an audit, the auditor should look at Canadian Auditing Standards as

Accepted Answer

A)  minimum standards of performance. 
B)  normal standards of performance. 
C)  ultimate standards of performance. 
D)  practical standards of performance. 
A)  minimum standards of performance. 
B)  normal standards of performance. 
C)  ultimate standards of performance. 
D)  practical standards of performance.

Question 12

CAS 200 explains that as part of general qualifications and conduct, the auditor should be professionally competent. Which of the following help the auditor achieve competence?

Accepted Answer

A)  using due care in the performance of all aspects of auditing 
B)  having an objective state of mind and independence from the client 
C)  having formal education and practical experience, and pursuing continuing education 
D)  conducting the audit using a risk-based approach and being skeptical 
A)  using due care in the performance of all aspects of auditing 
B)  having an objective state of mind and independence from the client 
C)  having formal education and practical experience, and pursuing continuing education 
D)  conducting the audit using a risk-based approach and being skeptical

Question 13

When the CPA Canada Handbook is silent on an auditing issue, which of the following is the best of other authoritative sources that the auditor could use?

Accepted Answer

A)  Assurance and Related Services Guidelines (AuG) 
B)  audit firm practice manuals 
C)  past practice at the client 
D)  reference to audit standards partner 
A)  Assurance and Related Services Guidelines (AuG) 
B)  audit firm practice manuals 
C)  past practice at the client 
D)  reference to audit standards partner

Question 14

There are many elements of quality control at the firm level. Which element does the statement "an organizational culture that emphasizes that quality should be present for audit and review engagements" fall under?

Accepted Answer

A)  leadership and responsibilities within the firm 
B)  general ethical requirements 
C)  general human resource policies 
D)  engagement performance 
A)  leadership and responsibilities within the firm 
B)  general ethical requirements 
C)  general human resource policies 
D)  engagement performance

Question 15

For each of the following situations, state which element of the profession or society encourages the public accountant to conduct himself at a high level.
A) Marco attended a seminar on the topic of business combinations to ensure he was up to date with the new standard.
B) Barbara referred to the standard on hedging to ensure that her client had the appropriate documentation to qualify for hedge accounting.
C) Gretchen refused to perform the audit of her uncle's restaurant chain.
D) Walid worked overtime all week to ensure that the file was properly documented and met the quality control requirements.
E) Sarah took the summer off to study for the Common Final Examination (CFE) to ensure that she would pass the entrance exam to become a Chartered Professional Accountant.

Accepted Answer

A)Continuing Education
B)CPA C

Question 16

What is one of the ways that high-profile business failures (such as Enron, WorldCom, and Nortel) have affected the auditing profession?

Accepted Answer

A)  raised the cost of hiring accounting-firm professionals 
B)  resulted in a need for decreased paperwork on audits 
C)  lowered the number of professionals working on an audit engagement 
D)  created increased focus on standards and high-quality audits 
A)  raised the cost of hiring accounting-firm professionals 
B)  resulted in a need for decreased paperwork on audits 
C)  lowered the number of professionals working on an audit engagement 
D)  created increased focus on standards and high-quality audits

Question 17

The Canadian Auditing Standards can be divided into three categories. List these categories and provide an example of each.

Accepted Answer

Note: Two examples are provided. Others

Question 18

Who do the external auditors and the internal auditors usually report to?

Accepted Answer

A)  senior management 
B)  audit committee 
C)  chief executive officer 
D)  director of internal audit 
A)  senior management 
B)  audit committee 
C)  chief executive officer 
D)  director of internal audit

Question 19

Securities regulations in Canada are the responsibility of

Accepted Answer

A)  a national securities commission. 
B)  provincial securities commissions. 
C)  the professional accounting organizations. 
D)  office of the Auditor General of Canada. 
A)  a national securities commission. 
B)  provincial securities commissions. 
C)  the professional accounting organizations. 
D)  office of the Auditor General of Canada.

Question 20

CAS 200 provides overall objectives of the independent auditor during the conduct of an audit in three categories: qualifications and conduct, performance of the audit, and reporting of results. How do these standards provide guidance to auditors?

Accepted Answer

A)  They detail what an auditor should do during each financial statement audit. 
B)  They represent a framework for further discussion of detailed standards. 
C)  They provide specific rules about how work should be done for evidence gathering. 
D)  They explain how the audit report should be developed and distributed. 
A)  They detail what an auditor should do during each financial statement audit. 
B)  They represent a framework for further discussion of detailed standards. 
C)  They provide specific rules about how work should be done for evidence gathering. 
D)  They explain how the audit report should be developed and distributed.

What is the purpose of assurance standards issued by the AASB (Auditing and Assurance Standards Board) in Canada?

A PA firm has an organizational structure that assures the technical review of every engagement by a partner who has expertise in the client's industry. This is an example of good

There are many elements of quality control at the firm level. Which element does the statement "management within a firm should ensure that qualified personnel monitor and address non-compliance with quality-control procedures" fall under?

Which of the following is a typical consequence to a PA or PA firm if practice inspectors find any files or quality control procedures to be unsatisfactory? The PA

How do practice inspections affect the ability of a PA firm to have articling students work at the firm? Practice inspectors

Large accounting firm are often limited liability partnerships (LLPs) because of their audits are conducted in accordance with GAAS,

What is the size of most public accounting firms in Canada?

When conducting an audit, the auditor should look at Canadian Auditing Standards as

CAS 200 explains that as part of general qualifications and conduct, the auditor should be professionally competent. Which of the following help the auditor achieve competence?

When the CPA Canada Handbook is silent on an auditing issue, which of the following is the best of other authoritative sources that the auditor could use?

There are many elements of quality control at the firm level. Which element does the statement "an organizational culture that emphasizes that quality should be present for audit and review engagements" fall under?

What is one of the ways that high-profile business failures (such as Enron, WorldCom, and Nortel) have affected the auditing profession?

The Canadian Auditing Standards can be divided into three categories. List these categories and provide an example of each.

Who do the external auditors and the internal auditors usually report to?

Securities regulations in Canada are the responsibility of

CAS 200 provides overall objectives of the independent auditor during the conduct of an audit in three categories: qualifications and conduct, performance of the audit, and reporting of results. How do these standards provide guidance to auditors?

The Demand for Audit and Other Assurance Services

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 2: The Public Accounting Profession and Audit Quality

What is the purpose of assurance standards issued by the AASB (Auditing and Assurance Standards Board) in Canada?

A PA firm has an organizational structure that assures the technical review of every engagement by a partner who has expertise in the client's industry. This is an example of good

There are many elements of quality control at the firm level. Which element does the statement "management within a firm should ensure that qualified personnel monitor and address non-compliance with quality-control procedures" fall under?

Which of the following is a typical consequence to a PA or PA firm if practice inspectors find any files or quality control procedures to be unsatisfactory? The PA

How do practice inspections affect the ability of a PA firm to have articling students work at the firm? Practice inspectors

Large accounting firm are often limited liability partnerships (LLPs) because of their audits are conducted in accordance with GAAS,

What is the size of most public accounting firms in Canada?

When conducting an audit, the auditor should look at Canadian Auditing Standards as

CAS 200 explains that as part of general qualifications and conduct, the auditor should be professionally competent. Which of the following help the auditor achieve competence?

When the CPA Canada Handbook is silent on an auditing issue, which of the following is the best of other authoritative sources that the auditor could use?

There are many elements of quality control at the firm level. Which element does the statement "an organizational culture that emphasizes that quality should be present for audit and review engagements" fall under?

What is one of the ways that high-profile business failures (such as Enron, WorldCom, and Nortel) have affected the auditing profession?

The Canadian Auditing Standards can be divided into three categories. List these categories and provide an example of each.

Who do the external auditors and the internal auditors usually report to?

Securities regulations in Canada are the responsibility of

CAS 200 provides overall objectives of the independent auditor during the conduct of an audit in three categories: qualifications and conduct, performance of the audit, and reporting of results. How do these standards provide guidance to auditors?

The Demand for Audit and Other Assurance Services

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters