Question 1

Which of the following is a correct statement regarding the SEC?

Accepted Answer

A) The Securities Act of 1934 requires most companies planning to issue new securities to the public to submit a registration statement to the SEC for approval. 
B) All public companies must file monthly statements with the SEC. 
C) The Form 10-K must be filed within 30 days after the close of the fiscal year. 
D) The SEC has the power to establish rules for any CPA associated with audited financial statements submitted to the commission. 
A) The Securities Act of 1934 requires most companies planning to issue new securities to the public to submit a registration statement to the SEC for approval. 
B) All public companies must file monthly statements with the SEC. 
C) The Form 10-K must be filed within 30 days after the close of the fiscal year. 
D) The SEC has the power to establish rules for any CPA associated with audited financial statements submitted to the commission. D

Question 2

Which one of the following is not True regarding the American Institute of Certified Public Accountants peer review requirement?

Accepted Answer

A) A CPA firm must develop and adhere to quality control standards. 
B) Peer reviews are mandatory. 
C) A CPA firm will lose AICPA eligibility if a peer review is not performed. 
D) Firms required to be registered with and inspected by the PCAOB are exempt. 
A) A CPA firm must develop and adhere to quality control standards. 
B) Peer reviews are mandatory. 
C) A CPA firm will lose AICPA eligibility if a peer review is not performed. 
D) Firms required to be registered with and inspected by the PCAOB are exempt. D

Question 3

International Standards on Auditing are issued by the International Auditing and Assurance Standards Board (IAASB).

Accepted Answer

A) True 
 B)False  True

Question 4

Many small,local accounting firms perform audits as their primary service to their clients.

Accepted Answer

A) True 
 B)False

Question 5

Professional skepticism must be maintained only if the auditor suspects fraud.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not one of the responsibilities of an auditor under the principles underlying an audit?

Accepted Answer

A) possess appropriate competence and capabilities 
B) comply with ethical requirements 
C) plan work and supervise assistants 
D) maintain professional skepticism and exercise professional judgment 
A) possess appropriate competence and capabilities 
B) comply with ethical requirements 
C) plan work and supervise assistants 
D) maintain professional skepticism and exercise professional judgment

Question 7

Membership in the AICPA is restricted to CPAs who are currently practicing as independent auditors.

Accepted Answer

A) True 
 B)False

Question 8

In order to properly plan and perform an audit,an important fact for both the auditor and the client to understand is that

Accepted Answer

A) the internal control policies and procedures are developed by the auditors. 
B) the purpose of an audit is to prevent fraud. 
C) management is responsible for the preparation of the financial statements. 
D) management can restrict the auditor's access to important information relevant to the financial statements. 
A) the internal control policies and procedures are developed by the auditors. 
B) the purpose of an audit is to prevent fraud. 
C) management is responsible for the preparation of the financial statements. 
D) management can restrict the auditor's access to important information relevant to the financial statements.

Question 9

The purpose of establishing quality control policies and procedures to accept or continue a client relationship is to

Accepted Answer

A) provide reasonable assurance that personnel are adequately trained to fulfill their responsibilities. 
B) monitor the risk factors concerning misstatements that arise from the misappropriation of assets. 
C) document objective criteria for the CPA firm's peer review. 
D) minimize the likelihood of associating with a client whose management may lack integrity. 
A) provide reasonable assurance that personnel are adequately trained to fulfill their responsibilities. 
B) monitor the risk factors concerning misstatements that arise from the misappropriation of assets. 
C) document objective criteria for the CPA firm's peer review. 
D) minimize the likelihood of associating with a client whose management may lack integrity.

Question 10

Statements on Auditing Standards (SASs)are issued by the Public Company Accounting Oversight Board.

Accepted Answer

A) True 
 B)False

Question 11

To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,the auditor fulfills several performance responsibilities,including

Accepted Answer

A) complying with the AICPA Code of Professional Conduct. 
B) issuing a written report on the financial statements. 
C) determining and applying materiality levels. 
D) having the appropriate competence to perform the audit. 
A) complying with the AICPA Code of Professional Conduct. 
B) issuing a written report on the financial statements. 
C) determining and applying materiality levels. 
D) having the appropriate competence to perform the audit.

Question 12

List the four principles underlying an audit.

Accepted Answer

•Purpose of an audit

Question 13

The Statements on Auditing Standards issued by the Auditing Standards Board

Accepted Answer

A) are regarded as authoritative literature. 
B) mandate the amount of evidence that must be obtained. 
C) must be followed in all situations. 
D) are optional guidelines which an auditor may choose to follow or not follow when conducting an audit. 
A) are regarded as authoritative literature. 
B) mandate the amount of evidence that must be obtained. 
C) must be followed in all situations. 
D) are optional guidelines which an auditor may choose to follow or not follow when conducting an audit.

Question 14

Who is responsible for establishing auditing standards for privately held companies?

Accepted Answer

A) Securities and Exchange Commission 
B) Public Company Accounting Oversight Board 
C) Auditing Standards Board 
D) National Association of Accounting 
A) Securities and Exchange Commission 
B) Public Company Accounting Oversight Board 
C) Auditing Standards Board 
D) National Association of Accounting

Question 15

The International Standards on Auditing (ISA)

Accepted Answer

A) are issued by the AICPA. 
B) override a country's regulations governing the audit of a company. 
C) has many of the same standards as the Auditing Standards Board (AS
B) . 
D) must be followed by companies whose stock is traded in the U.S. 
A) are issued by the AICPA. 
B) override a country's regulations governing the audit of a company. 
C) has many of the same standards as the Auditing Standards Board (AS
B) . 
D) must be followed by companies whose stock is traded in the U.S.

Question 16

The AICPA principles underlying an audit are organized around four principles.Which of the following is not one of those principles?

Accepted Answer

A) fairness 
B) responsibilities 
C) reporting 
D) performance 
A) fairness 
B) responsibilities 
C) reporting 
D) performance

Question 17

With respect to the SEC,

Accepted Answer

A) the attitude of the SEC is generally considered in any major change proposed by the FASB. 
B) the SEC is the sole agency responsible for setting generally accepted accounting principles. 
C) the SEC requirements of greatest interest to CPAs are set forth in the their enforcement regulations. 
D) the SEC has the power to establish rules for all CPAs. 
A) the attitude of the SEC is generally considered in any major change proposed by the FASB. 
B) the SEC is the sole agency responsible for setting generally accepted accounting principles. 
C) the SEC requirements of greatest interest to CPAs are set forth in the their enforcement regulations. 
D) the SEC has the power to establish rules for all CPAs.

Question 18

In a CPA firm,the audit partner coordinates the performance of audit procedures.

Accepted Answer

A) True 
 B)False

Question 19

Discuss the purpose of the Securities and Exchange Commission and its influence on setting generally accepted accounting principles.

Accepted Answer

The SEC,an agency of the federal governm

Question 20

The AU-C number identifies the order in which it was issued in relation to all other codified auditing standards.

Accepted Answer

A) True 
 B)False

Exam 2: The Cpa Profession

Which of the following is a correct statement regarding the SEC?

Which one of the following is not True regarding the American Institute of Certified Public Accountants peer review requirement?

International Standards on Auditing are issued by the International Auditing and Assurance Standards Board (IAASB).

Many small,local accounting firms perform audits as their primary service to their clients.

Professional skepticism must be maintained only if the auditor suspects fraud.

Which of the following is not one of the responsibilities of an auditor under the principles underlying an audit?

Membership in the AICPA is restricted to CPAs who are currently practicing as independent auditors.

In order to properly plan and perform an audit,an important fact for both the auditor and the client to understand is that

The purpose of establishing quality control policies and procedures to accept or continue a client relationship is to

Statements on Auditing Standards (SASs)are issued by the Public Company Accounting Oversight Board.

To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,the auditor fulfills several performance responsibilities,including

List the four principles underlying an audit.

The Statements on Auditing Standards issued by the Auditing Standards Board

Who is responsible for establishing auditing standards for privately held companies?

The International Standards on Auditing (ISA)

The AICPA principles underlying an audit are organized around four principles.Which of the following is not one of those principles?

With respect to the SEC,

In a CPA firm,the audit partner coordinates the performance of audit procedures.

Discuss the purpose of the Securities and Exchange Commission and its influence on setting generally accepted accounting principles.

The AU-C number identifies the order in which it was issued in relation to all other codified auditing standards.

The Demand for Audit and Other Assurance Services

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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