Question 1

Which staff level in a CPA firm performs most of the detailed audit work?

Accepted Answer

A) partner 
B) staff assistant 
C) senior auditor 
D) senior manager 
A) partner 
B) staff assistant 
C) senior auditor 
D) senior manager

Question 2

The difference between the Securities Act of 1933 and the Securities Act of 1934 is that only the 1934 act requires audited financial statements.

Accepted Answer

A) True 
 B)False

Question 3

Listed below are policies or procedures that the Crystal Cove audit firm has in place.For each identified policy or procedure state if it is an auditing standard or a quality control standard.

Accepted Answer

1.b
2.b
3.

Question 4

Performance is one of the principles underlying an audit.List three performance responsibilities.

Accepted Answer

Performance responsibilities include:
•o

Question 5

List and describe the six elements of quality control.Who establishes the standards for quality control?

Accepted Answer

•Leadership responsibilities for quality

Question 6

In addition to attestation and assurance services,CPA firms provide other services to their clients.List three of these services.

Accepted Answer

Other services performed by a

Question 7

Quality controls are established for the entire CPA firm whereas auditing standards are applicable to the individual engagement.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is True with regards to the various auditing standards?

Accepted Answer

A) Statements on Auditing Standards (SASs)are issued by the PCAOB. 
B) The ASB Clarity Project was intended to make the U.S.auditing standards easier to read,understand,and apply. 
C) The ASB redrafted existing AICPA auditing standards to align them with respective ISAs. 
D) Both B and C are correct. 
A) Statements on Auditing Standards (SASs)are issued by the PCAOB. 
B) The ASB Clarity Project was intended to make the U.S.auditing standards easier to read,understand,and apply. 
C) The ASB redrafted existing AICPA auditing standards to align them with respective ISAs. 
D) Both B and C are correct.

Question 9

When assessing the risk of material misstatements in the financial statements,

Accepted Answer

A) inadequate internal control procedures will mitigate client business risk. 
B) GAAS specifies in detail how much and what types of evidence the auditor needs to obtain. 
C) company management is responsible for determining materiality levels. 
D) the auditor must have an understanding of the client's business and industry. 
A) inadequate internal control procedures will mitigate client business risk. 
B) GAAS specifies in detail how much and what types of evidence the auditor needs to obtain. 
C) company management is responsible for determining materiality levels. 
D) the auditor must have an understanding of the client's business and industry.

Question 10

Which of the following is not an essential component of quality control?

Accepted Answer

A) policies and procedures to ensure that firm personnel are actively engaged in marketing strategies 
B) policies and procedures to ensure that the work performed by firm personnel meet applicable professional standards 
C) policies to ensure that personnel maintain their independence in fact and in appearance 
D) policies that ensure that monitoring activities are effectively applied 
A) policies and procedures to ensure that firm personnel are actively engaged in marketing strategies 
B) policies and procedures to ensure that the work performed by firm personnel meet applicable professional standards 
C) policies to ensure that personnel maintain their independence in fact and in appearance 
D) policies that ensure that monitoring activities are effectively applied

Question 11

Principles related to the auditor's responsibilities in the audit stress three important personal qualities that the auditor should possess.List and discuss these three qualities.

Accepted Answer

1.Appropriate competence and capabilitie

Question 12

Historically,auditing standards have been organized into three categories,including

Accepted Answer

A) standards of field work. 
B) purpose of an audit. 
C) responsibilities of the auditor. 
D) proper planning and supervision. 
A) standards of field work. 
B) purpose of an audit. 
C) responsibilities of the auditor. 
D) proper planning and supervision.

Question 13

Which of the following is a True statement regarding auditing standards?

Accepted Answer

A) Prior to the passage of Sarbanes-Oxley,the FASB established auditing principles for U.S.public companies. 
B) PCAOB auditing standards are applicable to entities outside the U.S. 
C) There are no similarities between PCAOB standards and International Standards on Auditing. 
D) The Auditing Standards Board has revised most of its standards to converge with the international standards. 
A) Prior to the passage of Sarbanes-Oxley,the FASB established auditing principles for U.S.public companies. 
B) PCAOB auditing standards are applicable to entities outside the U.S. 
C) There are no similarities between PCAOB standards and International Standards on Auditing. 
D) The Auditing Standards Board has revised most of its standards to converge with the international standards.

Question 14

The AICPA principles and the auditing standards should be viewed by practitioners as

Accepted Answer

A) ideals to work towards,but which are not achievable. 
B) maximum standards that denote excellent work. 
C) minimum standards of performance that must be achieved on each audit engagement. 
D) benchmarks to be used on all audits,reviews,and compilations. 
A) ideals to work towards,but which are not achievable. 
B) maximum standards that denote excellent work. 
C) minimum standards of performance that must be achieved on each audit engagement. 
D) benchmarks to be used on all audits,reviews,and compilations.

Question 15

Quality control for a CPA firm

Accepted Answer

A) includes the organizational structure of the firm and the procedures it establishes. 
B) is tailored to each specific audit engagement. 
C) is a guarantee that auditing standards are followed. 
D) is required only for firms auditing SEC companies. 
A) includes the organizational structure of the firm and the procedures it establishes. 
B) is tailored to each specific audit engagement. 
C) is a guarantee that auditing standards are followed. 
D) is required only for firms auditing SEC companies.

Question 16

Which of the following are audit standards used in professional practice by audit firms?

Accepted Answer

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

Question 17

The Sarbanes-Oxley Act established the Public Company Accounting Oversight Board (PCAOB).What are the PCAOB's primary functions?

Accepted Answer

The PCAOB provides oversight for auditor

Question 18

________ is one of the Big Four international CPA firms.

Accepted Answer

A) Deloitte 
B) KPMG 
C) Ernst & Young 
D) All of the above are classified as Big Four international CPA firms. 
A) Deloitte 
B) KPMG 
C) Ernst & Young 
D) All of the above are classified as Big Four international CPA firms.

Question 19

Limited liability companies are structured and taxed like a general partnership,but their owners have limited personal liability similar to that of a general corporation.

Accepted Answer

A) True 
 B)False

Question 20

Sarbanes-Oxley and the Securities and Exchange Commission restrict auditors from providing many consulting services to their publicly traded audit clients.Which of the following is True for auditors of publicly traded companies?
I. They are restricted from providing consulting services to privately held companies.
II. There is no restriction on providing consulting services to non-audit clients.

Accepted Answer

A) I only 
B) II only 
C) I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) I and II 
D) Neither I nor II

Exam 2: The Cpa Profession

Which staff level in a CPA firm performs most of the detailed audit work?

The difference between the Securities Act of 1933 and the Securities Act of 1934 is that only the 1934 act requires audited financial statements.

Listed below are policies or procedures that the Crystal Cove audit firm has in place.For each identified policy or procedure state if it is an auditing standard or a quality control standard.

Performance is one of the principles underlying an audit.List three performance responsibilities.

List and describe the six elements of quality control.Who establishes the standards for quality control?

In addition to attestation and assurance services,CPA firms provide other services to their clients.List three of these services.

Quality controls are established for the entire CPA firm whereas auditing standards are applicable to the individual engagement.

Which of the following is True with regards to the various auditing standards?

When assessing the risk of material misstatements in the financial statements,

Which of the following is not an essential component of quality control?

Principles related to the auditor's responsibilities in the audit stress three important personal qualities that the auditor should possess.List and discuss these three qualities.

Historically,auditing standards have been organized into three categories,including

Which of the following is a True statement regarding auditing standards?

The AICPA principles and the auditing standards should be viewed by practitioners as

Quality control for a CPA firm

Which of the following are audit standards used in professional practice by audit firms?

The Sarbanes-Oxley Act established the Public Company Accounting Oversight Board (PCAOB).What are the PCAOB's primary functions?

________ is one of the Big Four international CPA firms.

Limited liability companies are structured and taxed like a general partnership,but their owners have limited personal liability similar to that of a general corporation.

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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