Question 1

Requires a registration statement.

Accepted Answer

A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards 
A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

For privately held companies who is responsible for establishing auditing standards?

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 5

Practice monitoring by a CPA firm for another CPA firm.

Accepted Answer

A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards 
A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards

Question 6

Generally Accepted Auditing Standards (GAAS)and Statements on Auditing Standards (SAS)should be looked upon 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 7

Which of the following statements best describes the primary purpose of Statements on Auditing Standards?

Accepted Answer

A) They are guides intended to set forth auditing procedures that are applicable to a variety of situations. 
B) They are procedural outlines that are intended to narrow the areas of inconsistency and divergence of auditor opinion. 
C) They are authoritative statements, enforced through the Code of Professional Conduct, and are intended to limit the degree of auditor judgment. 
D) They are interpretations that are intended to clarify the meaning of "generally accepted auditing standards." 
A) They are guides intended to set forth auditing procedures that are applicable to a variety of situations. 
B) They are procedural outlines that are intended to narrow the areas of inconsistency and divergence of auditor opinion. 
C) They are authoritative statements, enforced through the Code of Professional Conduct, and are intended to limit the degree of auditor judgment. 
D) They are interpretations that are intended to clarify the meaning of "generally accepted auditing standards."

Question 8

The PCAOB considers International Standards on Auditing (ISAs)when developing its standards.

Accepted Answer

A) True 
 B)False

Question 9

Assists in providing investors with reliable information.

Accepted Answer

A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards 
A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards

Question 10

List the four principles underlying an audit.

Accepted Answer

•Purpose of an audit

Question 11

The grantor of the right to practice public accounting.

Accepted Answer

A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards 
A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards

Question 12

A report filed to indicate a significant event.

Accepted Answer

A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards 
A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards

Question 13

Which of the following is not true for audit firms who audit publicly traded companies?

Accepted Answer

A) They must undergo a PCAOB inspection on an annual basis if they audit more than 100 issuers. 
B) They must have an AICPA peer review on all audit clients. 
C) They must have an AICPA peer review on all non-publicly traded clients. 
D) The audit firm can choose which CPA firm they wish to conduct their AICPA peer review. 
A) They must undergo a PCAOB inspection on an annual basis if they audit more than 100 issuers. 
B) They must have an AICPA peer review on all audit clients. 
C) They must have an AICPA peer review on all non-publicly traded clients. 
D) The audit firm can choose which CPA firm they wish to conduct their AICPA peer review.

Question 14

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

Accepted Answer

A) verifying that all audit work is performed by a CPA with a minimum of three years experience. 
B) obtaining sufficient, appropriate audit evidence. 
C) exercising professional judgment. 
D) providing an opinion on the financial statements. 
A) verifying that all audit work is performed by a CPA with a minimum of three years experience. 
B) obtaining sufficient, appropriate audit evidence. 
C) exercising professional judgment. 
D) providing an opinion on the financial statements.

Question 15

Fulfilling duties diligently and carefully.

Accepted Answer

A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards 
A) AICPA 
B) PCAOB 
C) Securities Exchange Commission 
D) Form 10-k 
E) IAASB
F)Form S-1
G)Due professional care
H)Limited Liability Partnership
I)Professional Corporation
J)Limited Liability Company
K)Peer review
L)1933 Securities Act
M)1934 Securities Act
N) Form 8-k
O) State Regulation
P) Code of Professional Conduct
Q) Quality Control Standards
R) GAAS Standards

Question 16

The four categories for describing the size of audit firms include: the Big Four international firms; national firms; regional and local firms; and small firms.Which of the following is not a characteristic of a small firm?

Accepted Answer

A) Most have fewer than 25 professionals. 
B) They perform audits on small and not-for-profit businesses. 
C) Tax services are more important to their practice than auditing. 
D) They do not audit publicly traded companies. 
A) Most have fewer than 25 professionals. 
B) They perform audits on small and not-for-profit businesses. 
C) Tax services are more important to their practice than auditing. 
D) They do not audit publicly traded companies.

Question 17

The organization that is responsible for providing oversight for auditors of public companies is called the ________.

Accepted Answer

A) Auditing Standards Board 
B) American Institute of Certified Public Accountants 
C) Public Oversight Board 
D) Public Company Accounting Oversight Board 
A) Auditing Standards Board 
B) American Institute of Certified Public Accountants 
C) Public Oversight Board 
D) Public Company Accounting Oversight Board

Question 18

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 19

Membership in the AICPA is mandatory for all licensed practicing CPAs.

Accepted Answer

A) True 
 B)False

Question 20

Sarbanes-Oxley and the Securities Exchange Commission restrict auditors from providing many consulting services to their publicly traded audit clients.

Accepted Answer

A) True 
 B)False

Exam 2: The Cpa Profession

Requires a registration statement.

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

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

For privately held companies who is responsible for establishing auditing standards?

Practice monitoring by a CPA firm for another CPA firm.

Generally Accepted Auditing Standards (GAAS)and Statements on Auditing Standards (SAS)should be looked upon by practitioners as:

Which of the following statements best describes the primary purpose of Statements on Auditing Standards?

The PCAOB considers International Standards on Auditing (ISAs)when developing its standards.

Assists in providing investors with reliable information.

List the four principles underlying an audit.

The grantor of the right to practice public accounting.

A report filed to indicate a significant event.

Which of the following is not true for audit firms who audit publicly traded companies?

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

Fulfilling duties diligently and carefully.

The four categories for describing the size of audit firms include: the Big Four international firms; national firms; regional and local firms; and small firms.Which of the following is not a characteristic of a small firm?

The organization that is responsible for providing oversight for auditors of public companies is called the ________.

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

Membership in the AICPA is mandatory for all licensed practicing CPAs.

Sarbanes-Oxley and the Securities Exchange Commission restrict auditors from providing many consulting services to their publicly traded audit clients.

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

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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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