Question 1

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 2

Many small, local accounting firms do not perform audits as their primary services to their clients include accounting and tax.

Accepted Answer

A) True 
 B)False

Question 3

If an auditor of a public company cannot find guidance issued by the PCAOB on a particular audit matter, the auditor should generally seek guidance from which of the following sources?

Accepted Answer

A) Statements on Auditing Standards 
B) Statements on Standards for Accounting and Review Services 
C) Regulations issued by the Securities and Exchange Commission 
D) The AICPA Code of Professional Conduct 
A) Statements on Auditing Standards 
B) Statements on Standards for Accounting and Review Services 
C) Regulations issued by the Securities and Exchange Commission 
D) The AICPA Code of Professional Conduct

Question 4

The methods used by a CPA firm to ensure that the firm meets is professional responsibilities to clients and others is:

Accepted Answer

A) continuing professional education. 
B) compliance with generally accepted reporting standards. 
C) quality control. 
D) peer review. 
A) continuing professional education. 
B) compliance with generally accepted reporting standards. 
C) quality control. 
D) peer review.

Question 5

Sarbanes-Oxley and the Securities 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 or II 
A) I only 
B) II only 
C) I and II 
D) Neither I or II

Question 6

Statements on Standards for Accounting and Review Services are issued by the:

Accepted Answer

A) Accounting and Review Services Committee. 
B) Professional Ethics Executive Committee. 
C) Securities and Exchange Commission. 
D) Financial Accounting Standards Board. 
A) Accounting and Review Services Committee. 
B) Professional Ethics Executive Committee. 
C) Securities and Exchange Commission. 
D) Financial Accounting Standards Board.

Question 7

Form 10-K must be filed with the SEC whenever a public company experiences a significant event.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

All of the Big Four accounting firms and many of the smaller CPA firms now operate as Limited Liability Partnerships.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

•Leadership responsibilities for quality

Question 12

The AICPA has authority to establish standards and rules in all but which of the following areas?

Accepted Answer

A) Auditing standards applicable to financial statements of private companies 
B) Compilation and review standards 
C) Professional conduct 
D) Auditing standards applicable to financial statements of private and public companies 
A) Auditing standards applicable to financial statements of private companies 
B) Compilation and review standards 
C) Professional conduct 
D) Auditing standards applicable to financial statements of private and public companies

Question 13

The methods used to ensure the firm meets its professional responsibilities to clients and others.

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 14

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 govern

Question 15

The Statements on Auditing Standards issued by the Auditing Standards Board:

Accepted Answer

A) are regarded as authoritative literature. 
B) are the equivalent of laws for audit practitioners. 
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) are the equivalent of laws for audit practitioners. 
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 16

The Public Company Accounting Oversight Board:

Accepted Answer

A) performs inspections of the quality controls of audit firms that audit public companies. 
B) establishes auditing standards that must be followed by CPAs on all audits. 
C) oversees auditors of private companies. 
D) performs any of the above functions. 
A) performs inspections of the quality controls of audit firms that audit public companies. 
B) establishes auditing standards that must be followed by CPAs on all audits. 
C) oversees auditors of private companies. 
D) performs any of the above functions.

Question 17

Sets professional standards and rules for auditors.

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 18

Which of the following statements about Generally Accepted Audit Standards are true?
I.They serve as broad guidelines to auditors for conducting an audit engagement.
II.They are sufficiently specific to provide any meaningful guide to practitioners.
III.They represent a framework upon which the AICPA can provide interpretations..

Accepted Answer

A) I and II 
B) I and III 
C) II and III 
D) I, II and III 
A) I and II 
B) I and III 
C) II and III 
D) I, II and III

Question 19

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

Accepted Answer

A) True 
 B)False

Exam 2: The Cpa Profession

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

Many small, local accounting firms do not perform audits as their primary services to their clients include accounting and tax.

If an auditor of a public company cannot find guidance issued by the PCAOB on a particular audit matter, the auditor should generally seek guidance from which of the following sources?

The methods used by a CPA firm to ensure that the firm meets is professional responsibilities to clients and others is:

Statements on Standards for Accounting and Review Services are issued by the:

Form 10-K must be filed with the SEC whenever a public company experiences a significant event.

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

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.

All of the Big Four accounting firms and many of the smaller CPA firms now operate as Limited Liability Partnerships.

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

The AICPA has authority to establish standards and rules in all but which of the following areas?

The methods used to ensure the firm meets its professional responsibilities to clients and others.

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

The Statements on Auditing Standards issued by the Auditing Standards Board:

The Public Company Accounting Oversight Board:

Sets professional standards and rules for auditors.

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

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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