Question 1

The audit objective of posting and summarization is associated with the management assertion of accuracy.

Accepted Answer

A) True 
 B)False

Question 2

The term audit objective refers to all of the following except for:

Accepted Answer

A) transaction-related audit objectives. 
B) presentation and disclosure-related audit objectives. 
C) balance-related audit objectives. 
D) cycle-related audit objectives. 
A) transaction-related audit objectives. 
B) presentation and disclosure-related audit objectives. 
C) balance-related audit objectives. 
D) cycle-related audit objectives.

Question 3

The posting and summarization audit objective is the auditor's counterpart to management's assertion of:

Accepted Answer

A) occurrence. 
B) completeness. 
C) accuracy. 
D) classification. 
A) occurrence. 
B) completeness. 
C) accuracy. 
D) classification.

Question 4

List the four phases of a Financial Statement Audit

Accepted Answer

1.Plan and design an audit approach base

Question 5

The auditor's best defense when material misstatements are not uncovered is to have conducted the audit:

Accepted Answer

A) in accordance with generally accepted auditing standards. 
B) as effectively as reasonably possible. 
C) in a timely manner. 
D) only after an adequate investigation of the management team. 
A) in accordance with generally accepted auditing standards. 
B) as effectively as reasonably possible. 
C) in a timely manner. 
D) only after an adequate investigation of the management team.

Question 6

Which of the following is the auditor least likely to do when aware of an illegal act?

Accepted Answer

A) Discuss the matter with the client's legal counsel. 
B) Obtain evidence about the potential effect of the illegal act on the financial statements. 
C) Contact the local law enforcement officials regarding potential criminal wrongdoing. 
D) Consider the impact of the illegal act on the relationship with the company's management. 
A) Discuss the matter with the client's legal counsel. 
B) Obtain evidence about the potential effect of the illegal act on the financial statements. 
C) Contact the local law enforcement officials regarding potential criminal wrongdoing. 
D) Consider the impact of the illegal act on the relationship with the company's management.

Question 7

The auditors determine which disclosures must be presented in the financial statements.

Accepted Answer

A) True 
 B)False

Question 8

The annual reports of many public companies include a statement about management's responsibilities and relationship with the CPA firm.

Accepted Answer

A) True 
 B)False

Question 9

An audit generally provides no assurance that illegal acts that do not have a direct effect on the financial statements will be detected.

Accepted Answer

A) True 
 B)False

Question 10

When comparing the auditor's responsibility for detecting employee fraud and for detecting errors, the profession has placed the responsibility:

Accepted Answer

A) more on discovering errors than employee fraud. 
B) more on discovering employee fraud than errors. 
C) equally on discovering errors and employee fraud. 
D) on the senior auditor for detecting errors and on the manager for detecting employee fraud. 
A) more on discovering errors than employee fraud. 
B) more on discovering employee fraud than errors. 
C) equally on discovering errors and employee fraud. 
D) on the senior auditor for detecting errors and on the manager for detecting employee fraud.

Question 11

Errors are usually more difficult for an auditor to detect than frauds.

Accepted Answer

A) True 
 B)False

Question 12

The classification balance-related audit objective:

Accepted Answer

A) involves determining if items included on a client's listing are included in the correct general leger accounts. 
B) is the counterpart to the management assertion of completeness. 
C) involves determining if items included on a client's listing are disclosed properly in the financial statements. 
D) involves tying in the account balances to the general ledger. 
A) involves determining if items included on a client's listing are included in the correct general leger accounts. 
B) is the counterpart to the management assertion of completeness. 
C) involves determining if items included on a client's listing are disclosed properly in the financial statements. 
D) involves tying in the account balances to the general ledger.

Question 13

Which of the following statements best describes the auditor's responsibility with respect to illegal acts that do not have a material effect on the client's financial statements?

Accepted Answer

A) Generally, the auditor is under no obligation to notify parties other than personnel within the client's organization. 
B) Generally, the auditor is under an obligation to inform the PCAOB. 
C) Generally, the auditor is obligated to disclose the relevant facts in the auditor's report. 
D) Generally, the auditor is expected to compel the client to adhere to requirements of the Foreign Corrupt Practices Act. 
A) Generally, the auditor is under no obligation to notify parties other than personnel within the client's organization. 
B) Generally, the auditor is under an obligation to inform the PCAOB. 
C) Generally, the auditor is obligated to disclose the relevant facts in the auditor's report. 
D) Generally, the auditor is expected to compel the client to adhere to requirements of the Foreign Corrupt Practices Act.

Question 14

For a private company audit, tests of controls are normally performed only on those internal controls the auditor believes have not been operating effectively during the period under audit.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true about the completeness and occurrence assertions?

Accepted Answer

A) Both assertions are relevant to classes of transactions and events and account balances. 
B) If management asserts that recorded sales transactions represent exchanges of goods or services that actually took place, they are asserting to completeness. 
C) Violations of the occurrence assertion relate to account overstatements. 
D) The failure to record a sale that did occur is a violation of the occurrence assertion. 
A) Both assertions are relevant to classes of transactions and events and account balances. 
B) If management asserts that recorded sales transactions represent exchanges of goods or services that actually took place, they are asserting to completeness. 
C) Violations of the occurrence assertion relate to account overstatements. 
D) The failure to record a sale that did occur is a violation of the occurrence assertion.

Question 16

Auditing standards make ________ distinction(s)between the auditor's responsibilities for searching for errors and fraud.

Accepted Answer

A) little 
B) a significant 
C) no 
D) various 
A) little 
B) a significant 
C) no 
D) various

Question 17

In certifying their annual financial statements, the CEO and CFO of a public company certify that the financial statements comply with the requirements of:

Accepted Answer

A) GAAP. 
B) the Sarbanes-Oxley Act. 
C) the Securities Exchange Act of 1934. 
D) GAAS. 
A) GAAP. 
B) the Sarbanes-Oxley Act. 
C) the Securities Exchange Act of 1934. 
D) GAAS.

Question 18

Which of the following is not one of the reasons that auditors provide only reasonable assurance on the financial statements?

Accepted Answer

A) The auditor commonly examines a sample, rather than the entire population of transactions. 
B) Accounting presentations contain complex estimates which involve uncertainty. 
C) Fraudulently prepared financial statements are often difficult to detect. 
D) Auditors believe that reasonable assurance is sufficient in the vast majority of cases. 
A) The auditor commonly examines a sample, rather than the entire population of transactions. 
B) Accounting presentations contain complex estimates which involve uncertainty. 
C) Fraudulently prepared financial statements are often difficult to detect. 
D) Auditors believe that reasonable assurance is sufficient in the vast majority of cases.

Question 19

Tests of details of balances are specific audit procedures that are intended to:

Accepted Answer

A) test for monetary misstatements in the financial statements. 
B) prove that the accounts with material balances are classified correctly. 
C) prove that the trial balance is in balance. 
D) identify the details of the internal control system. 
A) test for monetary misstatements in the financial statements. 
B) prove that the accounts with material balances are classified correctly. 
C) prove that the trial balance is in balance. 
D) identify the details of the internal control system.

Question 20

An important balance related audit objective is realizable value.Describe the purpose of this audit objective, what it is concerned with, and give an example.

Accepted Answer

Purpose-to make sure that assets are inc

Exam 6: Audit Responsibilities and Objectives

The audit objective of posting and summarization is associated with the management assertion of accuracy.

The term audit objective refers to all of the following except for:

The posting and summarization audit objective is the auditor's counterpart to management's assertion of:

List the four phases of a Financial Statement Audit

The auditor's best defense when material misstatements are not uncovered is to have conducted the audit:

Which of the following is the auditor least likely to do when aware of an illegal act?

The auditors determine which disclosures must be presented in the financial statements.

The annual reports of many public companies include a statement about management's responsibilities and relationship with the CPA firm.

An audit generally provides no assurance that illegal acts that do not have a direct effect on the financial statements will be detected.

When comparing the auditor's responsibility for detecting employee fraud and for detecting errors, the profession has placed the responsibility:

Errors are usually more difficult for an auditor to detect than frauds.

The classification balance-related audit objective:

Which of the following statements best describes the auditor's responsibility with respect to illegal acts that do not have a material effect on the client's financial statements?

For a private company audit, tests of controls are normally performed only on those internal controls the auditor believes have not been operating effectively during the period under audit.

Which of the following statements is true about the completeness and occurrence assertions?

Auditing standards make ________ distinction(s)between the auditor's responsibilities for searching for errors and fraud.

In certifying their annual financial statements, the CEO and CFO of a public company certify that the financial statements comply with the requirements of:

Which of the following is not one of the reasons that auditors provide only reasonable assurance on the financial statements?

Tests of details of balances are specific audit procedures that are intended to:

An important balance related audit objective is realizable value.Describe the purpose of this audit objective, what it is concerned with, and give an example.

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

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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