Question 1

The GAO reports to the Public Company Accounting Oversight Board, which reports to the Securities and Exchange Commission.

Accepted Answer

A) True 
 B)False

Question 2

Compliance is a secondary objective of audits performed by the GAO of the financial information prepared by the various Federal government agencies before that information is submitted to Congress.

Accepted Answer

A) True 
 B)False

Question 3

It is increasingly important for companies to ask their third-party service provider of services, including payroll and other types of transaction processing, for attestation reports covering a review of the effectiveness of internal controls in place at the third-party service provider.

Accepted Answer

A) True 
 B)False

Question 4

Accountants are not directly responsible for developing a system that ensures the entity's economic events are properly recorded on a timely basis and at a reasonable cost.

Accepted Answer

A) True 
 B)False

Question 5

CPA firms are often called and thought of by outsiders as external auditors, independent auditors, or internal auditors.

Accepted Answer

A) True 
 B)False

Question 6

Evaluating internal controls at third-party service providers, such as cloud computing suppliers, is not an attestation type of service which a CPA is allowed to perform today.

Accepted Answer

A) True 
 B)False

Question 7

To perform an audit, there must be information in a verifiable form and some criteria by which the auditor can evaluate the information.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an accurate statement regarding assurance services?

Accepted Answer

A)  Assurance services must be performed by a CPA. 
B)  An attestation service is not a type of assurance service. 
C)  Assurance services improve the quality of information for decision makers. 
D)  Assurance services can only be performed on financial data. 
A)  Assurance services must be performed by a CPA. 
B)  An attestation service is not a type of assurance service. 
C)  Assurance services improve the quality of information for decision makers. 
D)  Assurance services can only be performed on financial data.

Question 9

In the auditing process,

Accepted Answer

A)  the types and amounts of evidence remain constant from audit to audit. 
B)  the criteria for evaluating information will not vary depending on the information being audited. 
C)  the audit report communicates the auditor's findings to users. 
D)  records are gathered by the auditor to determine whether the audited information is stated in accordance with SEC standards. 
A)  the types and amounts of evidence remain constant from audit to audit. 
B)  the criteria for evaluating information will not vary depending on the information being audited. 
C)  the audit report communicates the auditor's findings to users. 
D)  records are gathered by the auditor to determine whether the audited information is stated in accordance with SEC standards.

Question 10

Auditors strive to maintain a high level of independence to keep the confidence of users relying on their reports.

Accepted Answer

A) True 
 B)False

Question 11

Audits and some types of attestation services are no longer limited by regulation to licensed CPAs.

Accepted Answer

A) True 
 B)False

Question 12

The possibility that a business may not be able to repay a bank loan because of an economic downturn is referred to as

Accepted Answer

A)  materiality risk. 
B)  information risk. 
C)  interest rate risk. 
D)  business risk. 
A)  materiality risk. 
B)  information risk. 
C)  interest rate risk. 
D)  business risk.

Question 13

Which of the following is not a cause of information risk?

Accepted Answer

A)  Society, today, is not as complex as it used to be. 
B)  Remoteness of information. 
C)  The volume and the complexity of data and exchange transactions. 
D)  The biases and the motives of the information provider. 
A)  Society, today, is not as complex as it used to be. 
B)  Remoteness of information. 
C)  The volume and the complexity of data and exchange transactions. 
D)  The biases and the motives of the information provider.

Question 14

Which of the following is an accurate statement regarding the various types of other assurance services?

Accepted Answer

A)  Assurance services must be about the reliability of another party's assertion about compliance with specified criteria. 
B)  Other assurance services must meet the definition of an attestation service. 
C)  The primary purpose of a management consulting engagement is to improve the quality of information. 
D)  The market for other forms of assurance services is open to non-CPA competitors. 
A)  Assurance services must be about the reliability of another party's assertion about compliance with specified criteria. 
B)  Other assurance services must meet the definition of an attestation service. 
C)  The primary purpose of a management consulting engagement is to improve the quality of information. 
D)  The market for other forms of assurance services is open to non-CPA competitors.

Question 15

Match between columns
                        Premises: Determine if a public school is properly applying their reimbursement for the payment-in-kind program.
List A - Type of Audit:
Determine the effectiveness of a Department of Defense project.
List A - Type of Audit:
Evaluate a company's payroll processing for economy of scale.
List A - Type of Audit:
Determine if the tax return of a multinational corporation is in accordance with the tax code.
List A - Type of Audit:
Determine if Medicare reimbursements are in accordance with the Healthcare Financing Administration (HCFA).
List A - Type of Audit:
Evaluate financial statements that are to be submitted to a bank.
List A - Type of Audit:
Evaluate the promptness of materials inspection in a manufacturer's receiving department.
List A - Type of Audit:
Evaluate/determine if bank covenants are being met.
List A - Type of Audit:

Accepted Answer

The Answer of Financial Statement and Operational
List B - Type is...

Question 16

Which of the following is not an example of a compliance audit?

Accepted Answer

A)  The accounting personnel at the Chinese subsidiary following the financial statement preparation procedures prescribed in writing by the corporate controller. 
B)  Is the company paying the minimum wage rates required by state laws? 
C)  Determine if a company is meeting the financial covenants of a loan agreement with its lenders. 
D)  Is the computerized processing of payroll at the Indian subsidiary operating effectively and efficiently? 
A)  The accounting personnel at the Chinese subsidiary following the financial statement preparation procedures prescribed in writing by the corporate controller. 
B)  Is the company paying the minimum wage rates required by state laws? 
C)  Determine if a company is meeting the financial covenants of a loan agreement with its lenders. 
D)  Is the computerized processing of payroll at the Indian subsidiary operating effectively and efficiently?

Question 17

What is an audit of internal control over financial reporting?

Accepted Answer

For an audit of internal control over fi

Question 18

Auditing can have a significant effect on both information risk and business risk.

Accepted Answer

A) True 
 B)False

Question 19

Auditors are not allowed and should not audit subjective information like the effectiveness of computer controls or the efficiency of manufacturing-related operations.

Accepted Answer

A) True 
 B)False

Question 20

An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n)

Accepted Answer

A)  audit of financial statements. 
B)  compliance audit. 
C)  operational audit. 
D)  production audit. 
A)  audit of financial statements. 
B)  compliance audit. 
C)  operational audit. 
D)  production audit.

Exam 1: The Demand for Audit and Other Assurance Services

The GAO reports to the Public Company Accounting Oversight Board, which reports to the Securities and Exchange Commission.

Compliance is a secondary objective of audits performed by the GAO of the financial information prepared by the various Federal government agencies before that information is submitted to Congress.

It is increasingly important for companies to ask their third-party service provider of services, including payroll and other types of transaction processing, for attestation reports covering a review of the effectiveness of internal controls in place at the third-party service provider.

Accountants are not directly responsible for developing a system that ensures the entity's economic events are properly recorded on a timely basis and at a reasonable cost.

CPA firms are often called and thought of by outsiders as external auditors, independent auditors, or internal auditors.

Evaluating internal controls at third-party service providers, such as cloud computing suppliers, is not an attestation type of service which a CPA is allowed to perform today.

To perform an audit, there must be information in a verifiable form and some criteria by which the auditor can evaluate the information.

Which of the following is an accurate statement regarding assurance services?

In the auditing process,

Auditors strive to maintain a high level of independence to keep the confidence of users relying on their reports.

Audits and some types of attestation services are no longer limited by regulation to licensed CPAs.

The possibility that a business may not be able to repay a bank loan because of an economic downturn is referred to as

Which of the following is not a cause of information risk?

Which of the following is an accurate statement regarding the various types of other assurance services?

Which of the following is not an example of a compliance audit?

What is an audit of internal control over financial reporting?

Auditing can have a significant effect on both information risk and business risk.

Auditors are not allowed and should not audit subjective information like the effectiveness of computer controls or the efficiency of manufacturing-related operations.

An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n)

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Materiality

Assessing the Risk of Material Misstatement

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, 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

Filters