Exam 2: The CPA Profession

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

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(Multiple Choice)

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Question 1

Correct Answer:

Verified

The PCAOB website includes a reference tool that identifies the analogous AICPA and IAASB auditing standards for each PCAOB standard.

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(True/False)

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Question 2

Correct Answer:

Verified

True

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

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(Essay)

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Question 3

Correct Answer:

Verified

The SEC, an agency of the federal government, assists in providing investors with reliable information upon which to make investment decisions. The SEC has considerable influence in setting generally accepted accounting principles (GAAP) and disclosure requirements for financial statements as a result of its authority for specifying reporting requirements considered necessary for fair disclosure to investors. The SEC has the power to establish rules for any CPA associated with audited financial statements submitted to the commission. The attitude of the SEC is generally considered in any major change proposed by the Financial Accounting Standards Board (FASB), the independent organization that establishes U.S. GAAP.

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

(Essay)

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Question 4

Match the definition with its associated term. Each term can be used once, more than once or not at all.

practice monitoring by a CPA firm for another CPA firm

auditing standards

a report that is filed when a company wishes to issue new securities

due professional care

requires annual inspections of accounting firms auditing more than 100 public companies

state regulation

Correct Answer:

Verified

practice monitoring by a CPA firm for another CPA firm

a report that is filed when a company wishes to issue new securities

requires annual inspections of accounting firms auditing more than 100 public companies

assists in providing investors with reliable information

an organizational structure where professional services are provided by one or more shareholders

oversees accounting firms who audit public companies

a report filed to indicate a significant event

requires a registration statement

fulfilling duties diligently and carefully

the grantor of the right to practice public accounting

setsprofessional standards and rules for members

an organizational structure where the owners art taxed like a partnership and have limited personal liability

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

(Matching)

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Question 5

The Auditing Standards Board (ASB) of the AICPA is responsible for issuing pronouncements on auditing matters in the U.S. for the audits of every type of entity.

(True/False)

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Question 6

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.

(True/False)

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Question 7

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

(True/False)

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Question 8

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

(Multiple Choice)

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Question 9

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

(Multiple Choice)

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Question 10

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

(True/False)

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Question 11

________ is an attitude that includes a questioning mind, being alert to conditions that might indicate possible misstatements due to fraud or error, and a critical assessment of audit evidence.

(Multiple Choice)

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Question 12

In which type of service does the CPA assemble the financial statements but provide no assurance to third parties?

(Multiple Choice)

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Question 13

The Public Company Accounting Oversight Board (PCAOB) provides oversight to auditors of publicly traded and private companies.

(True/False)

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Question 14

Which of the following is a correct statement regarding the SEC?

(Multiple Choice)

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Question 15

In order to be eligible for membership in the AICPA, public accounting firms must be enrolled in an AICPA-approved practice monitoring program. Members of the firm can still be eligible for AICPA membership even if their firms are not enrolled in an AICPA-approved practice monitoring program.

(True/False)

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Question 16

The form that must be completed and filed with the Securities and Exchange Commission whenever a company experiences a significant event that is of interest to public investors is the

(Multiple Choice)

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Question 17

The ASB has revised its audit standards to converge with international standards.

(True/False)

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Question 18

A CPA must meet continuing education requirements to maintain their license to practice.

(True/False)

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Question 19

________ is one of the Big Four international CPA firms.

(Multiple Choice)

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Question 20

Showing 1 - 20 of 101

Exam 2: The CPA Profession

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

The PCAOB website includes a reference tool that identifies the analogous AICPA and IAASB auditing standards for each PCAOB standard.

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

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

The Auditing Standards Board (ASB) of the AICPA is responsible for issuing pronouncements on auditing matters in the U.S. for the audits of every type of entity.

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.

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

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

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

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

________ is an attitude that includes a questioning mind, being alert to conditions that might indicate possible misstatements due to fraud or error, and a critical assessment of audit evidence.

In which type of service does the CPA assemble the financial statements but provide no assurance to third parties?

The Public Company Accounting Oversight Board (PCAOB) provides oversight to auditors of publicly traded and private companies.

Which of the following is a correct statement regarding the SEC?

In order to be eligible for membership in the AICPA, public accounting firms must be enrolled in an AICPA-approved practice monitoring program. Members of the firm can still be eligible for AICPA membership even if their firms are not enrolled in an AICPA-approved practice monitoring program.

The form that must be completed and filed with the Securities and Exchange Commission whenever a company experiences a significant event that is of interest to public investors is the

The ASB has revised its audit standards to converge with international standards.

A CPA must meet continuing education requirements to maintain their license to practice.

________ is one of the Big Four international CPA firms.

The Demand for Audit and Other Assurance Services

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

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