Question 1

Within the context of quality control, the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide its personnel with

Accepted Answer

A)  technical training that assures proficiency as a valuation expert. 
B)  professional education that is required in order to perform with due professional care. 
C)  knowledge required to fulfill assigned responsibilities. 
D)  knowledge required to perform a peer review. 
A)  technical training that assures proficiency as a valuation expert. 
B)  professional education that is required in order to perform with due professional care. 
C)  knowledge required to fulfill assigned responsibilities. 
D)  knowledge required to perform a peer review.

Question 2

Statements on Standards for Accounting and Review Services (SSARS) 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 3

In situations in which the CPA or the CPA's assistants are not qualified to perform the audit work, which of the following is not an option the CPA or the CPA firm has?

Accepted Answer

A)  The CPA and the CPA's assistants have a professional obligation to acquire the required knowledge and skills. 
B)  The CPA and the CPA's assistants should simply rely more upon the client's representations when performing the audit. 
C)  The CPA should suggest someone else or another CPA firm which is qualified to perform the work. 
D)  The CPA should decline the audit engagement. 
A)  The CPA and the CPA's assistants have a professional obligation to acquire the required knowledge and skills. 
B)  The CPA and the CPA's assistants should simply rely more upon the client's representations when performing the audit. 
C)  The CPA should suggest someone else or another CPA firm which is qualified to perform the work. 
D)  The CPA should decline the audit engagement.

Question 4

The AICPA principles and the auditing standards should be viewed 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 5

Members of the Public Company Accounting Oversight Board are appointed and overseen by the

Accepted Answer

A)  U.S. Congress. 
B)  American Institute of Certified Public Accountants. 
C)  Auditing Standards Board. 
D)  Securities and Exchange Commission. 
A)  U.S. Congress. 
B)  American Institute of Certified Public Accountants. 
C)  Auditing Standards Board. 
D)  Securities and Exchange Commission.

Question 6

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

Accepted Answer

• Leadership responsibilities for qualit

Question 7

What are the major functions of the AICPA?

Accepted Answer

Major functions of the AICPA include:
•

Question 8

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 understand 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 understand the client's business and industry.

Question 9

Assume the Public Company Accounting Oversight Board (PCAOB) identifies a violation during its inspection of a registered accounting firm. The PCAOB

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Quality control for a CPA firm

Accepted Answer

A)  includes the organizational structure of the firm and the procedures it establishes. 
B)  is tailored to each specific audit engagement. 
C)  is a guarantee that auditing standards are followed. 
D)  is required only for firms auditing SEC companies. 
A)  includes the organizational structure of the firm and the procedures it establishes. 
B)  is tailored to each specific audit engagement. 
C)  is a guarantee that auditing standards are followed. 
D)  is required only for firms auditing SEC companies.

Question 12

The International Standards on Auditing (ISA)

Accepted Answer

A)  are issued by the AICPA. 
B)  override a country's regulations governing the audit of a company. 
C)  has many of the same standards as the Auditing Standards Board (AS
B) . 
D)  must be followed by companies whose stock is traded in the U.S. 
A)  are issued by the AICPA. 
B)  override a country's regulations governing the audit of a company. 
C)  has many of the same standards as the Auditing Standards Board (AS
B) . 
D)  must be followed by companies whose stock is traded in the U.S.

Question 13

Listed below are policies or procedures that the Crystal Cove audit firm has in place. For each identified policy or procedure state if it is an auditing standard or a quality control standard.

Accepted Answer

1. b
2. b

Question 14

Principles related to the auditor's responsibilities in the audit stress three important personal qualities that the auditor should possess. List and discuss these three qualities.

Accepted Answer

1. Appropriate competence and capabiliti

Question 15

Many small, local accounting firms perform audits as their primary service to their clients.

Accepted Answer

A) True 
 B)False

Question 16

Sarbanes-Oxley and the Securities and 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 nor II 
A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II

Question 17

The difference between the Securities Act of 1933 and the Securities Act of 1934 is that only the 1934 Act requires audited financial statements.

Accepted Answer

A) True 
 B)False

Question 18

In addition to attestation and assurance services, CPA firms provide other services to their clients. List three of these services.

Accepted Answer

Other services performed by a

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

International Standards on Auditing (ISAs) override a country's regulations governing the audit of financial or other information.

Accepted Answer

A) True 
 B)False

Exam 2: The CPA Profession

Within the context of quality control, the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide its personnel with

Statements on Standards for Accounting and Review Services (SSARS) are issued by the

In situations in which the CPA or the CPA's assistants are not qualified to perform the audit work, which of the following is not an option the CPA or the CPA firm has?

The AICPA principles and the auditing standards should be viewed by practitioners as

Members of the Public Company Accounting Oversight Board are appointed and overseen by the

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

What are the major functions of the AICPA?

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

Assume the Public Company Accounting Oversight Board (PCAOB) identifies a violation during its inspection of a registered accounting firm. The PCAOB

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

Quality control for a CPA firm

The International Standards on Auditing (ISA)

Listed below are policies or procedures that the Crystal Cove audit firm has in place. For each identified policy or procedure state if it is an auditing standard or a quality control standard.

Principles related to the auditor's responsibilities in the audit stress three important personal qualities that the auditor should possess. List and discuss these three qualities.

Many small, local accounting firms perform audits as their primary service to their clients.

The difference between the Securities Act of 1933 and the Securities Act of 1934 is that only the 1934 Act requires audited financial statements.

In addition to attestation and assurance services, CPA firms provide other services to their clients. List three of these services.

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

International Standards on Auditing (ISAs) override a country's regulations governing the audit of financial or other information.

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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