Question 1

Which of the following is an accurate statement regarding principles and auditing standards?

Accepted Answer

A)  The principles underlying an audit give specific guidance to an auditor when a problem arises in an audit. 
B)  The principles underlying an audit state that the only objective of an audit is to provide financial statement users with an opinion. 
C)  All auditing standards issued by the PCAOB are given two classification numbers. 
D)  The Statement on Auditing Standard (SAS) number identifies the order in which it was issued in relation to other SASs. 
A)  The principles underlying an audit give specific guidance to an auditor when a problem arises in an audit. 
B)  The principles underlying an audit state that the only objective of an audit is to provide financial statement users with an opinion. 
C)  All auditing standards issued by the PCAOB are given two classification numbers. 
D)  The Statement on Auditing Standard (SAS) number identifies the order in which it was issued in relation to other SASs.

Question 2

Which of the following is not a characteristic of a small local CPA firm?

Accepted Answer

A)  Most small firms have fewer than 25 professionals. 
B)  Small firms perform audits on small and not-for-profit businesses. 
C)  Tax services are more important than auditing services to the small firm. 
D)  Small firms are prohibited by the SEC from auditing publicly traded companies. 
A)  Most small firms have fewer than 25 professionals. 
B)  Small firms perform audits on small and not-for-profit businesses. 
C)  Tax services are more important than auditing services to the small firm. 
D)  Small firms are prohibited by the SEC from auditing publicly traded companies.

Question 3

Which of the following is not a purpose of the Center for Audit Quality which is affiliated with the AICPA?

Accepted Answer

A)  to serve the capital markets 
B)  to serve public company auditors 
C)  to serve investors 
D)  to serve the International Accounting Standards Board (IAS
B)  
A)  to serve the capital markets 
B)  to serve public company auditors 
C)  to serve investors 
D)  to serve the International Accounting Standards Board (IAS
B)

Question 4

The organization that is responsible for providing oversight for auditors of public companies is called the

Accepted Answer

A)  Auditing Standards Board. 
B)  American Institute of Certified Public Accountants. 
C)  Public Oversight Board. 
D)  Public Company Accounting Oversight Board. 
A)  Auditing Standards Board. 
B)  American Institute of Certified Public Accountants. 
C)  Public Oversight Board. 
D)  Public Company Accounting Oversight Board.

Question 5

List and describe the six organizational structures available to CPA firms.

Accepted Answer

CPA firms can take one of six organizati

Question 6

Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit

Accepted Answer

A)  both private and public companies. 
B)  public companies only. 
C)  private companies, public companies, and nonprofit entities. 
D)  private companies only. 
A)  both private and public companies. 
B)  public companies only. 
C)  private companies, public companies, and nonprofit entities. 
D)  private companies only.

Question 7

The method used by a CPA firm to ensure that the firm meets its 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 8

Which of the following is not one of the responsibilities of an auditor under the principles underlying an audit of financial statements?

Accepted Answer

A)  possess appropriate competence and capabilities 
B)  comply with relevant ethical requirements 
C)  plan work and supervise assistants 
D)  maintain professional skepticism and exercise professional judgment 
A)  possess appropriate competence and capabilities 
B)  comply with relevant ethical requirements 
C)  plan work and supervise assistants 
D)  maintain professional skepticism and exercise professional judgment

Question 9

In 2017, the American Institute of CPAs joined with which of the following to form the Association of International Certified Public Accountants?

Accepted Answer

A)  the Chartered Institute of Management Accountants 
B)  the Securities and Exchange Commission 
C)  the Public Accounting Oversight Board 
D)  the Japanese Institute of Certified Public Accountants 
A)  the Chartered Institute of Management Accountants 
B)  the Securities and Exchange Commission 
C)  the Public Accounting Oversight Board 
D)  the Japanese Institute of Certified Public Accountants

Question 10

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 a 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 11

________ are referred to as U.S. generally accepted auditing standards (GAAS).

Accepted Answer

A)  AICPA auditing standards 
B)  SEC auditing standards 
C)  PCAOB auditing standards 
D)  Sarbanes-Oxley standards 
A)  AICPA auditing standards 
B)  SEC auditing standards 
C)  PCAOB auditing standards 
D)  Sarbanes-Oxley standards

Question 12

The PCAOB requires annual inspections of accounting firms that audit more than ten public companies.

Accepted Answer

A) True 
 B)False

Question 13

The American Institute of Certified Public Accountants (AICPA)

Accepted Answer

A)  is responsible for issuing licenses to new CPAs. 
B)  restricts its membership to CPAs who are independent auditors. 
C)  sets auditing standards for both public and private companies. 
D)  sets rules of conduct that CPAs are required to meet. 
A)  is responsible for issuing licenses to new CPAs. 
B)  restricts its membership to CPAs who are independent auditors. 
C)  sets auditing standards for both public and private companies. 
D)  sets rules of conduct that CPAs are required to meet.

Question 14

Form 10-Q must be filed monthly with the Securities and Exchange Commission by every publicly held company.

Accepted Answer

A) True 
 B)False

Question 15

The PCAOB considers International Standards on Auditing (ISA) when developing its standards.

Accepted Answer

A) True 
 B)False

Question 16

________ is not one of the National/Regional CPA Firms.

Accepted Answer

A)  PwC 
B)  BDO USA 
C)  Grant Thornton 
D)  RSM US. 
A)  PwC 
B)  BDO USA 
C)  Grant Thornton 
D)  RSM US.

Question 17

The Public Company Accounting Oversight Board

Accepted Answer

A)  performs inspections of the quality controls of 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 all of the above functions. 
A)  performs inspections of the quality controls of 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 all of the above functions.

Question 18

Small local CPA Firms are allowed under Sarbanes-Oxley and the Securities and Exchange Commission a special exemption to perform audits of publicly-listed firms.

Accepted Answer

A) True 
 B)False

Question 19

The Statements on Auditing Standards issued by the Auditing Standards Board

Accepted Answer

A)  are regarded as authoritative literature. 
B)  mandate the amount of evidence that must be obtained. 
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)  mandate the amount of evidence that must be obtained. 
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 20

The PCAOB requires annual inspections of other registered accounting firms that audit less than 100 publicly listed companies at least once every 3 years.

Accepted Answer

A) True 
 B)False

Exam 2: The CPA Profession

Which of the following is an accurate statement regarding principles and auditing standards?

Which of the following is not a characteristic of a small local CPA firm?

Which of the following is not a purpose of the Center for Audit Quality which is affiliated with the AICPA?

The organization that is responsible for providing oversight for auditors of public companies is called the

List and describe the six organizational structures available to CPA firms.

Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit

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

Which of the following is not one of the responsibilities of an auditor under the principles underlying an audit of financial statements?

In 2017, the American Institute of CPAs joined with which of the following to form the Association of International Certified Public Accountants?

________ are referred to as U.S. generally accepted auditing standards (GAAS).

The PCAOB requires annual inspections of accounting firms that audit more than ten public companies.

The American Institute of Certified Public Accountants (AICPA)

Form 10-Q must be filed monthly with the Securities and Exchange Commission by every publicly held company.

The PCAOB considers International Standards on Auditing (ISA) when developing its standards.

________ is not one of the National/Regional CPA Firms.

The Public Company Accounting Oversight Board

Small local CPA Firms are allowed under Sarbanes-Oxley and the Securities and Exchange Commission a special exemption to perform audits of publicly-listed firms.

The Statements on Auditing Standards issued by the Auditing Standards Board

The PCAOB requires annual inspections of other registered accounting firms that audit less than 100 publicly listed companies at least once every 3 years.

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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