Question 1

Which of the following best describes the role of corporate governance?

Accepted Answer

A) Management decides which accounting principles are the most appropriate. 
B) Shareholders vote to decide who should be members of the board of directors. 
C) Holding the management team accountable to shareholders and other constituents for the utilization of the entity's resources. 
D) Management often is compensated based on the company's profitability. 
A) Management decides which accounting principles are the most appropriate. 
B) Shareholders vote to decide who should be members of the board of directors. 
C) Holding the management team accountable to shareholders and other constituents for the utilization of the entity's resources. 
D) Management often is compensated based on the company's profitability. C

Question 2

What auditing standards are used to conduct an audit for a privately-held corporation? What auditing standards are used to conduct an audit for a publicly-traded corporation? What organization is responsible for setting each of these sets of standards?

Accepted Answer

Auditing standards developed by the AICPA's Auditing Standards Board (ASB)are used to conduct an audit for a privately-held corporation or other entities that are nonpublic companies. This includes the principles underlying an audit conducted in accordance with generally accepted auditing standards and the ASB's Statements on Auditing Standards (SAS).
Auditing standards developed by the Public Company Accounting Oversight Board (PCAOB)must be used to conduct an audit for a publicly-traded corporation. These standards include all those issued by the ASB through 2003, which were codified by the PCAOB, and any new standards issued by the PCAOB after that point.

Question 3

What is the general character of the work conducted in performing a forensic audit for a company?

Accepted Answer

A) Providing assurance that the financial statements are not materially misstated. 
B) Detecting or deterring fraudulent activity. 
C) Offering an opinion on the reliability of the specific assertions made by management. 
D) Identifying the causes of an entity's financial difficulties. 
A) Providing assurance that the financial statements are not materially misstated. 
B) Detecting or deterring fraudulent activity. 
C) Offering an opinion on the reliability of the specific assertions made by management. 
D) Identifying the causes of an entity's financial difficulties. B

Question 4

A CPA is most likely to refer to one or more of the items listed in the Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS in determining:

Accepted Answer

A) the nature of the CPA's report qualification. 
B) the scope of the CPA's auditing procedures. 
C) requirements for the review of the entity and its environment. 
D) whether the CPA should undertake an audit engagement. 
A) the nature of the CPA's report qualification. 
B) the scope of the CPA's auditing procedures. 
C) requirements for the review of the entity and its environment. 
D) whether the CPA should undertake an audit engagement.

Question 5

The Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS is concerned with:

Accepted Answer

A) proper planning and supervision, appropriate materiality levels, and sufficient appropriate audit evidence. 
B) an audit opinion in accordance with the auditor's findings, whether the financials are presented fairly, and whether the financial are in accordance with the applicable financial reporting framework. 
C) whether the auditor has unrestricted access to those within the entity from whom the auditor needs to obtain audit evidence. 
D) complying with ethical requirement, appropriate competence and maintaining professional skepticism. 
A) proper planning and supervision, appropriate materiality levels, and sufficient appropriate audit evidence. 
B) an audit opinion in accordance with the auditor's findings, whether the financials are presented fairly, and whether the financial are in accordance with the applicable financial reporting framework. 
C) whether the auditor has unrestricted access to those within the entity from whom the auditor needs to obtain audit evidence. 
D) complying with ethical requirement, appropriate competence and maintaining professional skepticism.

Question 6

There are several types of audit services that are provided by auditors. Identify and define three of these types of audits.

Accepted Answer

Financial Statement Audit: Auditors test

Question 7

The Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS states that auditors are responsible for having appropriate competence and:

Accepted Answer

A) independence with respect to the financial statements and supplementary disclosures. 
B) exercising professional care as judged by peer reviewers. 
C) capabilities to perform the audit. 
D) objectivity as an auditor as verified by proper supervision. 
A) independence with respect to the financial statements and supplementary disclosures. 
B) exercising professional care as judged by peer reviewers. 
C) capabilities to perform the audit. 
D) objectivity as an auditor as verified by proper supervision.

Question 8

A financial statement audit must be conducted based on GAAP.

Accepted Answer

A) True 
 B)False

Question 9

The auditor must be independent of the auditee unless:

Accepted Answer

A) the lack of independence does not influence his or her professional judgment. 
B) both parties agree that the independence issue is not a problem. 
C) the lack of independence is insignificant. 
D) none of the above-the auditor cannot lack independence. 
A) the lack of independence does not influence his or her professional judgment. 
B) both parties agree that the independence issue is not a problem. 
C) the lack of independence is insignificant. 
D) none of the above-the auditor cannot lack independence.

Question 10

Generally, the financial statements of U.S. companies must be prepared based on GAAP.

Accepted Answer

A) True 
 B)False

Question 11

The principles underlying an audit conducted in accordance with generally accepted auditing standards are grouped into four categories. The second category is that of "personal responsibility of the auditor." Generally explain what is intended by this principle.

Accepted Answer

Auditors are responsible for having appr

Question 12

Typically, an external auditor first gets supervisory experience at what level of authority?

Accepted Answer

A) Associate. 
B) Senior. 
C) Manager. 
D) Partner. 
A) Associate. 
B) Senior. 
C) Manager. 
D) Partner.

Question 13

An "in-charge" auditor typically holds the rank of:

Accepted Answer

A) associate. 
B) senior. 
C) manager. 
D) partner. 
A) associate. 
B) senior. 
C) manager. 
D) partner.

Question 14

The Reporting section of Principles Underlying an Audit Conducted in Accordance with GAAS requires the auditor's report to contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. The objective of this requirement is to prevent:

Accepted Answer

A) an auditor from reporting on one basic financial statement and not the others. 
B) an auditor from expressing different opinions on each of the basic financial statements. 
C) management from reducing its final responsibility for the basic financial statements. 
D) misinterpretations regarding the degree of responsibility the auditor is assuming. 
A) an auditor from reporting on one basic financial statement and not the others. 
B) an auditor from expressing different opinions on each of the basic financial statements. 
C) management from reducing its final responsibility for the basic financial statements. 
D) misinterpretations regarding the degree of responsibility the auditor is assuming.

Question 15

Forensic audits include all of the following except:

Accepted Answer

A) criminal investigations. 
B) manufacturers' assertions about product quality. 
C) employee fraud. 
D) management fraud. 
A) criminal investigations. 
B) manufacturers' assertions about product quality. 
C) employee fraud. 
D) management fraud.

Question 16

PCAOB auditing standards must be followed on all financial statement audits performed in the U.S.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following best describes the general character of the three principles that are listed in the Performance section of the Principles Underlying an Audit Conducted in Accordance with GAAS?

Accepted Answer

A) The purpose and value of a financial statement audit and lays out the responsibilities of management for an effective audit to be possible. 
B) The fundamental responsibilities and characteristics of an auditor. 
C) Auditors' responsibilities in performing an effective audit. 
D) Auditors provide a written report that expresses their opinion about the financial statements. 
A) The purpose and value of a financial statement audit and lays out the responsibilities of management for an effective audit to be possible. 
B) The fundamental responsibilities and characteristics of an auditor. 
C) Auditors' responsibilities in performing an effective audit. 
D) Auditors provide a written report that expresses their opinion about the financial statements.

Question 18

Describe the organizations involved in standard setting for auditors in the United States and what their respective roles are in setting current auditing standards for companies in the United States.

Accepted Answer

Most auditing standards were developed b

Question 19

Which of the following is NOT a requirement of the Sarbanes-Oxley Act?

Accepted Answer

A) Audit firms cannot provide most types of nonaudit services to their public company auditees. 
B) Audit firms are required to rotate audit partners off audit engagements every five years for public company audits. 
C) Firms that audit public companies are subject to inspection by the PCAOB. 
D) A certain number of hours, which is based on the size of the company being audited, must be spent on each audit engagement. 
A) Audit firms cannot provide most types of nonaudit services to their public company auditees. 
B) Audit firms are required to rotate audit partners off audit engagements every five years for public company audits. 
C) Firms that audit public companies are subject to inspection by the PCAOB. 
D) A certain number of hours, which is based on the size of the company being audited, must be spent on each audit engagement.

Question 20

You are the owner of a small grocery store, Corner Marketplace. Explain the five process categories and how they apply to your business.

Accepted Answer

Financing: The financing process involve

Which of the following best describes the role of corporate governance?

What auditing standards are used to conduct an audit for a privately-held corporation? What auditing standards are used to conduct an audit for a publicly-traded corporation? What organization is responsible for setting each of these sets of standards?

What is the general character of the work conducted in performing a forensic audit for a company?

A CPA is most likely to refer to one or more of the items listed in the Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS in determining:

The Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS is concerned with:

There are several types of audit services that are provided by auditors. Identify and define three of these types of audits.

The Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS states that auditors are responsible for having appropriate competence and:

A financial statement audit must be conducted based on GAAP.

The auditor must be independent of the auditee unless:

Generally, the financial statements of U.S. companies must be prepared based on GAAP.

The principles underlying an audit conducted in accordance with generally accepted auditing standards are grouped into four categories. The second category is that of "personal responsibility of the auditor." Generally explain what is intended by this principle.

Typically, an external auditor first gets supervisory experience at what level of authority?

An "in-charge" auditor typically holds the rank of:

Forensic audits include all of the following except:

PCAOB auditing standards must be followed on all financial statement audits performed in the U.S.

Which of the following best describes the general character of the three principles that are listed in the Performance section of the Principles Underlying an Audit Conducted in Accordance with GAAS?

Describe the organizations involved in standard setting for auditors in the United States and what their respective roles are in setting current auditing standards for companies in the United States.

Which of the following is NOT a requirement of the Sarbanes-Oxley Act?

You are the owner of a small grocery store, Corner Marketplace. Explain the five process categories and how they apply to your business.

An Introduction to Assurance and Financial Statement Auditing

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters

Exam 2: The Financial Statement Auditing Environment

Which of the following best describes the role of corporate governance?

What auditing standards are used to conduct an audit for a privately-held corporation? What auditing standards are used to conduct an audit for a publicly-traded corporation? What organization is responsible for setting each of these sets of standards?

What is the general character of the work conducted in performing a forensic audit for a company?

A CPA is most likely to refer to one or more of the items listed in the Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS in determining:

The Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS is concerned with:

There are several types of audit services that are provided by auditors. Identify and define three of these types of audits.

The Responsibilities section of the Principles Underlying an Audit Conducted in Accordance with GAAS states that auditors are responsible for having appropriate competence and:

A financial statement audit must be conducted based on GAAP.

The auditor must be independent of the auditee unless:

Generally, the financial statements of U.S. companies must be prepared based on GAAP.

The principles underlying an audit conducted in accordance with generally accepted auditing standards are grouped into four categories. The second category is that of "personal responsibility of the auditor." Generally explain what is intended by this principle.

Typically, an external auditor first gets supervisory experience at what level of authority?

An "in-charge" auditor typically holds the rank of:

Forensic audits include all of the following except:

PCAOB auditing standards must be followed on all financial statement audits performed in the U.S.

Which of the following best describes the general character of the three principles that are listed in the Performance section of the Principles Underlying an Audit Conducted in Accordance with GAAS?

Describe the organizations involved in standard setting for auditors in the United States and what their respective roles are in setting current auditing standards for companies in the United States.

Which of the following is NOT a requirement of the Sarbanes-Oxley Act?

You are the owner of a small grocery store, Corner Marketplace. Explain the five process categories and how they apply to your business.

An Introduction to Assurance and Financial Statement Auditing

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters