Question 1

The largest public accounting firms typically are structured as:

Accepted Answer

A) subchapter S corporations. 
B) professional corporations. 
C) limited liability partnerships. 
D) limited liability corporations. 
A) subchapter S corporations. 
B) professional corporations. 
C) limited liability partnerships. 
D) limited liability corporations.

Question 2

The Reporting section of the "Principles Underlying an Audit" is concerned with:

Accepted Answer

A) proper planning and supervision, appropriate materiality levels, and sufficient appropriate audit evidence. 
B) the auditor expressing 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 requirements, appropriate competence and maintaining professional skepticism. 
A) proper planning and supervision, appropriate materiality levels, and sufficient appropriate audit evidence. 
B) the auditor expressing 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 requirements, appropriate competence and maintaining professional skepticism.

Question 3

Which of the following is NOT explicitly a part of the IIA's definition of internal auditing?

Accepted Answer

A) Internal auditing is an objective assurance activity. 
B) Internal auditing is a consulting activity. 
C) Internal auditing should help an organization accomplish its objectives. 
D) Internal auditors should help external auditors complete the annual financial statement audit. 
A) Internal auditing is an objective assurance activity. 
B) Internal auditing is a consulting activity. 
C) Internal auditing should help an organization accomplish its objectives. 
D) Internal auditors should help external auditors complete the annual financial statement audit.

Question 4

Jane Goodperson performed an audit on the Quagmire Corporation and issued an unqualified opinion. Jane performed the audit with due professional care and in accordance with generally accepted auditing standards. Two months after the report is issued, Jane discovers on the news that the CEO of Quagmire, Johnny Best, had been stealing small amounts of inventory. The amount, however, is immaterial compared to the overall inventory of the corporation. Jane soon receives a call from Quagmire's CFO, Mark Beastly. Mark wants Jane to refund her audit fees. Mark thinks Jane did not properly perform the audit, as she did not discover this fraud. Further, he feels that now Quagmire's financial statements are not fairly stated because of Jane. How should Jane respond to this claim?

Accepted Answer

Jane should tell Mark that her responsib

Question 5

Mike has just graduated from State University with a bachelor's degree in accounting. He would like to pursue a career in auditing. What options does Mike have? Describe three auditing career options, including a description of the organization Mike would work for.

Accepted Answer

External: Mike could become an external

Question 6

The Performance section of Principles Underlying an Audit Conducted in Accordance with GAAS states that for auditors to obtain reasonable assurance, they need to do all of the following except:

Accepted Answer

A) make sure all audit team members have adequate training. 
B) obtain sufficient appropriate audit evidence. 
C) identify and assess risks of material misstatement. 
D) determine and apply appropriate materiality levels. 
A) make sure all audit team members have adequate training. 
B) obtain sufficient appropriate audit evidence. 
C) identify and assess risks of material misstatement. 
D) determine and apply appropriate materiality levels.

Question 7

The Audit Committee consists of:

Accepted Answer

A) members of management. 
B) a subcommittee of the AICPA who establish the SAS. 
C) members of the Board of Directors. 
D) appointed government overseers. 
A) members of management. 
B) a subcommittee of the AICPA who establish the SAS. 
C) members of the Board of Directors. 
D) appointed government overseers.

Question 8

Which is NOT an attribute of an external auditor?

Accepted Answer

A) Independence. 
B) Auditee advocacy. 
C) Objectivity. 
D) Concern for the public interest. 
A) Independence. 
B) Auditee advocacy. 
C) Objectivity. 
D) Concern for the public interest.

Question 9

One of the five basic business processes is the warehousing cycle.

Accepted Answer

A) True 
 B)False

Question 10

PCAOB auditing standards must be followed on all audits of public companies' financial statements.

Accepted Answer

A) True 
 B)False

Question 11

The primary responsibility for the adequacy of disclosures in the financial statements of a publicly held company rests with the:

Accepted Answer

A) partner assigned to the audit engagement. 
B) management of the company. 
C) auditor in charge of the fieldwork. 
D) securities and exchange commission. 
A) partner assigned to the audit engagement. 
B) management of the company. 
C) auditor in charge of the fieldwork. 
D) securities and exchange commission.

Question 12

With respect to an entity's financial statements, describe both the responsibility of management and that of the auditor.

Accepted Answer

The financial statements are the respons

Question 13

Define corporate governance, the board of directors, and the audit committee and explain how they relate to each other.

Accepted Answer

Corporate governance is all the people,

Question 14

What organization is responsible for setting auditing standards for audits of publicly-traded companies in the U.S.?

Accepted Answer

A) AICPA. 
B) FASB. 
C) GASB. 
D) PCAOB. 
A) AICPA. 
B) FASB. 
C) GASB. 
D) PCAOB.

Question 15

External auditors are referred to as "external" because:

Accepted Answer

A) they report to users outside of the audited entity. 
B) they are paid by parties outside of the audited entity. 
C) they are not employees of the entity being audited. 
D) their offices are not at the entity's place of business. 
A) they report to users outside of the audited entity. 
B) they are paid by parties outside of the audited entity. 
C) they are not employees of the entity being audited. 
D) their offices are not at the entity's place of business.

Question 16

The Reporting section of the Principles Underlying an Audit Conducted in Accordance with GAAS requires that the report, "states whether the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework." This passage requires:

Accepted Answer

A) a statement of fact by the auditor. 
B) an opinion by the auditor. 
C) an implied measure of fairness. 
D) an objective measure of compliance. 
A) a statement of fact by the auditor. 
B) an opinion by the auditor. 
C) an implied measure of fairness. 
D) an objective measure of compliance.

Question 17

The primary audit context with which an auditor is concerned is the auditee's industry or business.

Accepted Answer

A) True 
 B)False

Question 18

What are the four things required of an auditor to obtain reasonable assurance that are outlined in the Performance section of the Principles Underlying an Audit Conducted in Accordance with GAAS?

Accepted Answer

- Plans the work and properly supervises

Question 19

The Performance section of the "Principles Underlying an Audit" 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 20

An internal auditor is likely to be more concerned with ________ than the external auditor.

Accepted Answer

A) internal administrative procedures 
B) cost accounting procedures 
C) the efficiency of operations 
D) internal control 
A) internal administrative procedures 
B) cost accounting procedures 
C) the efficiency of operations 
D) internal control

The largest public accounting firms typically are structured as:

The Reporting section of the "Principles Underlying an Audit" is concerned with:

Which of the following is NOT explicitly a part of the IIA's definition of internal auditing?

Mike has just graduated from State University with a bachelor's degree in accounting. He would like to pursue a career in auditing. What options does Mike have? Describe three auditing career options, including a description of the organization Mike would work for.

The Performance section of Principles Underlying an Audit Conducted in Accordance with GAAS states that for auditors to obtain reasonable assurance, they need to do all of the following except:

The Audit Committee consists of:

Which is NOT an attribute of an external auditor?

One of the five basic business processes is the warehousing cycle.

PCAOB auditing standards must be followed on all audits of public companies' financial statements.

The primary responsibility for the adequacy of disclosures in the financial statements of a publicly held company rests with the:

With respect to an entity's financial statements, describe both the responsibility of management and that of the auditor.

Define corporate governance, the board of directors, and the audit committee and explain how they relate to each other.

What organization is responsible for setting auditing standards for audits of publicly-traded companies in the U.S.?

External auditors are referred to as "external" because:

The Reporting section of the Principles Underlying an Audit Conducted in Accordance with GAAS requires that the report, "states whether the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework." This passage requires:

The primary audit context with which an auditor is concerned is the auditee's industry or business.

What are the four things required of an auditor to obtain reasonable assurance that are outlined in the Performance section of the Principles Underlying an Audit Conducted in Accordance with GAAS?

The Performance section of the "Principles Underlying an Audit" is concerned with:

An internal auditor is likely to be more concerned with ________ than the external auditor.

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

The largest public accounting firms typically are structured as:

The Reporting section of the "Principles Underlying an Audit" is concerned with:

Which of the following is NOT explicitly a part of the IIA's definition of internal auditing?

Mike has just graduated from State University with a bachelor's degree in accounting. He would like to pursue a career in auditing. What options does Mike have? Describe three auditing career options, including a description of the organization Mike would work for.

The Performance section of Principles Underlying an Audit Conducted in Accordance with GAAS states that for auditors to obtain reasonable assurance, they need to do all of the following except:

The Audit Committee consists of:

Which is NOT an attribute of an external auditor?

One of the five basic business processes is the warehousing cycle.

PCAOB auditing standards must be followed on all audits of public companies' financial statements.

The primary responsibility for the adequacy of disclosures in the financial statements of a publicly held company rests with the:

With respect to an entity's financial statements, describe both the responsibility of management and that of the auditor.

Define corporate governance, the board of directors, and the audit committee and explain how they relate to each other.

What organization is responsible for setting auditing standards for audits of publicly-traded companies in the U.S.?

External auditors are referred to as "external" because:

The Reporting section of the Principles Underlying an Audit Conducted in Accordance with GAAS requires that the report, "states whether the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework." This passage requires:

The primary audit context with which an auditor is concerned is the auditee's industry or business.

What are the four things required of an auditor to obtain reasonable assurance that are outlined in the Performance section of the Principles Underlying an Audit Conducted in Accordance with GAAS?

The Performance section of the "Principles Underlying an Audit" is concerned with:

An internal auditor is likely to be more concerned with ________ than the external auditor.

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