Question 1

Which of the following situations would result in the issuance of a disclaimer of opinion?

Accepted Answer

A)  The audit reveals weaknesses in the client's internal control over financial reporting. 
B)  The auditor is discovered to own a financial interest in the entity. 
C)  The audit is performed, with limited exception, in accordance with generally accepted auditing standards. 
D)  The entity's financial statements are not presented in conformity with the applicable financial reporting framework. 
A)  The audit reveals weaknesses in the client's internal control over financial reporting. 
B)  The auditor is discovered to own a financial interest in the entity. 
C)  The audit is performed, with limited exception, in accordance with generally accepted auditing standards. 
D)  The entity's financial statements are not presented in conformity with the applicable financial reporting framework. B

Question 2

In a system of quality control,leadership responsibilities for quality within the firm are best characterized by

Accepted Answer

A)  basing personnel performance evaluations on the employees' ability to generate revenues from existing clients or by acquiring new clients. 
B)  management's evaluation of the integrity and business reputation of the client. 
C)  management's clear and consistent demonstration of its own commitment to quality control and high-quality work. 
D)  assigning management responsibilities in such a manner that commercial considerations are the firm's top priority. 
A)  basing personnel performance evaluations on the employees' ability to generate revenues from existing clients or by acquiring new clients. 
B)  management's evaluation of the integrity and business reputation of the client. 
C)  management's clear and consistent demonstration of its own commitment to quality control and high-quality work. 
D)  assigning management responsibilities in such a manner that commercial considerations are the firm's top priority. C

Question 3

All of the following are examples of procedures a firm can use to monitor its system of quality control except

Accepted Answer

A)  discussions with firm personnel. 
B)  conducting reviews of engagement documentation. 
C)  devoting sufficient resources to developing a system of quality control. 
D)  assessing compliance with independence policies and procedures. 
A)  discussions with firm personnel. 
B)  conducting reviews of engagement documentation. 
C)  devoting sufficient resources to developing a system of quality control. 
D)  assessing compliance with independence policies and procedures. C

Question 4

The auditors' responsibility to express an opinion on the financial statements is

Accepted Answer

A)  implicitly represented in the auditors' standard report. 
B)  explicitly represented in the introductory paragraph of the auditors' standard report. 
C)  explicitly represented in the scope paragraph of the auditors' standard report. 
D)  explicitly represented in the opinion paragraph of the auditors' standard report. 
A)  implicitly represented in the auditors' standard report. 
B)  explicitly represented in the introductory paragraph of the auditors' standard report. 
C)  explicitly represented in the scope paragraph of the auditors' standard report. 
D)  explicitly represented in the opinion paragraph of the auditors' standard report.

Question 5

Pronouncements issued by the Public Company Accounting Oversight Board are subject to formal approval by the

Accepted Answer

A)  American Institute of Certified Public Accountants. 
B)  Auditing Standards Board. 
C)  International Auditing and Assurance Standards Board. 
D)  Securities and Exchange Commission. 
A)  American Institute of Certified Public Accountants. 
B)  Auditing Standards Board. 
C)  International Auditing and Assurance Standards Board. 
D)  Securities and Exchange Commission.

Question 6

Which of the following paragraphs references the conduct of the audit in accordance with PCAOB standards?

Accepted Answer

A)  Introductory paragraph 
B)  Scope paragraph 
C)  Opinion paragraph 
D)  Internal control paragraph 
A)  Introductory paragraph 
B)  Scope paragraph 
C)  Opinion paragraph 
D)  Internal control paragraph

Question 7

Which of the following is true with respect to the PCAOB inspection process?

Accepted Answer

A)  All firms performing audits of public entities are inspected every year. 
B)  PCAOB inspections are conducted by partners of other CPA firms. 
C)  PCAOB inspection teams review a sample of audit engagements conducted by the firm as well as the firm's system of quality control. 
D)  Deficiencies from sample audit engagements reviewed by the inspection team and deficiencies in the firm's system of quality control are publicly disclosed on the PCAOB's website. 
A)  All firms performing audits of public entities are inspected every year. 
B)  PCAOB inspections are conducted by partners of other CPA firms. 
C)  PCAOB inspection teams review a sample of audit engagements conducted by the firm as well as the firm's system of quality control. 
D)  Deficiencies from sample audit engagements reviewed by the inspection team and deficiencies in the firm's system of quality control are publicly disclosed on the PCAOB's website.

Question 8

Which of the following would normally be considered earliest in the audit examination?

Accepted Answer

A)  Determination of materiality levels for use during the audit 
B)  Consideration of the ability of the entity's internal control to prevent or detect errors 
C)  Preparation of a written audit plan 
D)  Evaluation of the type of audit opinion to be issued, based on the auditor's findings 
A)  Determination of materiality levels for use during the audit 
B)  Consideration of the ability of the entity's internal control to prevent or detect errors 
C)  Preparation of a written audit plan 
D)  Evaluation of the type of audit opinion to be issued, based on the auditor's findings

Question 9

Which of the following procedures would provide the most reliable audit evidence?

Accepted Answer

A)  Inquiries of the client's accounting staff held in private 
B)  Inspection of prenumbered client shipping documents 
C)  Inspection of bank statements obtained directly from the client's financial institution 
D)  Analytical procedures performed by auditors on the client's trial balance 
A)  Inquiries of the client's accounting staff held in private 
B)  Inspection of prenumbered client shipping documents 
C)  Inspection of bank statements obtained directly from the client's financial institution 
D)  Analytical procedures performed by auditors on the client's trial balance

Question 10

An audit of the financial statements of Camden Corporation is being conducted by external auditors.The external auditors are expected to

Accepted Answer

A)  certify the correctness of Camden's financial statements. 
B)  make a complete examination of Camden's records and verify all of Camden's transactions. 
C)  give an opinion on the fair presentation of Camden's financial statements in conformity with the applicable financial reporting framework (e.g., GAAP, IFRS). 
D)  give an opinion on the attractiveness of Camden for investment purposes and critique the wisdom and legality of its business decisions. 
A)  certify the correctness of Camden's financial statements. 
B)  make a complete examination of Camden's records and verify all of Camden's transactions. 
C)  give an opinion on the fair presentation of Camden's financial statements in conformity with the applicable financial reporting framework (e.g., GAAP, IFRS). 
D)  give an opinion on the attractiveness of Camden for investment purposes and critique the wisdom and legality of its business decisions.

Question 11

Which of the following is not included in the auditors' standard report representing an unmodified opinion?

Accepted Answer

A)  A brief indication of the responsibility of auditors and management for the financial statements 
B)  An indication that all appropriate disclosures have been made and included in the financial statements 
C)  An indication that the audit was conducted in accordance with standards established by the PCAOB 
D)  The auditors' opinion on the fairness of the financial statements 
A)  A brief indication of the responsibility of auditors and management for the financial statements 
B)  An indication that all appropriate disclosures have been made and included in the financial statements 
C)  An indication that the audit was conducted in accordance with standards established by the PCAOB 
D)  The auditors' opinion on the fairness of the financial statements

Question 12

Which of the following is an element of a system of quality control that should be considered by a public accounting firm in establishing its quality control policies and procedures?

Accepted Answer

A)  Lending credibility to a client's financial statements 
B)  Using statistical sampling techniques 
C)  Acceptance and continuance of client relationships and specific engagements 
D)  Membership in the Center for Public Company Audit Firms 
A)  Lending credibility to a client's financial statements 
B)  Using statistical sampling techniques 
C)  Acceptance and continuance of client relationships and specific engagements 
D)  Membership in the Center for Public Company Audit Firms

Question 13

An important role of the Public Company Accounting Oversight Board is to oversee the

Accepted Answer

A)  issuance of statements by the Financial Accounting Standards Board. 
B)  preparation and grading of the Uniform CPA Examination. 
C)  peer review of member firms of the Private Companies Practice Section. 
D)  regulation of firms that audit public entities. 
A)  issuance of statements by the Financial Accounting Standards Board. 
B)  preparation and grading of the Uniform CPA Examination. 
C)  peer review of member firms of the Private Companies Practice Section. 
D)  regulation of firms that audit public entities.

Question 14

The role of the Public Company Accounting Oversight Board in the standard-setting process is to develop

Accepted Answer

A)  Statements on Auditing Standards for the audits of nonpublic entities. 
B)  Auditing Standards for the audits of public entities. 
C)  Governmental Auditing Standards for the audits of governmental entities. 
D)  International Standards on Auditing for the audits of foreign entities. 
A)  Statements on Auditing Standards for the audits of nonpublic entities. 
B)  Auditing Standards for the audits of public entities. 
C)  Governmental Auditing Standards for the audits of governmental entities. 
D)  International Standards on Auditing for the audits of foreign entities.

Question 15

Which reporting options do auditors have if the client's financial statements are not presented according to the applicable financial framework (e.g.,GAAP,IFRS)?

Accepted Answer

A)  Unmodified opinion or disclaimer of opinion 
B)  Qualified opinion or disclaimer of opinion 
C)  Unmodified opinion or adverse opinion 
D)  Qualified opinion or adverse opinion 
A)  Unmodified opinion or disclaimer of opinion 
B)  Qualified opinion or disclaimer of opinion 
C)  Unmodified opinion or adverse opinion 
D)  Qualified opinion or adverse opinion

Question 16

Auditors try to achieve independence in appearance in order to

Accepted Answer

A)  maintain public confidence in the profession. 
B)  become independent in fact. 
C)  comply with the responsibilities principle. 
D)  maintain an unbiased mental attitude. 
A)  maintain public confidence in the profession. 
B)  become independent in fact. 
C)  comply with the responsibilities principle. 
D)  maintain an unbiased mental attitude.

Question 17

Generally accepted auditing standards are

Accepted Answer

A)  specific actions performed by auditors during an examination. 
B)  standards that guide the conduct of an audit examination. 
C)  legal requirements auditors must observe during the audits of public entities. 
D)  standards used by entities in deciding whether to engage or retain the services of auditors. 
A)  specific actions performed by auditors during an examination. 
B)  standards that guide the conduct of an audit examination. 
C)  legal requirements auditors must observe during the audits of public entities. 
D)  standards used by entities in deciding whether to engage or retain the services of auditors.

Question 18

Which of the following information would not be included in the auditors' standard report?

Accepted Answer

A)  The names of the financial statements audited 
B)  A description of the nature of an audit 
C)  An indication that all necessary disclosures have been presented 
D)  An opinion on the entity's financial statements 
A)  The names of the financial statements audited 
B)  A description of the nature of an audit 
C)  An indication that all necessary disclosures have been presented 
D)  An opinion on the entity's financial statements

Question 19

Which of the following is not considered a type of audit evidence?

Accepted Answer

A)  The entity's trial balance 
B)  Auditors' calculations 
C)  Physical observation 
D)  Verbal statements made by client personnel 
A)  The entity's trial balance 
B)  Auditors' calculations 
C)  Physical observation 
D)  Verbal statements made by client personnel

Question 20

Which element of a system of quality control strives to provide the firm with reasonable assurance that its policies and procedures are operating effectively?

Accepted Answer

A)  Human resources 
B)  Leadership responsibilities for quality within the firm 
C)  Monitoring 
D)  Relevant ethical requirements 
A)  Human resources 
B)  Leadership responsibilities for quality within the firm 
C)  Monitoring 
D)  Relevant ethical requirements

Which of the following situations would result in the issuance of a disclaimer of opinion?

In a system of quality control,leadership responsibilities for quality within the firm are best characterized by

All of the following are examples of procedures a firm can use to monitor its system of quality control except

The auditors' responsibility to express an opinion on the financial statements is

Pronouncements issued by the Public Company Accounting Oversight Board are subject to formal approval by the

Which of the following paragraphs references the conduct of the audit in accordance with PCAOB standards?

Which of the following is true with respect to the PCAOB inspection process?

Which of the following would normally be considered earliest in the audit examination?

Which of the following procedures would provide the most reliable audit evidence?

An audit of the financial statements of Camden Corporation is being conducted by external auditors.The external auditors are expected to

Which of the following is not included in the auditors' standard report representing an unmodified opinion?

Which of the following is an element of a system of quality control that should be considered by a public accounting firm in establishing its quality control policies and procedures?

An important role of the Public Company Accounting Oversight Board is to oversee the

The role of the Public Company Accounting Oversight Board in the standard-setting process is to develop

Which reporting options do auditors have if the client's financial statements are not presented according to the applicable financial framework (e.g.,GAAP,IFRS)?

Auditors try to achieve independence in appearance in order to

Generally accepted auditing standards are

Which of the following information would not be included in the auditors' standard report?

Which of the following is not considered a type of audit evidence?

Which element of a system of quality control strives to provide the firm with reasonable assurance that its policies and procedures are operating effectively?

Auditing and Assurance Services

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 2: Professional Standards

Which of the following situations would result in the issuance of a disclaimer of opinion?

In a system of quality control,leadership responsibilities for quality within the firm are best characterized by

All of the following are examples of procedures a firm can use to monitor its system of quality control except

The auditors' responsibility to express an opinion on the financial statements is

Pronouncements issued by the Public Company Accounting Oversight Board are subject to formal approval by the

Which of the following paragraphs references the conduct of the audit in accordance with PCAOB standards?

Which of the following is true with respect to the PCAOB inspection process?

Which of the following would normally be considered earliest in the audit examination?

Which of the following procedures would provide the most reliable audit evidence?

An audit of the financial statements of Camden Corporation is being conducted by external auditors.The external auditors are expected to

Which of the following is not included in the auditors' standard report representing an unmodified opinion?

Which of the following is an element of a system of quality control that should be considered by a public accounting firm in establishing its quality control policies and procedures?

An important role of the Public Company Accounting Oversight Board is to oversee the

The role of the Public Company Accounting Oversight Board in the standard-setting process is to develop

Which reporting options do auditors have if the client's financial statements are not presented according to the applicable financial framework (e.g.,GAAP,IFRS)?

Auditors try to achieve independence in appearance in order to

Generally accepted auditing standards are

Which of the following information would not be included in the auditors' standard report?

Which of the following is not considered a type of audit evidence?

Which element of a system of quality control strives to provide the firm with reasonable assurance that its policies and procedures are operating effectively?

Auditing and Assurance Services

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters