Question 1

Which of the following is not true with respect to the concept of reasonable assurance?

Accepted Answer

A)  Reasonable assurance allows for mistakes and misinterpretations by the audit team throughout the examination. 
B)  The nature of many audit procedures is such that they cannot always be relied upon to detect misstatements. 
C)  Audit teams should evaluate all transactions and components of an account balance or class of transactions. 
D)  Auditors should control the overall risk in an audit to an acceptably low level. 
A)  Reasonable assurance allows for mistakes and misinterpretations by the audit team throughout the examination. 
B)  The nature of many audit procedures is such that they cannot always be relied upon to detect misstatements. 
C)  Audit teams should evaluate all transactions and components of an account balance or class of transactions. 
D)  Auditors should control the overall risk in an audit to an acceptably low level.

Question 2

Prior to,or in conjunction with,the information-gathering procedures for an audit,audit team members should discuss the potential for material misstatement due to fraud.Which of the following best characterizes the mindset that the audit team should maintain during this discussion?

Accepted Answer

A)  Presumptive 
B)  Judgmental 
C)  Criticizing 
D)  Questioning 
A)  Presumptive 
B)  Judgmental 
C)  Criticizing 
D)  Questioning

Question 3

Which of the following is most closely associated with the responsibilities principle?

Accepted Answer

A)  Due care 
B)  Planning 
C)  Qualified audit opinion 
D)  Risk of material misstatement 
A)  Due care 
B)  Planning 
C)  Qualified audit opinion 
D)  Risk of material misstatement

Question 4

Which of the following statements is generally correct about the appropriateness of audit evidence?

Accepted Answer

A)  Auditors' direct personal knowledge, obtained through observation and inspection, is of higher quality than information obtained indirectly from independent outside sources. 
B)  To be reliable, audit evidence must be either valid or relevant, but need not be both. 
C)  Client accounting data alone may be considered sufficient appropriate audit evidence to issue an unmodified opinion on client financial statements. 
D)  Appropriateness of audit evidence refers to the amount of corroborative evidence to be obtained. 
A)  Auditors' direct personal knowledge, obtained through observation and inspection, is of higher quality than information obtained indirectly from independent outside sources. 
B)  To be reliable, audit evidence must be either valid or relevant, but need not be both. 
C)  Client accounting data alone may be considered sufficient appropriate audit evidence to issue an unmodified opinion on client financial statements. 
D)  Appropriateness of audit evidence refers to the amount of corroborative evidence to be obtained.

Question 5

Which of the following is not true with respect to the responsibilities for establishing generally accepted auditing standards?

Accepted Answer

A)  Auditing standards for both public and private entities must be formally approved by the Securities and Exchange Commission. 
B)  Interpretive publications are issued by the AICPA to provide guidance on the application of generally accepted auditing standards in specific circumstances. 
C)  The PCAOB is the body with formal authority for the creation of auditing standards for the audits of public entities. 
D)  If specific guidance is not provided by PCAOB Auditing Standards, auditors may refer to Statements on Auditing Standards that have not been amended or superseded. 
A)  Auditing standards for both public and private entities must be formally approved by the Securities and Exchange Commission. 
B)  Interpretive publications are issued by the AICPA to provide guidance on the application of generally accepted auditing standards in specific circumstances. 
C)  The PCAOB is the body with formal authority for the creation of auditing standards for the audits of public entities. 
D)  If specific guidance is not provided by PCAOB Auditing Standards, auditors may refer to Statements on Auditing Standards that have not been amended or superseded.

Question 6

The standard auditors' report refers to standards of the PCAOB and GAAP in which paragraph?

Accepted Answer

A)  Standards of the PCAOB: Scope only; GAAP: Opinion only 
B)  Standards of the PCAOB: Introductory only; GAAP: Scope and opinion 
C)  Standards of the PCAOB: Introductory and scope; GAAP: Opinion only 
D)  Standards of the PCAOB: Introductory only; GAAP: All paragraphs 
A)  Standards of the PCAOB: Scope only; GAAP: Opinion only 
B)  Standards of the PCAOB: Introductory only; GAAP: Scope and opinion 
C)  Standards of the PCAOB: Introductory and scope; GAAP: Opinion only 
D)  Standards of the PCAOB: Introductory only; GAAP: All paragraphs

Question 7

The Public Company Accounting Oversight Board was established by which of the following?

Accepted Answer

A)  The Financial Accounting Standards Board 
B)  The American Institute of Certified Public Accountants 
C)  The Sarbanes-Oxley Act of 2002 
D)  The International Accounting Standards Board 
A)  The Financial Accounting Standards Board 
B)  The American Institute of Certified Public Accountants 
C)  The Sarbanes-Oxley Act of 2002 
D)  The International Accounting Standards Board

Question 8

During which stages of an audit examination are auditors required to exhibit the appropriate use of professional judgment?

Accepted Answer

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

Question 9

Which of the following is not true with respect to the auditors' report for a public entity?

Accepted Answer

A)  The report title should contain the word "independent." 
B)  The report provides a detailed listing of major auditing procedures performed during the examination. 
C)  The opinion assesses the financial statements against an applicable financial reporting framework. 
D)  The report specifically identifies the financial statements and years examined by the auditor. 
A)  The report title should contain the word "independent." 
B)  The report provides a detailed listing of major auditing procedures performed during the examination. 
C)  The opinion assesses the financial statements against an applicable financial reporting framework. 
D)  The report specifically identifies the financial statements and years examined by the auditor.

Question 10

The particular and specialized actions that auditors undertake to obtain evidence in a specific audit engagement are known as

Accepted Answer

A)  Interim Auditing Standards. 
B)  audit procedures. 
C)  Interpretive Publications. 
D)  Statements on Auditing Standards. 
A)  Interim Auditing Standards. 
B)  audit procedures. 
C)  Interpretive Publications. 
D)  Statements on Auditing Standards.

Question 11

Which of the following courses of action is most appropriate if an auditor concludes that there is a high risk of material misstatement?

Accepted Answer

A)  Use smaller, rather than larger, sample sizes. 
B)  Perform substantive tests as of an interim date. 
C)  Select more effective substantive tests. 
D)  Increase tests of controls. 
A)  Use smaller, rather than larger, sample sizes. 
B)  Perform substantive tests as of an interim date. 
C)  Select more effective substantive tests. 
D)  Increase tests of controls.

Question 12

The preparation of an audit plan prior to the beginning of fieldwork is appropriately considered documentation of

Accepted Answer

A)  planning. 
B)  supervision. 
C)  information evaluation. 
D)  quality assurance. 
A)  planning. 
B)  supervision. 
C)  information evaluation. 
D)  quality assurance.

Question 13

When a firm decides to withdraw from an engagement,it should document all of the following except

Accepted Answer

A)  significant issues influencing the decision to withdraw from the engagement. 
B)  the basis for any conclusions related to this decision to withdraw from the engagement. 
C)  significant consultations related to the decision to withdraw from the engagement. 
D)  significant effects the decision to withdraw from the engagement could have on the firm. 
A)  significant issues influencing the decision to withdraw from the engagement. 
B)  the basis for any conclusions related to this decision to withdraw from the engagement. 
C)  significant consultations related to the decision to withdraw from the engagement. 
D)  significant effects the decision to withdraw from the engagement could have on the firm.

Question 14

Which of the following actions should a CPA firm take to comply with the AICPA's quality control standards?

Accepted Answer

A)  Establish procedures that comply with the standards of the Sarbanes-Oxley Act. 
B)  Use attributes sampling techniques in testing internal controls. 
C)  Consider inherent risk and control risk before determining detection risk. 
D)  Establish policies to ensure that the audit work meets applicable professional standards. 
A)  Establish procedures that comply with the standards of the Sarbanes-Oxley Act. 
B)  Use attributes sampling techniques in testing internal controls. 
C)  Consider inherent risk and control risk before determining detection risk. 
D)  Establish policies to ensure that the audit work meets applicable professional standards.

Question 15

Which of the following would be evaluated during the PCAOB inspection process?

Accepted Answer

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

Question 16

The three fundamental principles underlying GAAS include all of the following,except

Accepted Answer

A)  general principle. 
B)  performance principle. 
C)  reporting principle. 
D)  responsibilities principle. 
A)  general principle. 
B)  performance principle. 
C)  reporting principle. 
D)  responsibilities principle.

Question 17

Which of the following statements is true with respect to the quality of audit evidence?

Accepted Answer

A)  Quality is related to the relevance of evidence, but not the reliability of evidence. 
B)  Evidence is considered of higher quality when gathered prior to year-end than following year-end. 
C)  Evidence obtained under environments of stronger internal control is of higher quality than evidence obtained under environments of weaker internal control. 
D)  In evaluating quality, sufficiency of evidence is of greater importance than appropriateness of evidence. 
A)  Quality is related to the relevance of evidence, but not the reliability of evidence. 
B)  Evidence is considered of higher quality when gathered prior to year-end than following year-end. 
C)  Evidence obtained under environments of stronger internal control is of higher quality than evidence obtained under environments of weaker internal control. 
D)  In evaluating quality, sufficiency of evidence is of greater importance than appropriateness of evidence.

Question 18

Which of the following is not a concept from the performance principle under generally accepted auditing standards?

Accepted Answer

A)  The auditor must plan the work and properly supervise any assistants. 
B)  The auditor must express an opinion in accordance with the auditor's findings. 
C)  The auditor must obtain sufficient appropriate evidence about whether material misstatements exist. 
D)  The auditor must determine and apply an appropriate materiality level throughout the audit. 
A)  The auditor must plan the work and properly supervise any assistants. 
B)  The auditor must express an opinion in accordance with the auditor's findings. 
C)  The auditor must obtain sufficient appropriate evidence about whether material misstatements exist. 
D)  The auditor must determine and apply an appropriate materiality level throughout the audit.

Question 19

Which of the following statements is not true with respect to the evidence that would be gathered when assessments of control risk are high?

Accepted Answer

A)  Auditors would be required to rely on external (rather than internal) forms of evidence. 
B)  Auditors would be required to perform procedures at interim periods, rather than at year end. 
C)  Auditors would be required to confirm a larger number of customer accounts receivable balances. 
D)  Auditors would be required to obtain more evidence through direct personal observation. 
A)  Auditors would be required to rely on external (rather than internal) forms of evidence. 
B)  Auditors would be required to perform procedures at interim periods, rather than at year end. 
C)  Auditors would be required to confirm a larger number of customer accounts receivable balances. 
D)  Auditors would be required to obtain more evidence through direct personal observation.

Question 20

Which of the following is an example of the appropriate implementation of a system of quality control?

Accepted Answer

A)  The firm requires all documents obtained during the audit to be destroyed immediately following the engagement to ensure the client's information remains confidential. 
B)  The firm's quality control policies have evolved through the performance of audit procedures but are not formally developed or communicated to staff members. 
C)  All firm employees must verbally confirm their compliance with the appropriate independence requirements before being assigned to an engagement. 
D)  The firm uses manuals and standardized forms for audit documentation to help ensure engagement performance objectives and quality standards are met. 
A)  The firm requires all documents obtained during the audit to be destroyed immediately following the engagement to ensure the client's information remains confidential. 
B)  The firm's quality control policies have evolved through the performance of audit procedures but are not formally developed or communicated to staff members. 
C)  All firm employees must verbally confirm their compliance with the appropriate independence requirements before being assigned to an engagement. 
D)  The firm uses manuals and standardized forms for audit documentation to help ensure engagement performance objectives and quality standards are met.

Which of the following is not true with respect to the concept of reasonable assurance?

Prior to,or in conjunction with,the information-gathering procedures for an audit,audit team members should discuss the potential for material misstatement due to fraud.Which of the following best characterizes the mindset that the audit team should maintain during this discussion?

Which of the following is most closely associated with the responsibilities principle?

Which of the following statements is generally correct about the appropriateness of audit evidence?

Which of the following is not true with respect to the responsibilities for establishing generally accepted auditing standards?

The standard auditors' report refers to standards of the PCAOB and GAAP in which paragraph?

The Public Company Accounting Oversight Board was established by which of the following?

During which stages of an audit examination are auditors required to exhibit the appropriate use of professional judgment?

Which of the following is not true with respect to the auditors' report for a public entity?

The particular and specialized actions that auditors undertake to obtain evidence in a specific audit engagement are known as

Which of the following courses of action is most appropriate if an auditor concludes that there is a high risk of material misstatement?

The preparation of an audit plan prior to the beginning of fieldwork is appropriately considered documentation of

When a firm decides to withdraw from an engagement,it should document all of the following except

Which of the following actions should a CPA firm take to comply with the AICPA's quality control standards?

Which of the following would be evaluated during the PCAOB inspection process?

The three fundamental principles underlying GAAS include all of the following,except

Which of the following statements is true with respect to the quality of audit evidence?

Which of the following is not a concept from the performance principle under generally accepted auditing standards?

Which of the following statements is not true with respect to the evidence that would be gathered when assessments of control risk are high?

Which of the following is an example of the appropriate implementation of a system of quality control?

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 is not true with respect to the concept of reasonable assurance?

Prior to,or in conjunction with,the information-gathering procedures for an audit,audit team members should discuss the potential for material misstatement due to fraud.Which of the following best characterizes the mindset that the audit team should maintain during this discussion?

Which of the following is most closely associated with the responsibilities principle?

Which of the following statements is generally correct about the appropriateness of audit evidence?

Which of the following is not true with respect to the responsibilities for establishing generally accepted auditing standards?

The standard auditors' report refers to standards of the PCAOB and GAAP in which paragraph?

The Public Company Accounting Oversight Board was established by which of the following?

During which stages of an audit examination are auditors required to exhibit the appropriate use of professional judgment?

Which of the following is not true with respect to the auditors' report for a public entity?

The particular and specialized actions that auditors undertake to obtain evidence in a specific audit engagement are known as

Which of the following courses of action is most appropriate if an auditor concludes that there is a high risk of material misstatement?

The preparation of an audit plan prior to the beginning of fieldwork is appropriately considered documentation of

When a firm decides to withdraw from an engagement,it should document all of the following except

Which of the following actions should a CPA firm take to comply with the AICPA's quality control standards?

Which of the following would be evaluated during the PCAOB inspection process?

The three fundamental principles underlying GAAS include all of the following,except

Which of the following statements is true with respect to the quality of audit evidence?

Which of the following is not a concept from the performance principle under generally accepted auditing standards?

Which of the following statements is not true with respect to the evidence that would be gathered when assessments of control risk are high?

Which of the following is an example of the appropriate implementation of a system of quality control?

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