Question 1

In China, who is responsible for regulating auditing practice?

Accepted Answer

A) Chinese Institute of Certified Public Accountants (CICP
A)  
B) Government, through local audit bureaus 
C) Chinese stock exchange 
D) Auditing Practices Board (AP
B)  
A) Chinese Institute of Certified Public Accountants (CICP
A)  
B) Government, through local audit bureaus 
C) Chinese stock exchange 
D) Auditing Practices Board (AP
B)

Question 2

Which of the following is a factor influencing the probability that an auditor will report a detected error or irregularity?

Accepted Answer

A) Competence of the auditor. 
B) Independence of the auditor. 
C) Quality review and monitoring. 
D) Financial reporting requirements. 
A) Competence of the auditor. 
B) Independence of the auditor. 
C) Quality review and monitoring. 
D) Financial reporting requirements.

Question 3

Which of the following is a strategy adopted internationally to limit the auditor's liability?

Accepted Answer

A) Decreasing the amount of disclosure in financial statements 
B) Limiting the amount of foreign direct investment in audit firms 
C) Increasing dependence of auditors on management of the company 
D) Changing the ownership structure of audit firms 
A) Decreasing the amount of disclosure in financial statements 
B) Limiting the amount of foreign direct investment in audit firms 
C) Increasing dependence of auditors on management of the company 
D) Changing the ownership structure of audit firms

Question 4

Auditors in the United States may form limited liability partnerships.What does this mean for civil liability of auditors?

Accepted Answer

A) It allows negligent auditors to escape civil litigation for their failures. 
B) Auditors are limited to serving clients that agree not to pursue litigation for audit negligence. 
C) The personal wealth of partners who are not negligent is protected from litigation against the audit firm. 
D) It has no impact on civil liability because it provides limitations only on criminal liability. 
A) It allows negligent auditors to escape civil litigation for their failures. 
B) Auditors are limited to serving clients that agree not to pursue litigation for audit negligence. 
C) The personal wealth of partners who are not negligent is protected from litigation against the audit firm. 
D) It has no impact on civil liability because it provides limitations only on criminal liability.

Question 5

What term is used to refer to the probability that an accounting error or irregularity is detected and reported?

Accepted Answer

A) Accounting risk 
B) Audit risk 
C) Audit quality 
D) Transaction risk 
A) Accounting risk 
B) Audit risk 
C) Audit quality 
D) Transaction risk

Question 6

What is the role of internal auditing?

Accepted Answer

A) To substitute for the external auditor whenever possible 
B) To provide assurance and consulting services to improve an organization's operations 
C) To assist the audit committee in negotiations with the external auditor 
D) To mediate disagreements between the external auditor and corporate management 
A) To substitute for the external auditor whenever possible 
B) To provide assurance and consulting services to improve an organization's operations 
C) To assist the audit committee in negotiations with the external auditor 
D) To mediate disagreements between the external auditor and corporate management

Question 7

What are the two main theories of corporate governance?

Accepted Answer

A) Audit reliance and board of directors' responsibility 
B) Agency and stakeholder 
C) Common law and code law 
D) Internal auditing and external auditing 
A) Audit reliance and board of directors' responsibility 
B) Agency and stakeholder 
C) Common law and code law 
D) Internal auditing and external auditing

Question 8

Which of the following is a limitation of SEC requirements for audit committee membership?

Accepted Answer

A) The expanded responsibilities make service on the committee less desirable to competent directors. 
B) External auditors are unwilling to report to an independent audit committee. 
C) The audit committee compromises the external auditor's independence. 
D) Only the United Kingdom and the United States require audit committees, putting corporations in these countries at a disadvantage. 
A) The expanded responsibilities make service on the committee less desirable to competent directors. 
B) External auditors are unwilling to report to an independent audit committee. 
C) The audit committee compromises the external auditor's independence. 
D) Only the United Kingdom and the United States require audit committees, putting corporations in these countries at a disadvantage.

Question 9

The Fourth Directive of the European Commission:

Accepted Answer

A) aims at harmonizing the educational and training prerequisites necessary to become a statutory auditor. 
B) requires that the auditor's report include whether the financial statements present a "true and fair view." 
C) mandates for the new members of the auditing profession to hold a university degree in accountancy. 
D) requires that the auditor of the company to be the officer or employee of the company being audited. 
A) aims at harmonizing the educational and training prerequisites necessary to become a statutory auditor. 
B) requires that the auditor's report include whether the financial statements present a "true and fair view." 
C) mandates for the new members of the auditing profession to hold a university degree in accountancy. 
D) requires that the auditor of the company to be the officer or employee of the company being audited.

Question 10

In an effort to harmonize international auditing standards on a regional level, the European Union has issued directives pertaining to this end.Its Eighth Directive caused the United Kingdom to change the country's long-held standard for individuals wishing to be auditors.Which of the following is a new requirement for auditors in the UK?

Accepted Answer

A) Auditors must be members of a recognized professional association, such as the ICAEW. 
B) New entrants to the auditing profession must hold a university degree in accountancy. 
C) Auditors may now be a citizen of any country in the European Union rather than just the UK. 
D) New members of the auditing profession must have a university degree. 
A) Auditors must be members of a recognized professional association, such as the ICAEW. 
B) New entrants to the auditing profession must hold a university degree in accountancy. 
C) Auditors may now be a citizen of any country in the European Union rather than just the UK. 
D) New members of the auditing profession must have a university degree.

Question 11

According to the 2004 Management Barometer Survey conducted with senior executives of MNCs, in addition to internal control effectiveness, which was the next highest area in need of improvement?

Accepted Answer

A) Security controls 
B) Internal audit effectiveness 
C) Fraud programs 
D) Financial processes 
A) Security controls 
B) Internal audit effectiveness 
C) Fraud programs 
D) Financial processes

Question 12

Who oversees the work of the IFAC committees?

Accepted Answer

A) PIOB 
B) PCAOB 
C) IOSCO 
D) OECD 
A) PIOB 
B) PCAOB 
C) IOSCO 
D) OECD

Question 13

Which of the following is NOT a key driver of audit quality based on the 2008 U.K.FRC publication "The Audit Quality Framework"?

Accepted Answer

A) The composition of a company's audit committee 
B) The culture within an audit firm 
C) The effectiveness of the audit process 
D) The skills and personal qualities of audit partners and staff 
A) The composition of a company's audit committee 
B) The culture within an audit firm 
C) The effectiveness of the audit process 
D) The skills and personal qualities of audit partners and staff

Question 14

In proposed PCAOB Rule 4012, "Inspection of Foreign Registered Public Accounting Firms" issued for comment in December 2007, which of the following is NOT one of the broad principles upon which the board may place full reliance on the inspection program of qualified non-U.S.auditor oversight entities?

Accepted Answer

A) Transparency of the oversight system 
B) Adequacy and integrity of the oversight system 
C) Rigidity of professional standards mandated by the oversight system 
D) Independence of the oversight system's source of funding 
A) Transparency of the oversight system 
B) Adequacy and integrity of the oversight system 
C) Rigidity of professional standards mandated by the oversight system 
D) Independence of the oversight system's source of funding

Question 15

The Institute of Chartered Accountants in New Zealand (ICANZ) proposed a policy of proportionate liability to replace the country's existing "joint and several liability" approach.Why was the proposal denied?

Accepted Answer

A) Proportionate responsibility for damages cannot be determined objectively. 
B) Fairness to the defendants was not relevant to ensuring fairness to the injured party. 
C) Large auditing firms would be paying proportionately higher damage awards than small firms. 
D) Such a policy is inconsistent with harmonization of international auditing standards. 
A) Proportionate responsibility for damages cannot be determined objectively. 
B) Fairness to the defendants was not relevant to ensuring fairness to the injured party. 
C) Large auditing firms would be paying proportionately higher damage awards than small firms. 
D) Such a policy is inconsistent with harmonization of international auditing standards.

Question 16

Which of the following is a positive area identified in the 2008 IFAC report "Financial Reporting Supply Chain-Current Perspectives and Directions"?

Accepted Answer

A) Governance not in name but in spirit 
B) Limited liability for directors and senior management 
C) More transparency in reporting 
D) Good relation of remuneration to performance 
A) Governance not in name but in spirit 
B) Limited liability for directors and senior management 
C) More transparency in reporting 
D) Good relation of remuneration to performance

Question 17

What is an audit committee?

Accepted Answer

A) It is a group of audit firms that develop national or international standards for auditing practice. 
B) It is a subset of a corporate board of directors with oversight of the auditing function. 
C) It is the team of external auditors (i.e.CPAs) that conducts audit testing and prepares the audit report. 
D) It is a management group responsible for negotiating the audit engagement with a public accounting firm. 
A) It is a group of audit firms that develop national or international standards for auditing practice. 
B) It is a subset of a corporate board of directors with oversight of the auditing function. 
C) It is the team of external auditors (i.e.CPAs) that conducts audit testing and prepares the audit report. 
D) It is a management group responsible for negotiating the audit engagement with a public accounting firm.

Question 18

Which of the following is true of a conceptual approach to auditor independence?

Accepted Answer

A) Its applicability goes beyond any specific situation and mandates a proactive approach based on clearly articulated principles. 
B) It prohibits certain nonaudit services such as bookkeeping, valuations, actuarial, and internal audit outsourcing. 
C) It requires audit committee prior approval for any service provided by the auditors. 
D) It prevents the use of legalistic devices to avoid compliance. 
A) Its applicability goes beyond any specific situation and mandates a proactive approach based on clearly articulated principles. 
B) It prohibits certain nonaudit services such as bookkeeping, valuations, actuarial, and internal audit outsourcing. 
C) It requires audit committee prior approval for any service provided by the auditors. 
D) It prevents the use of legalistic devices to avoid compliance.

Question 19

What impact did the Asian financial crisis in the late 1990s and the corporate scandals in the United States in this century have on the auditing profession?

Accepted Answer

A) Regulation of the external auditing profession was reduced. 
B) CPAs were no longer allowed to provide external audit services for multinational corporations. 
C) Reputation for being the watchdogs of financial reporting integrity was reduced. 
D) External auditors were required to sit on the boards of directors of multinational corporations. 
A) Regulation of the external auditing profession was reduced. 
B) CPAs were no longer allowed to provide external audit services for multinational corporations. 
C) Reputation for being the watchdogs of financial reporting integrity was reduced. 
D) External auditors were required to sit on the boards of directors of multinational corporations.

Question 20

If an auditor breaks a contractual obligation, such as failing to complete an audit within the time frame specified in the engagement letter, what kind of liability does the auditor face?

Accepted Answer

A) Criminal liability 
B) Civil liability 
C) Professional sanctions 
D) None of the above 
A) Criminal liability 
B) Civil liability 
C) Professional sanctions 
D) None of the above

In China, who is responsible for regulating auditing practice?

Which of the following is a factor influencing the probability that an auditor will report a detected error or irregularity?

Which of the following is a strategy adopted internationally to limit the auditor's liability?

Auditors in the United States may form limited liability partnerships.What does this mean for civil liability of auditors?

What term is used to refer to the probability that an accounting error or irregularity is detected and reported?

What is the role of internal auditing?

What are the two main theories of corporate governance?

Which of the following is a limitation of SEC requirements for audit committee membership?

The Fourth Directive of the European Commission:

According to the 2004 Management Barometer Survey conducted with senior executives of MNCs, in addition to internal control effectiveness, which was the next highest area in need of improvement?

Who oversees the work of the IFAC committees?

Which of the following is NOT a key driver of audit quality based on the 2008 U.K.FRC publication "The Audit Quality Framework"?

The Institute of Chartered Accountants in New Zealand (ICANZ) proposed a policy of proportionate liability to replace the country's existing "joint and several liability" approach.Why was the proposal denied?

Which of the following is a positive area identified in the 2008 IFAC report "Financial Reporting Supply Chain-Current Perspectives and Directions"?

What is an audit committee?

Which of the following is true of a conceptual approach to auditor independence?

What impact did the Asian financial crisis in the late 1990s and the corporate scandals in the United States in this century have on the auditing profession?

If an auditor breaks a contractual obligation, such as failing to complete an audit within the time frame specified in the engagement letter, what kind of liability does the auditor face?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

Analysis of Foreign Financial Statements

International Taxation

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

International Corporate Social Reporting

Filters

Exam 14: Comparative International Auditing and Corporate Governance

In China, who is responsible for regulating auditing practice?

Which of the following is a factor influencing the probability that an auditor will report a detected error or irregularity?

Which of the following is a strategy adopted internationally to limit the auditor's liability?

Auditors in the United States may form limited liability partnerships.What does this mean for civil liability of auditors?

What term is used to refer to the probability that an accounting error or irregularity is detected and reported?

What is the role of internal auditing?

What are the two main theories of corporate governance?

Which of the following is a limitation of SEC requirements for audit committee membership?

The Fourth Directive of the European Commission:

According to the 2004 Management Barometer Survey conducted with senior executives of MNCs, in addition to internal control effectiveness, which was the next highest area in need of improvement?

Who oversees the work of the IFAC committees?

Which of the following is NOT a key driver of audit quality based on the 2008 U.K.FRC publication "The Audit Quality Framework"?

The Institute of Chartered Accountants in New Zealand (ICANZ) proposed a policy of proportionate liability to replace the country's existing "joint and several liability" approach.Why was the proposal denied?

Which of the following is a positive area identified in the 2008 IFAC report "Financial Reporting Supply Chain-Current Perspectives and Directions"?

What is an audit committee?

Which of the following is true of a conceptual approach to auditor independence?

What impact did the Asian financial crisis in the late 1990s and the corporate scandals in the United States in this century have on the auditing profession?

If an auditor breaks a contractual obligation, such as failing to complete an audit within the time frame specified in the engagement letter, what kind of liability does the auditor face?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

Analysis of Foreign Financial Statements

International Taxation

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

International Corporate Social Reporting

Filters