Question 1

What reason has been given to explain the lack of well-developed auditing professions in less-developed economies?

Accepted Answer

A) inability to train auditors given the lack of educational systems 
B) Since investors are not major players in these economies,there is little need for audited financial statements. 
C) Investors and creditors in these countries do not want external auditors attesting to financial statement reliability. 
D) In these cultures,financial statements are presumed to be accurate and therefore do not require independent audits. 
A) inability to train auditors given the lack of educational systems 
B) Since investors are not major players in these economies,there is little need for audited financial statements. 
C) Investors and creditors in these countries do not want external auditors attesting to financial statement reliability. 
D) In these cultures,financial statements are presumed to be accurate and therefore do not require independent audits.

Question 2

Recently enacted listing requirements of the New York Stock Exchange focuses attention on independent directors. How does the NYSE define an independent director?

Accepted Answer

A) no material relationship with the listed corporation 
B) not a member of corporate management 
C) owns fewer than 10,000 shares of the corporation's stock 
D) does not meet regularly with the board of directors 
A) no material relationship with the listed corporation 
B) not a member of corporate management 
C) owns fewer than 10,000 shares of the corporation's stock 
D) does not meet regularly with the board of directors

Question 3

Why is litigation against external auditors,which is very common in the United States,virtually unknown in Japan?

Accepted Answer

A) Japanese auditors rarely make mistakes in their professional work. 
B) Such litigation is inconsistent with Japanese values of interpersonal harmony. 
C) Japan lacks a sophisticated court system for handling complex cases involving accounting matters. 
D) External auditors are not responsible for the quality of work performed for a corporate client. 
A) Japanese auditors rarely make mistakes in their professional work. 
B) Such litigation is inconsistent with Japanese values of interpersonal harmony. 
C) Japan lacks a sophisticated court system for handling complex cases involving accounting matters. 
D) External auditors are not responsible for the quality of work performed for a corporate client.

Question 4

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 5

Why has corporate financial reporting in China not resembled reporting in Anglo-Saxon countries?

Accepted Answer

A) There was a lack of distinction between business functions and social service functions in Chinese reporting entities. 
B) China has only recently become involved in international trade. 
C) The concept of accounting was only introduced to China recently and therefore it has not had time to develop properly. 
D) The 1960's Cultural Revolution eliminated the requirements that Chinese corporations provide information on business operations. 
A) There was a lack of distinction between business functions and social service functions in Chinese reporting entities. 
B) China has only recently become involved in international trade. 
C) The concept of accounting was only introduced to China recently and therefore it has not had time to develop properly. 
D) The 1960's Cultural Revolution eliminated the requirements that Chinese corporations provide information on business operations.

Question 6

How does the principle of "joint and several liability" affect auditors in countries where it is applied?

Accepted Answer

A) This limits civil liability to only those people who conducted the audit negligently. 
B) All partners in the accounting firm can be personally liable for the negligence of any one partner. 
C) All audit partners are liable for the actions of the firm only up to the level of their investment in the firm. 
D) It creates limited liability for auditors accused of wrong-doing by their clients. 
A) This limits civil liability to only those people who conducted the audit negligently. 
B) All partners in the accounting firm can be personally liable for the negligence of any one partner. 
C) All audit partners are liable for the actions of the firm only up to the level of their investment in the firm. 
D) It creates limited liability for auditors accused of wrong-doing by their clients.

Question 7

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 8

What is the position of the U.S.Securities and Exchange Commission (SEC)with respect to internal auditing?

Accepted Answer

A) It requires all companies,including foreign enterprises,listed on U.S.stock exchanges to have an internal audit function. 
B) Since 2000,the SEC has been silent with respect to internal auditing. 
C) Internal auditing is recommended by the SEC,but it is not required for listed companies. 
D) Only multinational companies are required to have internal auditing systems. 
A) It requires all companies,including foreign enterprises,listed on U.S.stock exchanges to have an internal audit function. 
B) Since 2000,the SEC has been silent with respect to internal auditing. 
C) Internal auditing is recommended by the SEC,but it is not required for listed companies. 
D) Only multinational companies are required to have internal auditing systems.

Question 9

Under the Sarbanes-Oxley Act of 2002,to whom does the audit committee report?

Accepted Answer

A) management of the corporation 
B) external auditor 
C) board of directors 
D) internal audit department 
A) management of the corporation 
B) external auditor 
C) board of directors 
D) internal audit department

Question 10

What caused the U.S.Congress,the OECD,the International Federation of Accountants,and other organizations to enact stricter rules on corporate governance in recent years?

Accepted Answer

A) sudden increase in world trade 
B) high-profile corporate scandals 
C) significant decline in world trade 
D) expansion of the European Union membership 
A) sudden increase in world trade 
B) high-profile corporate scandals 
C) significant decline in world trade 
D) expansion of the European Union membership

Question 11

According to international auditing standards,if audit work has been limited in its scope,the auditors have had a disagreement with management,or there is significant uncertainty associated with the financial statements,what kind of audit opinion should be rendered?

Accepted Answer

A) disclaimer of opinion 
B) unqualified 
C) adverse 
D) qualified 
A) disclaimer of opinion 
B) unqualified 
C) adverse 
D) qualified

Question 12

What reason can be given for the importance of internal auditing in multinational corporations?

Accepted Answer

A) a serious lack of external auditors available to audit an international company 
B) a growing demand for risk management skills possessed by internal auditors 
C) reluctance by multinational corporations to hire external auditors to comply with international regulations 
D) decline in the reputation of external auditors 
A) a serious lack of external auditors available to audit an international company 
B) a growing demand for risk management skills possessed by internal auditors 
C) reluctance by multinational corporations to hire external auditors to comply with international regulations 
D) decline in the reputation of external auditors

Question 13

According to the International Auditing Practices Committee,financial statements have conformed to International Financial Reporting Standards (IFRS)if:

Accepted Answer

A) they have complied with at least 75% of the IFRS. 
B) they have complied with at least one-half of the provisions of the IFRS. 
C) they have complied with all requirements and interpretations of the IFRS. 
D) they have complied with most of the IFRS or with U.S.GAAP. 
A) they have complied with at least 75% of the IFRS. 
B) they have complied with at least one-half of the provisions of the IFRS. 
C) they have complied with all requirements and interpretations of the IFRS. 
D) they have complied with most of the IFRS or with U.S.GAAP.

Question 14

What explains the reason for the historically very low (1/3% to 1/2%)limit on allowance for doubtful accounts in China?

Accepted Answer

A) The primary customer in China was the government,which was presumed to have very good credit. 
B) This is the international accounting standard for companies operating in eastern Asia. 
C) Prior to being admitted to the World Trade Organization (WTO),China was required to reduce its bad debt level. 
D) all of the above 
A) The primary customer in China was the government,which was presumed to have very good credit. 
B) This is the international accounting standard for companies operating in eastern Asia. 
C) Prior to being admitted to the World Trade Organization (WTO),China was required to reduce its bad debt level. 
D) all of the above

Question 15

What does ISA 700 say about the interpretation of an audit opinion?

Accepted Answer

A) It enhances the credibility of the financial statements of corporation. 
B) It guarantees the future viability of the corporation. 
C) It assures readers that no errors have been made in the financial statements. 
D) It tells shareholders that management has operated the corporation efficiently. 
A) It enhances the credibility of the financial statements of corporation. 
B) It guarantees the future viability of the corporation. 
C) It assures readers that no errors have been made in the financial statements. 
D) It tells shareholders that management has operated the corporation efficiently.

Question 16

An auditor may be subject to criminal liability under which of the following situations?

Accepted Answer

A) She willingly participates in defrauding the company's stockholders. 
B) She breaks a contract with the client. 
C) She violates a rule on the manner of advertising allowed by the professional accounting and auditing association. 
D) none of the above 
A) She willingly participates in defrauding the company's stockholders. 
B) She breaks a contract with the client. 
C) She violates a rule on the manner of advertising allowed by the professional accounting and auditing association. 
D) none of the above

Question 17

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 18

What act of the U.S.Congress advocated creating the Public Company Accounting Oversight Board,required financial statement certification by the CEO and CFO,and requires external auditors to report directly to an audit committee?

Accepted Answer

A) Securities Act of 1933 
B) Securities and Exchange Act of 1934 
C) Sherman Anti-Trust Act of 1890 
D) Sarbanes-Oxley Act of 2002 
A) Securities Act of 1933 
B) Securities and Exchange Act of 1934 
C) Sherman Anti-Trust Act of 1890 
D) Sarbanes-Oxley Act of 2002

Question 19

Which of the following is NOT a factor influencing the probability that an auditor will detect an accounting error?

Accepted Answer

A) competence of the auditor 
B) quality review and monitoring 
C) financial reporting requirements 
D) independence of the auditor 
A) competence of the auditor 
B) quality review and monitoring 
C) financial reporting requirements 
D) independence of the auditor

Question 20

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.

What reason has been given to explain the lack of well-developed auditing professions in less-developed economies?

Recently enacted listing requirements of the New York Stock Exchange focuses attention on independent directors. How does the NYSE define an independent director?

Why is litigation against external auditors,which is very common in the United States,virtually unknown in Japan?

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?

Why has corporate financial reporting in China not resembled reporting in Anglo-Saxon countries?

How does the principle of "joint and several liability" affect auditors in countries where it is applied?

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

What is the position of the U.S.Securities and Exchange Commission (SEC)with respect to internal auditing?

Under the Sarbanes-Oxley Act of 2002,to whom does the audit committee report?

What caused the U.S.Congress,the OECD,the International Federation of Accountants,and other organizations to enact stricter rules on corporate governance in recent years?

According to international auditing standards,if audit work has been limited in its scope,the auditors have had a disagreement with management,or there is significant uncertainty associated with the financial statements,what kind of audit opinion should be rendered?

What reason can be given for the importance of internal auditing in multinational corporations?

According to the International Auditing Practices Committee,financial statements have conformed to International Financial Reporting Standards (IFRS)if:

What explains the reason for the historically very low (1/3% to 1/2%)limit on allowance for doubtful accounts in China?

What does ISA 700 say about the interpretation of an audit opinion?

An auditor may be subject to criminal liability under which of the following situations?

Who oversees the work of the IFAC committees?

What act of the U.S.Congress advocated creating the Public Company Accounting Oversight Board,required financial statement certification by the CEO and CFO,and requires external auditors to report directly to an audit committee?

Which of the following is NOT a factor influencing the probability that an auditor will detect an accounting error?

What is an audit committee?

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

What reason has been given to explain the lack of well-developed auditing professions in less-developed economies?

Recently enacted listing requirements of the New York Stock Exchange focuses attention on independent directors. How does the NYSE define an independent director?

Why is litigation against external auditors,which is very common in the United States,virtually unknown in Japan?

Why has corporate financial reporting in China not resembled reporting in Anglo-Saxon countries?

How does the principle of "joint and several liability" affect auditors in countries where it is applied?

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

What is the position of the U.S.Securities and Exchange Commission (SEC)with respect to internal auditing?

Under the Sarbanes-Oxley Act of 2002,to whom does the audit committee report?

What caused the U.S.Congress,the OECD,the International Federation of Accountants,and other organizations to enact stricter rules on corporate governance in recent years?

According to international auditing standards,if audit work has been limited in its scope,the auditors have had a disagreement with management,or there is significant uncertainty associated with the financial statements,what kind of audit opinion should be rendered?

What reason can be given for the importance of internal auditing in multinational corporations?

According to the International Auditing Practices Committee,financial statements have conformed to International Financial Reporting Standards (IFRS)if:

What explains the reason for the historically very low (1/3% to 1/2%)limit on allowance for doubtful accounts in China?

What does ISA 700 say about the interpretation of an audit opinion?

An auditor may be subject to criminal liability under which of the following situations?

Who oversees the work of the IFAC committees?

What act of the U.S.Congress advocated creating the Public Company Accounting Oversight Board,required financial statement certification by the CEO and CFO,and requires external auditors to report directly to an audit committee?

Which of the following is NOT a factor influencing the probability that an auditor will detect an accounting error?

What is an audit committee?

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