Question 1

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 2

Which of the following factors influences the risk of material misstatement? $$\begin{array} { c c c }

&\text { Susceptibility of the } & \text { Nature, timing, and } \
&\text { account balance to } & \text { extent of further audit }\
&\text { misstatement} & \text { procedures }\
\text { A. } & \text { Yes } & \text { No } \
\text { B. } & \text { Yes } & \text { Yes } \
\text { C. } &\text { No } & \text { Yes } \
\text { D } & \text { No } & \text { No }
\end{array}$$

Accepted Answer

The answer of Which of the following factors influences the...

Question 3

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 4

Which of the following is not related to the responsibilities principle?

Accepted Answer

A) Continuing professional education to ensure that professionals' knowledge keeps pace with changes in the accounting and auditing profession. 
B) Firm-wide policies to evaluate the financial and professional relationships of its professionals. 
C) Specific auditing procedures designed to determine the effectiveness of the entity's internal control over financial reporting. 
D) The auditors' use of professional judgment throughout the examination. 
A) Continuing professional education to ensure that professionals' knowledge keeps pace with changes in the accounting and auditing profession. 
B) Firm-wide policies to evaluate the financial and professional relationships of its professionals. 
C) Specific auditing procedures designed to determine the effectiveness of the entity's internal control over financial reporting. 
D) The auditors' use of professional judgment throughout the examination.

Question 5

As it relates to audit evidence,appropriateness refers to the

Accepted Answer

A) Originality of evidence gathered. 
B) Quality of evidence gathered. 
C) Quantity of evidence gathered. 
D) Timeliness of evidence gathered. 
A) Originality of evidence gathered. 
B) Quality of evidence gathered. 
C) Quantity of evidence gathered. 
D) Timeliness of evidence gathered.

Question 6

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 7

Which of the following represent audit quality guides that remain stable over time and are applicable for all audits?

Accepted Answer

A) Auditing procedures. 
B) Auditing standards. 
C) Due care. 
D) System of quality control. 
A) Auditing procedures. 
B) Auditing standards. 
C) Due care. 
D) System of quality control.

Question 8

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 9

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

Accepted Answer

A) Auditing Standards 
B) Audit procedures 
C) Interpretive Publications 
D) Statements on Auditing Standards 
A) Auditing Standards 
B) Audit procedures 
C) Interpretive Publications 
D) Statements on Auditing Standards

Question 10

Under generally accepted auditing standards,which of the following relates to the responsibilities principle?

Accepted Answer

A) The initial planning of the audit engagement. 
B) The confirmation of accounts receivable. 
C) The completion of an internal control questionnaire. 
D) Maintaining professional skepticism and exercising professional judgment. 
A) The initial planning of the audit engagement. 
B) The confirmation of accounts receivable. 
C) The completion of an internal control questionnaire. 
D) Maintaining professional skepticism and exercising professional judgment.

Question 11

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 12

Pronouncements issued by the Public Company Accounting Oversight Board are subject 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 13

An independent auditor must have which of the following?

Accepted Answer

A) A pre-existing and well-informed point of view with respect to the audit. 
B) Technical training that is adequate to meet the requirements of a professional. 
C) A background in many different disciplines. 
D) Experience in taxation that is sufficient to comply with generally accepted auditing standards. 
A) A pre-existing and well-informed point of view with respect to the audit. 
B) Technical training that is adequate to meet the requirements of a professional. 
C) A background in many different disciplines. 
D) Experience in taxation that is sufficient to comply with generally accepted auditing standards.

Question 14

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 15

A CPA firm would provide itself reasonable assurance of meeting its responsibility to offer professional services that conform with professional standards by

Accepted Answer

A) Establishing an understanding with each client concerning individual responsibilities in a signed engagement letter. 
B) Assessing the risk that errors and fraud may cause the financial statements to contain material misstatements. 
C) Developing specific audit objectives to support management's assertions that are embodied in the financial statements. 
D) Maintaining a comprehensive system of quality control that is suitably designed in relation to its organizational structure. 
A) Establishing an understanding with each client concerning individual responsibilities in a signed engagement letter. 
B) Assessing the risk that errors and fraud may cause the financial statements to contain material misstatements. 
C) Developing specific audit objectives to support management's assertions that are embodied in the financial statements. 
D) Maintaining a comprehensive system of quality control that is suitably designed in relation to its organizational structure.

Question 16

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

Accepted Answer

A) Receiving confirmation from third parties as to the existence of securities is more reliable than the auditors' personal inspection of those securities. 
B) Verbal inquiries received from the client regarding sales made to customers are more reliable than sales invoices prepared by the client for its customers. 
C) A bank confirmation received directly by the auditor is more reliable than a bank confirmation initially received by the client and forwarded to the auditor. 
D) Evidence drawn from a document prepared by the client is more reliable than evidence drawn from a document prepared by an external party that is forwarded to the auditor by the client. 
A) Receiving confirmation from third parties as to the existence of securities is more reliable than the auditors' personal inspection of those securities. 
B) Verbal inquiries received from the client regarding sales made to customers are more reliable than sales invoices prepared by the client for its customers. 
C) A bank confirmation received directly by the auditor is more reliable than a bank confirmation initially received by the client and forwarded to the auditor. 
D) Evidence drawn from a document prepared by the client is more reliable than evidence drawn from a document prepared by an external party that is forwarded to the auditor by the client.

Question 17

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 18

Which of the following is a definition of control risk?

Accepted Answer

A) The risk that a material misstatement will not be prevented or detected on a timely basis by the client's internal controls. 
B) The risk that the auditor will not detect a material misstatement. 
C) The risk that the auditor's assessment of internal controls will be at less than the maximum level. 
D) The susceptibility of material misstatement assuming there are no related internal control policies or procedures. 
A) The risk that a material misstatement will not be prevented or detected on a timely basis by the client's internal controls. 
B) The risk that the auditor will not detect a material misstatement. 
C) The risk that the auditor's assessment of internal controls will be at less than the maximum level. 
D) The susceptibility of material misstatement assuming there are no related internal control policies or procedures.

Question 19

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 20

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.

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 factors influences the risk of material misstatement? Susceptibility of the Nature, timing, and account balance to extent of further audit misstatement procedures A. Yes No B. Yes Yes C. No Yes D No No

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

Which of the following is not related to the responsibilities principle?

As it relates to audit evidence,appropriateness refers to the

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

Which of the following represent audit quality guides that remain stable over time and are applicable for all audits?

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

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

Under generally accepted auditing standards,which of the following relates to the responsibilities principle?

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

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

An independent auditor must have which of the following?

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

A CPA firm would provide itself reasonable assurance of meeting its responsibility to offer professional services that conform with professional standards by

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

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

Which of the following is a definition of control risk?

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

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

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

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 factors influences the risk of material misstatement? Susceptibility of the Nature, timing, and account balance to extent of further audit misstatement procedures A. Yes No B. Yes Yes C. No Yes D No No

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

Which of the following is not related to the responsibilities principle?

As it relates to audit evidence,appropriateness refers to the

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

Which of the following represent audit quality guides that remain stable over time and are applicable for all audits?

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

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

Under generally accepted auditing standards,which of the following relates to the responsibilities principle?

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

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

An independent auditor must have which of the following?

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

A CPA firm would provide itself reasonable assurance of meeting its responsibility to offer professional services that conform with professional standards by

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

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

Which of the following is a definition of control risk?

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

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

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