Question 1

An audit is more likely to detect tax evasion than violations of antitrust laws.

Accepted Answer

A) True 
 B)False

Question 2

A set of criteria used to determine measurement,recognition,representation,and disclosure of all material items appearing in the financial statements is referred to as a(n)

Accepted Answer

A) Financial reporting framework. 
B) Quality control presentation standard. 
C) Public Company Accounting Oversight Board Criteria. 
D) Special purpose audit standard. 
A) Financial reporting framework. 
B) Quality control presentation standard. 
C) Public Company Accounting Oversight Board Criteria. 
D) Special purpose audit standard.

Question 3

The auditors are primarily responsible for preparing the financial statements and expressing an opinion on whether they follow generally accepted auditing standards.

Accepted Answer

A) True 
 B)False

Question 4

Financial statements are prepared following a(an)

Accepted Answer

A) Applicable financial reporting framework. 
B) Appropriate subject matter. 
C) Generally accepted auditing standards. 
D) Set of quality control standards. 
A) Applicable financial reporting framework. 
B) Appropriate subject matter. 
C) Generally accepted auditing standards. 
D) Set of quality control standards.

Question 5

An investor reading the financial statements of The Sundby Corporation observes that the statements are accompanied by an unmodified auditors' report.From this the investor may conclude that:

Accepted Answer

A) Any disputes over significant accounting issues have been settled to the auditors' satisfaction. 
B) The auditors are satisfied that Sundby is operationally efficient. 
C) The auditors have ascertained that Sundby's financial statements have been prepared accurately. 
D) Informative disclosures in the financial statements but not necessarily in the footnotes are to be regarded as reasonably adequate. 
A) Any disputes over significant accounting issues have been settled to the auditors' satisfaction. 
B) The auditors are satisfied that Sundby is operationally efficient. 
C) The auditors have ascertained that Sundby's financial statements have been prepared accurately. 
D) Informative disclosures in the financial statements but not necessarily in the footnotes are to be regarded as reasonably adequate.

Question 6

Generally accepted auditing standards established by the AICPA through April of 2003:

Accepted Answer

A) Have been accepted as interim standards by the Public Company Accounting Oversight Board. 
B) Provide accounting guidance for nonpublic companies. 
C) Have all been superseded by Public Company Accounting Oversight Board standards. 
D) Are now developed by the Securities and Exchange Commission. 
A) Have been accepted as interim standards by the Public Company Accounting Oversight Board. 
B) Provide accounting guidance for nonpublic companies. 
C) Have all been superseded by Public Company Accounting Oversight Board standards. 
D) Are now developed by the Securities and Exchange Commission.

Question 7

The primary responsibility for the adequacy of disclosure in the financial statements of a publicly held company rests with the:

Accepted Answer

A) Partner assigned to the audit engagement. 
B) Management of the company. 
C) Auditor in charge of the fieldwork. 
D) Securities and Exchange Commission. 
A) Partner assigned to the audit engagement. 
B) Management of the company. 
C) Auditor in charge of the fieldwork. 
D) Securities and Exchange Commission.

Question 8

A peer review in which the peer reviewers study and appraise a CPA firm's system of quality control to perform accounting and auditing work is referred to as a(n):

Accepted Answer

A) Engagement review. 
B) Inspection review. 
C) Supervision review. 
D) System review. 
A) Engagement review. 
B) Inspection review. 
C) Supervision review. 
D) System review.

Question 9

Authoritative GAAP sources include: $\begin{array}{c}
\begin{array}{c}
\
\
A.\
B.\
C.\
D.\
\end{array}
\begin{array}{c}
\text{FASB Concepts}\
\underline{Statements}\
No\
No\
Yes\
Yes\
\end{array}
\begin{array}{c}
\text{FASB}\ 
\underline{\text{Codification}}\
No\
Yes\
No\
Yes\
\end{array}
\end{array}$

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 10

The Auditing Standards Board's guidance on matters such as the purpose of an audit,the premise of an audit,and auditor personal responsibilities is included in:

Accepted Answer

A) The 10 Generally Accepted Auditing Standards. 
B) The Code of Professional Conduct. 
C) Accounting Series Releases. 
D) Principles Underlying an Audit Conducted in Accordance with GAAS. 
A) The 10 Generally Accepted Auditing Standards. 
B) The Code of Professional Conduct. 
C) Accounting Series Releases. 
D) Principles Underlying an Audit Conducted in Accordance with GAAS.

Question 11

When the auditors express an opinion on financial statements their responsibilities extend to:

Accepted Answer

A) The underlying wisdom of their client's management decisions. 
B) Whether the results of their client's operating decisions are fairly presented in the financial statements. 
C) Active participation in the implementation of the advice given to their client. 
D) An ongoing responsibility for their client's solvency. 
A) The underlying wisdom of their client's management decisions. 
B) Whether the results of their client's operating decisions are fairly presented in the financial statements. 
C) Active participation in the implementation of the advice given to their client. 
D) An ongoing responsibility for their client's solvency.

Question 12

If noncompliance with a law is discovered during the audit of a publicly held company,the auditors should first:

Accepted Answer

A) Notify the regulatory authorities. 
B) Determine who was responsible for the noncompliance. 
C) Intensify the examination to identify noncompliance with any laws. 
D) Report the act to high level personnel within the client's organization and to the audit committee. 
A) Notify the regulatory authorities. 
B) Determine who was responsible for the noncompliance. 
C) Intensify the examination to identify noncompliance with any laws. 
D) Report the act to high level personnel within the client's organization and to the audit committee.

Question 13

When a Statement Auditing Standards uses the word "should" relating to a requirement,it means that the auditor:

Accepted Answer

A) Should fulfill the responsibilities under all circumstances. 
B) Should comply with requirements unless the auditor demonstrates and documents that alternative actions are sufficient to achieve the objectives of the standards. 
C) Should consider whether to follow the advice based on the exercise of professional judgment in the circumstances. 
D) May choose to change responsibilities relating to various professional standards that remain under consideration. 
A) Should fulfill the responsibilities under all circumstances. 
B) Should comply with requirements unless the auditor demonstrates and documents that alternative actions are sufficient to achieve the objectives of the standards. 
C) Should consider whether to follow the advice based on the exercise of professional judgment in the circumstances. 
D) May choose to change responsibilities relating to various professional standards that remain under consideration.

Question 14

The pronouncements of the International Auditing and Assurance Standards Board do not override the national auditing standards of its members,even when financial statements are issued by a multinational company.

Accepted Answer

A) True 
 B)False

Question 15

Partners in CPA firms usually have the responsibility for signing the audit report.

Accepted Answer

A) True 
 B)False

Question 16

The body that issues international pronouncements providing auditing procedural and reporting guidance is the:

Accepted Answer

A) International Federation of Auditors. 
B) Multinational Reporting Commission. 
C) International Auditing and Assurance Standards Board. 
D) AICPA Auditing Standards Board. 
A) International Federation of Auditors. 
B) Multinational Reporting Commission. 
C) International Auditing and Assurance Standards Board. 
D) AICPA Auditing Standards Board.

Question 17

By definition,proper professional skepticism on an audit requires $\begin{array}{c}
\begin{array}{c}
\
\
A.\
B.\
C.\
D.\
\end{array}
\begin{array}{c}
Questioning\
\underline{mind}\
No\
No\
Yes\
Yes\
\end{array}
\begin{array}{c}
\text{Subjective assessment}\ 
\underline{\text{of audit evidence}}\
No\
Yes\
No\
Yes\
\end{array}
\end{array}$

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 18

Of the following,which are current types of peer review? $$\begin{array} { c c c } 
& \text { System Review } & \text { Engagement Review } \
\text { A) } & \text { Yes } & \text { Yes } \
\text { B) } & \text { Yes } & \text { No } \
\text { C) } & \text { No } & \text { Yes } \
\text { D) } & \text { No } & \text { No }
\end{array}$$

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 19

A requirement to design recruitment processes and procedures to help the firm select individuals meeting minimum academic requirements established by the firm is an example of a quality control procedure in the area of:

Accepted Answer

A) Acceptance and continuance of client relationships and specific engagements. 
B) Engagement performance. 
C) Human resources. 
D) Relevant ethical requirements. 
A) Acceptance and continuance of client relationships and specific engagements. 
B) Engagement performance. 
C) Human resources. 
D) Relevant ethical requirements.

Question 20

An audit provides reasonable assurance of detecting which of the following types of material illegal acts? $\begin{array} { c}
 & \text { Direct Effect} & \text { Without a} \ 
&\text { } & \text { Direct Effect} \ 
 \text { A) } & \text { Yes } & \text { Yes } \ 
\text { B) } & \text { Yes } & \text { No } \ 
\text { C) } & \text { No } & \text { Yes } \ 
\text { D) } & \text { No } & \text { No } \end{array}$

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.

Exam 2: Professional Standards

An audit is more likely to detect tax evasion than violations of antitrust laws.

A set of criteria used to determine measurement,recognition,representation,and disclosure of all material items appearing in the financial statements is referred to as a(n)

The auditors are primarily responsible for preparing the financial statements and expressing an opinion on whether they follow generally accepted auditing standards.

Financial statements are prepared following a(an)

An investor reading the financial statements of The Sundby Corporation observes that the statements are accompanied by an unmodified auditors' report.From this the investor may conclude that:

Generally accepted auditing standards established by the AICPA through April of 2003:

The primary responsibility for the adequacy of disclosure in the financial statements of a publicly held company rests with the:

A peer review in which the peer reviewers study and appraise a CPA firm's system of quality control to perform accounting and auditing work is referred to as a(n):

Authoritative GAAP sources include: A. B. C. D. FASB Concepts No No Yes Yes FASB No Yes No Yes

The Auditing Standards Board's guidance on matters such as the purpose of an audit,the premise of an audit,and auditor personal responsibilities is included in:

When the auditors express an opinion on financial statements their responsibilities extend to:

If noncompliance with a law is discovered during the audit of a publicly held company,the auditors should first:

When a Statement Auditing Standards uses the word "should" relating to a requirement,it means that the auditor:

The pronouncements of the International Auditing and Assurance Standards Board do not override the national auditing standards of its members,even when financial statements are issued by a multinational company.

Partners in CPA firms usually have the responsibility for signing the audit report.

The body that issues international pronouncements providing auditing procedural and reporting guidance is the:

By definition,proper professional skepticism on an audit requires A. B. C. D. Questioning No No Yes Yes Subjective assessment No Yes No Yes

Of the following,which are current types of peer review? System Review Engagement Review A) Yes Yes B) Yes No C) No Yes D) No No

A requirement to design recruitment processes and procedures to help the firm select individuals meeting minimum academic requirements established by the firm is an example of a quality control procedure in the area of:

An audit provides reasonable assurance of detecting which of the following types of material illegal acts? Direct Effect Without a Direct Effect A) Yes Yes B) Yes No C) No Yes D) No No

The Role of the Public Accountant in the American Economy

Professional Ethics

Legal Liability of CPAS

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property Plant and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

Filters