Question 1

Primary responsibility for the financial statements lies with: $$\begin{array} { l c c } 
& \text { Auditors } & \text { Management } \
\text { A) } & \text { Yes } & \text { Yes } \
\text { B) } & \text { Yes } & \text { No } \
\text { C) } & \text { No } & \text { Yes } \
\text { D) } & \text { No } & \text { No }
\end{array}$$

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 2

Audits of financial statements are designed to obtain reasonable assurance of detecting misstatement due to: $$\begin{array}{l}
\begin{array} { c } 
&\text { Fraudulent Financial Reporting}&\text{ Misappropriation of Assets }\
\text { A) } & \text { Yes } & \text { Yes } \
\text { B) } & \text { Yes } & \text { No } \
\text { C) } & \text { No } & \text { Yes } \
\text { D) } & \text { No } & \text { No }
\end{array}
\end{array}$$

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 3

The auditors who find that the client has committed an illegal act would be most likely to withdraw from the engagement when the:

Accepted Answer

A) Management fails to take appropriate corrective action. 
B) Illegal act has material financial statement implications. 
C) Illegal act has received widespread publicity. 
D) Auditors cannot reasonably estimate the effect of the illegal act on the financial statements. 
A) Management fails to take appropriate corrective action. 
B) Illegal act has material financial statement implications. 
C) Illegal act has received widespread publicity. 
D) Auditors cannot reasonably estimate the effect of the illegal act on the financial statements.

Question 4

If the auditors discover illegal acts by a client,they ordinarily should immediately resign from the engagement.

Accepted Answer

A) True 
 B)False

Question 5

The Public Company Accounting Oversight Board has authority to establish which of the following relating to public companies? $$\begin{array} { c c c } 
& \text { Attestation Standards } & \text { Ethics Standards } \
\text { A) } & \text { Yes } & \text { Yes } \
\text { B) } & \text { Yes } & \text { No } \
\text { C) } & \text { No } & \text { Yes } \
\text { D) } & \text { No } & \text { No }
\end{array}$$

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 6

Auditors must consider the possibility of fraud by employees or management on every audit engagement.They must also consider the possibility that the client has not complied with laws.
(a)Distinguish between employee and management fraud.
(b)Describe the auditors' responsibility for the detection of fraud in an audit.
(c)Describe the auditors' responsibility regarding noncompliance with laws by a client.

Accepted Answer

(a)Employee fraud is dishonest actions b

Question 7

Which of the following is one of the elements of AICPA quality control?

Accepted Answer

A) Assurance of proper levels of association. 
B) Due professional care. 
C) Engagement performance. 
D) Supervision. 
A) Assurance of proper levels of association. 
B) Due professional care. 
C) Engagement performance. 
D) Supervision.

Question 8

The standard unmodified auditors' report for audits of nonpublic companies consists of three paragraphs.Identify the three paragraphs and describe the purpose of each.

Accepted Answer

•Introductory paragraph--describes the f

Question 9

Requirements for training,independence and due professional care are included in which group of the generally accepted auditing standards of the PCAOB?

Accepted Answer

A) Fieldwork. 
B) General. 
C) Reporting. 
D) Quality control. 
A) Fieldwork. 
B) General. 
C) Reporting. 
D) Quality control.

Question 10

An audit should be designed to obtain reasonable assurance of detecting non-compliance with all laws.

Accepted Answer

A) True 
 B)False

Question 11

The auditors' report may be addressed to the company whose financial statements are being examined or to that company's:

Accepted Answer

A) Chief operating officer. 
B) President. 
C) Board of Directors. 
D) Chief financial officer. 
A) Chief operating officer. 
B) President. 
C) Board of Directors. 
D) Chief financial officer.

Question 12

Which of the following is accurate,as indicated in the principles underlying an audit?

Accepted Answer

A) Management is expected to provide the auditors with all needed evidence prior to the beginning of audit work. 
B) An auditor is unable to obtain absolute assurance that the financial statements are free from material misstatement. 
C) Auditors are responsible for having appropriate competence to perform the audit without the assistance of outside specialists. 
D) Management is responsible for preparing accurate financial statement amounts, while auditors are responsible for auditing those amounts and for preparing note disclosures related to those amounts. 
A) Management is expected to provide the auditors with all needed evidence prior to the beginning of audit work. 
B) An auditor is unable to obtain absolute assurance that the financial statements are free from material misstatement. 
C) Auditors are responsible for having appropriate competence to perform the audit without the assistance of outside specialists. 
D) Management is responsible for preparing accurate financial statement amounts, while auditors are responsible for auditing those amounts and for preparing note disclosures related to those amounts.

Question 13

Which of the following is the name used to describe financial reporting frameworks other than GAAP which include: cash basis,tax basis,regulatory basis,or contractual basis?

Accepted Answer

A) Applicable. 
B) PCAOB. 
C) Special reports. 
D) Special purpose. 
A) Applicable. 
B) PCAOB. 
C) Special reports. 
D) Special purpose.

Question 14

The attestation standards do not supersede generally accepted auditing standards.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not an underlying premise of an audit?

Accepted Answer

A) Management should provide the auditor with all information relevant to the preparation and fair presentation of the financial statements. 
B) Management and the auditors have responsibility for the preparation of financial statements in accordance with the applicable financial reporting framework. 
C) Where appropriate, the auditor may obtain information from those charged with governance. 
D) The auditors should be provided unrestricted access to those within the entity from whom the auditor determines it necessary to obtain audit evidence. 
A) Management should provide the auditor with all information relevant to the preparation and fair presentation of the financial statements. 
B) Management and the auditors have responsibility for the preparation of financial statements in accordance with the applicable financial reporting framework. 
C) Where appropriate, the auditor may obtain information from those charged with governance. 
D) The auditors should be provided unrestricted access to those within the entity from whom the auditor determines it necessary to obtain audit evidence.

Question 16

The auditors' report for a nonpublic company should indicate:

Accepted Answer

A) That the audit was made in accordance with auditing standards generally accepted in the United States of America. 
B) Any weakness in internal control observed by the auditors. 
C) That accounting principles have been consistently applied. 
D) That no illegal acts have been identified. 
A) That the audit was made in accordance with auditing standards generally accepted in the United States of America. 
B) Any weakness in internal control observed by the auditors. 
C) That accounting principles have been consistently applied. 
D) That no illegal acts have been identified.

Question 17

Which of the following is not a type of auditors' opinion?

Accepted Answer

A) Adverse. 
B) Ordinary. 
C) Qualified. 
D) Unmodified. 
A) Adverse. 
B) Ordinary. 
C) Qualified. 
D) Unmodified.

Question 18

Which of the following best describes what is meant by generally accepted auditing standards?

Accepted Answer

A) Acts to be performed by the auditors. 
B) Measures of the quality of the auditors' performance. 
C) Procedures to be used to gather evidence to support financial statements. 
D) Audit objectives generally determined on audit engagements. 
A) Acts to be performed by the auditors. 
B) Measures of the quality of the auditors' performance. 
C) Procedures to be used to gather evidence to support financial statements. 
D) Audit objectives generally determined on audit engagements.

Question 19

To express an opinion on financial statements,the auditor obtains reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error.

Accepted Answer

A) True 
 B)False

Question 20

An unconditional responsibility to follow an AICPA professional standard exists when the professional standard uses the term(s) $$\begin{array} { l l l } 
& \text { Should } & \text { Should } \
\text { A) } & \text { Yes } & \text { Yes } \
\text { B) } & \text { Yes } & \text { No } \
\text { C) } & \text { No } & \text { Yes } \
\text { D) } & \text { No } & \text { No }
\end{array}$$

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

Primary responsibility for the financial statements lies with: Auditors Management A) Yes Yes B) Yes No C) No Yes D) No No

Audits of financial statements are designed to obtain reasonable assurance of detecting misstatement due to: Fraudulent Financial Reporting Misappropriation of Assets A) Yes Yes B) Yes No C) No Yes D) No No

The auditors who find that the client has committed an illegal act would be most likely to withdraw from the engagement when the:

If the auditors discover illegal acts by a client,they ordinarily should immediately resign from the engagement.

The Public Company Accounting Oversight Board has authority to establish which of the following relating to public companies? Attestation Standards Ethics Standards A) Yes Yes B) Yes No C) No Yes D) No No

Which of the following is one of the elements of AICPA quality control?

The standard unmodified auditors' report for audits of nonpublic companies consists of three paragraphs.Identify the three paragraphs and describe the purpose of each.

Requirements for training,independence and due professional care are included in which group of the generally accepted auditing standards of the PCAOB?

An audit should be designed to obtain reasonable assurance of detecting non-compliance with all laws.

The auditors' report may be addressed to the company whose financial statements are being examined or to that company's:

Which of the following is accurate,as indicated in the principles underlying an audit?

Which of the following is the name used to describe financial reporting frameworks other than GAAP which include: cash basis,tax basis,regulatory basis,or contractual basis?

The attestation standards do not supersede generally accepted auditing standards.

Which of the following is not an underlying premise of an audit?

The auditors' report for a nonpublic company should indicate:

Which of the following is not a type of auditors' opinion?

Which of the following best describes what is meant by generally accepted auditing standards?

To express an opinion on financial statements,the auditor obtains reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error.

An unconditional responsibility to follow an AICPA professional standard exists when the professional standard uses the term(s) Should Should 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

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