Question 1

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 2

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 3

What is the first line of enforcement of legal and professional financial reporting standards?

Accepted Answer

A)  Prosecuting attorney 
B)  International Accounting Standards Board 
C)  Local civil court system in the home country 
D)  External auditing 
A)  Prosecuting attorney 
B)  International Accounting Standards Board 
C)  Local civil court system in the home country 
D)  External auditing

Question 4

What does the Foreign Corrupt Practices Act have to do with accounting?

Accepted Answer

A)  It requires that U.S. companies properly record bribes made to obtain business from foreign clients. 
B)  It requires that appropriate internal control systems be maintained by publicly traded U.S. companies. 
C)  It mandates the use of the temporal method of translating assets obtained illegally in foreign countries. 
D)  It demands that publicly traded U.S. companies follow international best-practices when auditing illegal operations abroad. 
A)  It requires that U.S. companies properly record bribes made to obtain business from foreign clients. 
B)  It requires that appropriate internal control systems be maintained by publicly traded U.S. companies. 
C)  It mandates the use of the temporal method of translating assets obtained illegally in foreign countries. 
D)  It demands that publicly traded U.S. companies follow international best-practices when auditing illegal operations abroad.

Question 5

Under the Sarbanes-Oxley Act of 2002, who is responsible for paying the independent auditor?

Accepted Answer

A)  Management 
B)  Audit committee 
C)  Government who has jurisdiction over the corporation 
D)  American Institute of Certified Public Accountants (AICP
A)  
A)  Management 
B)  Audit committee 
C)  Government who has jurisdiction over the corporation 
D)  American Institute of Certified Public Accountants (AICP
A)

Question 6

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 International Financial Reporting Standards (IFRS). 
B)  they have complied with at least one-half of the provisions of the International Financial Reporting Standards (IFRS). 
C)  they have complied with all requirements and interpretations of the International Financial Reporting Interpretations Committee (IFRI
C) . 
D)  they have complied with most of the International Financial Reporting Standards (IFRS) or with U.S. GAAP. 
A)  they have complied with at least 75% of the International Financial Reporting Standards (IFRS). 
B)  they have complied with at least one-half of the provisions of the International Financial Reporting Standards (IFRS). 
C)  they have complied with all requirements and interpretations of the International Financial Reporting Interpretations Committee (IFRI
C) . 
D)  they have complied with most of the International Financial Reporting Standards (IFRS) or with U.S. GAAP.

Question 7

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 8

Which of the following is the responsibility of an audit committee?

Accepted Answer

A)  Oversee the internal control systems 
B)  Oversee internal auditing and the independent public accounting function 
C)  Monitor the financial reporting process 
D)  All answers are correct 
A)  Oversee the internal control systems 
B)  Oversee internal auditing and the independent public accounting function 
C)  Monitor the financial reporting process 
D)  All answers are correct

Question 9

In multinational corporations, to whom are the external auditors responsible according to OECD guidelines?

Accepted Answer

A)  Corporate management 
B)  Shareholders 
C)  Government of the host country 
D)  Creditors 
A)  Corporate management 
B)  Shareholders 
C)  Government of the host country 
D)  Creditors

Question 10

In what area is external auditing consistent internationally?

Accepted Answer

A)  Audit report 
B)  Auditing standards 
C)  Regulation of the profession 
D)  None of the above 
A)  Audit report 
B)  Auditing standards 
C)  Regulation of the profession 
D)  None of the above

Question 11

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 12

Why is international harmonization of auditing standards important?

Accepted Answer

A)  To be consistent with harmonized international accounting standards. 
B)  To ensure the independence of external auditors of multinational corporations. 
C)  To assure international capital markets that auditing has been consistent across companies. 
D)  To reduce the authority of individual governments to enact accounting laws. 
A)  To be consistent with harmonized international accounting standards. 
B)  To ensure the independence of external auditors of multinational corporations. 
C)  To assure international capital markets that auditing has been consistent across companies. 
D)  To reduce the authority of individual governments to enact accounting laws.

Question 13

Which group is responsible for setting and developing auditing standards in the United Kingdom?

Accepted Answer

A)  Department of Trade and Industries (DTI) 
B)  Consultative Committee of Accountancy Bodies (CCA
B)  
C)  Auditing Practices Board (AP
B)  
D)  Institute of Chartered Accountants in England and Wales (ICAEW) 
A)  Department of Trade and Industries (DTI) 
B)  Consultative Committee of Accountancy Bodies (CCA
B)  
C)  Auditing Practices Board (AP
B)  
D)  Institute of Chartered Accountants in England and Wales (ICAEW)

Question 14

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 15

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 16

Who may bring civil litigation against an auditor?

Accepted Answer

A)  Only the client company 
B)  Only shareholders 
C)  The client company and shareholders 
D)  It depends on a country's laws governing auditor liability 
A)  Only the client company 
B)  Only shareholders 
C)  The client company and shareholders 
D)  It depends on a country's laws governing auditor liability

Question 17

Auditors in the United Kingdom often include disclaimers of liability in their audit reports. According to the U.S. Securities and Exchange Commission, how effective is this approach to limiting civil liabilities?

Accepted Answer

A)  It will have no effect when included in the financial statements of U.S. companies. 
B)  It effectively caps the damage awards that will be made in U.S. civil courts. 
C)  It limits who can bring civil action in cases involving the audit of U.S. companies. 
D)  It limits both civil and criminal liability against auditors of U.S. companies. 
A)  It will have no effect when included in the financial statements of U.S. companies. 
B)  It effectively caps the damage awards that will be made in U.S. civil courts. 
C)  It limits who can bring civil action in cases involving the audit of U.S. companies. 
D)  It limits both civil and criminal liability against auditors of U.S. companies.

Question 18

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 creditors and 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 creditors and 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 19

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 20

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.

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

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

What is the first line of enforcement of legal and professional financial reporting standards?

What does the Foreign Corrupt Practices Act have to do with accounting?

Under the Sarbanes-Oxley Act of 2002, who is responsible for paying the independent auditor?

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

Who oversees the work of the IFAC committees?

Which of the following is the responsibility of an audit committee?

In multinational corporations, to whom are the external auditors responsible according to OECD guidelines?

In what area is external auditing consistent internationally?

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

Why is international harmonization of auditing standards important?

Which group is responsible for setting and developing auditing standards in the United Kingdom?

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

What are the two main theories of corporate governance?

Who may bring civil litigation against an auditor?

Auditors in the United Kingdom often include disclaimers of liability in their audit reports. According to the U.S. Securities and Exchange Commission, how effective is this approach to limiting civil liabilities?

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

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

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

International Taxation

International Transfer Pricing

Management Accounting Issues in Multinational Corporations

International Sustainability Reporting

Filters

Exam 11: Auditing and Corporate Governance: An International Perspective

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

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

What is the first line of enforcement of legal and professional financial reporting standards?

What does the Foreign Corrupt Practices Act have to do with accounting?

Under the Sarbanes-Oxley Act of 2002, who is responsible for paying the independent auditor?

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

Who oversees the work of the IFAC committees?

Which of the following is the responsibility of an audit committee?

In multinational corporations, to whom are the external auditors responsible according to OECD guidelines?

In what area is external auditing consistent internationally?

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

Why is international harmonization of auditing standards important?

Which group is responsible for setting and developing auditing standards in the United Kingdom?

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

What are the two main theories of corporate governance?

Who may bring civil litigation against an auditor?

Auditors in the United Kingdom often include disclaimers of liability in their audit reports. According to the U.S. Securities and Exchange Commission, how effective is this approach to limiting civil liabilities?

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

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

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

International Taxation

International Transfer Pricing

Management Accounting Issues in Multinational Corporations

International Sustainability Reporting

Filters