Question 1

The term "unqualified audit opinion" is commonly used when referring to an audit report having which characteristic?

Accepted Answer

A) The auditor who performed the audit was not properly licensed as a CPA. 
B) The auditor has no need to call attention to anything wrong with the audit work or the financial statements. 
C) The auditor conducted the audit according to a different set of standards than GAAS. 
D) That auditor is reporting on financial statements that are not limited to specific reporting period. 
A) The auditor who performed the audit was not properly licensed as a CPA. 
B) The auditor has no need to call attention to anything wrong with the audit work or the financial statements. 
C) The auditor conducted the audit according to a different set of standards than GAAS. 
D) That auditor is reporting on financial statements that are not limited to specific reporting period.

Question 2

Control risk is the risk that an accounting firm's quality control standards will not be adequate.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following has been established to oversee the auditors of public companies?

Accepted Answer

A) Canadian Coalition for Good Governance. 
B) Canadian Public Accountability Board. 
C) The SOX Board. 
D) The Canadian Securities Commission. 
A) Canadian Coalition for Good Governance. 
B) Canadian Public Accountability Board. 
C) The SOX Board. 
D) The Canadian Securities Commission.

Question 4

In Canada,although the CPA designation is the sole nationally recognized public accounting designation,individual provinces regulate the requirements for the practice of public accounting.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is the first task that the auditor must accomplish to demonstrate proficiency in auditing?

Accepted Answer

A) Identify the evidence relevant for the audit of assertions that are made by management in its unaudited financial statements and notes. 
B) Design an audit program to obtain sufficient appropriate evidence about assertions management makes in financial statements and notes. 
C) Recognize the underlying assertions made by management in the financial statements and notes. 
D) Evaluate the evidence gathered in the performance of the audit program and decide whether management's assertions conform to generally accepted accounting principles and reality. 
A) Identify the evidence relevant for the audit of assertions that are made by management in its unaudited financial statements and notes. 
B) Design an audit program to obtain sufficient appropriate evidence about assertions management makes in financial statements and notes. 
C) Recognize the underlying assertions made by management in the financial statements and notes. 
D) Evaluate the evidence gathered in the performance of the audit program and decide whether management's assertions conform to generally accepted accounting principles and reality.

Question 6

Control risk is ________.

Accepted Answer

A) the risk that a material misstatement could occur and not be prevented or detected by the company's internal control policies and procedures 
B) the risk that a material misstatement could occur and not be detected by the auditor's audit procedures 
C) the risk that the auditor will not be able to complete the audit on a timely basis 
D) the risk that the auditor will not properly control the staff on the audit engagement 
A) the risk that a material misstatement could occur and not be prevented or detected by the company's internal control policies and procedures 
B) the risk that a material misstatement could occur and not be detected by the auditor's audit procedures 
C) the risk that the auditor will not be able to complete the audit on a timely basis 
D) the risk that the auditor will not properly control the staff on the audit engagement

Question 7

Auditors try to achieve independence in appearance in order to ________.

Accepted Answer

A) maintain public confidence in the profession 
B) become independent in appearance and in fact 
C) comply with the generally accepted auditing standards 
D) maintain an unbiased mental attitude 
A) maintain public confidence in the profession 
B) become independent in appearance and in fact 
C) comply with the generally accepted auditing standards 
D) maintain an unbiased mental attitude

Question 8

Because of the risk of material misstatement,an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of ________.

Accepted Answer

A) objective judgment 
B) independent integrity 
C) professional skepticism 
D) impartial conservatism 
A) objective judgment 
B) independent integrity 
C) professional skepticism 
D) impartial conservatism

Question 9

Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle.Which of the following should the auditor consider to be the most authoritative?

Accepted Answer

A) CPA Canada Handbook. 
B) CPA Canada Exposure Drafts. 
C) Industry practice. 
D) Federal legislation. 
A) CPA Canada Handbook. 
B) CPA Canada Exposure Drafts. 
C) Industry practice. 
D) Federal legislation.

Question 10

To audit public companies in Canada,an auditor must be a CPA with a public accounting license and have their firm register with the CPAB.

Accepted Answer

A) True 
 B)False

Question 11

The GAAS examination standards relating to the audit of financial statements,mandates each of the following requirements,except for

Accepted Answer

A) Plan and perform an audit to reduce audit risk to an acceptably low level. 
B) Obtain reasonable assurance that the financial statements,taken as whole,are free of all misstatements 
C) Conduct an audit that is in accordance with CASs. 
D) Obtain a conclusive amount of audit evidence to support your audit opinion. 
A) Plan and perform an audit to reduce audit risk to an acceptably low level. 
B) Obtain reasonable assurance that the financial statements,taken as whole,are free of all misstatements 
C) Conduct an audit that is in accordance with CASs. 
D) Obtain a conclusive amount of audit evidence to support your audit opinion.

Question 12

The examination standard CAS 200 requires that auditors obtain a conclusive amount of evidence to support their audit opinion

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements best explains an unmodified report opinion?

Accepted Answer

A) The financial statements contain a departure from GAAP. 
B) The auditor was unable to complete the work necessary to form a complete opinion. 
C) The auditor was not aware of any reasons not to believe the statements are correct. 
D) Based on the evidence obtained,the auditor believes the statements are free of material error. 
A) The financial statements contain a departure from GAAP. 
B) The auditor was unable to complete the work necessary to form a complete opinion. 
C) The auditor was not aware of any reasons not to believe the statements are correct. 
D) Based on the evidence obtained,the auditor believes the statements are free of material error.

Question 14

Assurance standards can be applied to which of the following types of engagement?

Accepted Answer

A) Attestation engagements 
B) Direct reporting engagements 
C) Both direct reporting and attestation engagements 
D) Tax planning and consulting engagements 
A) Attestation engagements 
B) Direct reporting engagements 
C) Both direct reporting and attestation engagements 
D) Tax planning and consulting engagements

Question 15

The reporting standards require that the auditor explicitly report on whether the financial statements ________.

Accepted Answer

A) contain adequate disclosure of all material matters 
B) are in accordance with GAAP 
C) used principles that are appropriate for the circumstances 
D) were prepared on a consistent basis with the comparative year 
A) contain adequate disclosure of all material matters 
B) are in accordance with GAAP 
C) used principles that are appropriate for the circumstances 
D) were prepared on a consistent basis with the comparative year

Question 16

Williams & Co. ,a large international CPA firm,will be subject to an external peer review.The peer review will most likely be performed by ________.

Accepted Answer

A) employees and partners of Williams & Co.who are not associated with the particular audits being reviewed 
B) employees and partners of another CPA firm,hired by Williams & Co. 
C) peer review staff of the Ontario Securities Commission 
D) peer review staff of CPA Canada 
A) employees and partners of Williams & Co.who are not associated with the particular audits being reviewed 
B) employees and partners of another CPA firm,hired by Williams & Co. 
C) peer review staff of the Ontario Securities Commission 
D) peer review staff of CPA Canada

Question 17

The fourth reporting standard requires the audit report to comment on the consistency of the accounting principles used in preparing the financial statements.

Accepted Answer

A) True 
 B)False

Question 18

What is the difference between audit procedures and audit standards?

Accepted Answer

Audit standards are audit-quality recomm

Question 19

What are practice inspections and why are they performed?

Accepted Answer

Practice inspections are a system of rev

Question 20

According to generally accepted auditing standards (GAAS),the overall objective of a financial statement audit is ________.

Accepted Answer

A) to enable the auditor to express an opinion as to whether the financial statements are prepared in accordance with generally accepted accounting principles 
B) to reduce audit risk to an acceptably low level 
C) to determine whether the financial principles adopted by management in preparing the financial statements are acceptable 
D) to obtain reasonable assurance that the financial statements taken as a whole are free from misstatement,whether due to fraud or error 
A) to enable the auditor to express an opinion as to whether the financial statements are prepared in accordance with generally accepted accounting principles 
B) to reduce audit risk to an acceptably low level 
C) to determine whether the financial principles adopted by management in preparing the financial statements are acceptable 
D) to obtain reasonable assurance that the financial statements taken as a whole are free from misstatement,whether due to fraud or error

Exam 2: Auditors Professional Roles and Responsibilities

The term "unqualified audit opinion" is commonly used when referring to an audit report having which characteristic?

Control risk is the risk that an accounting firm's quality control standards will not be adequate.

Which of the following has been established to oversee the auditors of public companies?

In Canada,although the CPA designation is the sole nationally recognized public accounting designation,individual provinces regulate the requirements for the practice of public accounting.

Which of the following is the first task that the auditor must accomplish to demonstrate proficiency in auditing?

Control risk is ________.

Auditors try to achieve independence in appearance in order to ________.

Because of the risk of material misstatement,an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of ________.

Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle.Which of the following should the auditor consider to be the most authoritative?

To audit public companies in Canada,an auditor must be a CPA with a public accounting license and have their firm register with the CPAB.

The GAAS examination standards relating to the audit of financial statements,mandates each of the following requirements,except for

The examination standard CAS 200 requires that auditors obtain a conclusive amount of evidence to support their audit opinion

Which of the following statements best explains an unmodified report opinion?

Assurance standards can be applied to which of the following types of engagement?

The reporting standards require that the auditor explicitly report on whether the financial statements ________.

Williams & Co. ,a large international CPA firm,will be subject to an external peer review.The peer review will most likely be performed by ________.

The fourth reporting standard requires the audit report to comment on the consistency of the accounting principles used in preparing the financial statements.

What is the difference between audit procedures and audit standards?

What are practice inspections and why are they performed?

According to generally accepted auditing standards (GAAS),the overall objective of a financial statement audit is ________.

Introduction to Auditing

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, receivables, and Receipts Process and Cash Account Balance

The Purchases, payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, including Fraud Auditing

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