Exam 5: Professional Auditing Standards and the Audit Opinion Formulation Process

The PCAOB requires the audit be conducted with due professional care,which is a standard of care that would be expected of a reasonably prudent auditor.

Which of the following statements about assertions is true?

To satisfy the fieldwork standards,what must an auditor do?

Which of the following is a reason why an auditor needs an understanding of internal controls?

The PCAOB's fieldwork standards include planning and supervision,understanding the entity and its internal control structure,and obtaining sufficient appropriate audit evidence.

Part of the understanding the client process of an audit is identifying factors that may require extension or modification of the audit tests,such as potential related-party transactions or the possibility of material misstatements.

What organization continues to set auditing standards for firms auditing private companies?

Without independence,the value of the auditor's attestation function would be nil.

The PCAOB requires that the auditor will express an opinion on the financial statements as a whole.

Audit procedures can be classified as risk assessment procedures,test of controls or substantive tests.

Developing an understanding of the client's business and industry is essential to proficiency as discussed in the PCAOB's general standards.

AICPA standards are frequently called ISAs.

The standards of the PCAOB encompass three broad categories including: general standards,fieldwork standards and reporting standards.

Which of the following is not a type of audit procedure?

Inherent risk refers to the susceptibility of an assertion about a class of transaction,account balance,or disclosure to a misstatement that could be immaterial,either individually or when aggregated with other misstatements,before consideration of any related controls.

The American Institute of Certified Public Accountants no longer retains the right to set audit standards for any engagements as the Securities Exchange Commission has relinquished such power.

What does the quality of the evidence an auditor collects depend upon?

The auditor needs to obtain absolute assurance as to whether the financial statements are free from material misstatement.

Which assertion addresses whether all transactions and accounts that should be included in the financial statements are included?

Which of the following is not a typical accounting cycle?