Question 1

Which of the following is the international body that sets standards for the practice of internal auditing across the world?

Accepted Answer

A) The Internal Audit Reporting Standards Board. 
B) The Institute of Internal Auditors. 
C) The International Accounting Standards Board. 
D) The Charter of Certified Internal Auditors. 
A) The Internal Audit Reporting Standards Board. 
B) The Institute of Internal Auditors. 
C) The International Accounting Standards Board. 
D) The Charter of Certified Internal Auditors.

Question 2

Auditors are not responsible for making judgments regarding the fair value of securities.

Accepted Answer

A) True 
 B)False

Question 3

When auditing financial hedges,the auditor should understand the product,identify relevant risks and controls,and understand the appropriate accounting.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following reflects the scope of services performed in external auditing by a CPA?

Accepted Answer

A) Risk analysis. 
B) Control analysis. 
C) Operations analysis. 
D) Audits of financial statements. 
A) Risk analysis. 
B) Control analysis. 
C) Operations analysis. 
D) Audits of financial statements.

Question 5

Which of the following is not a significant challenge related to valuation issues for audits of merger and acquisition transactions?

Accepted Answer

A) Valuing the assets upon acquisition. 
B) Valuing the liabilities upon acquisition. 
C) Measuring restructuring charges. 
D) Measuring the qualifications of personnel from the acquired company. 
A) Valuing the assets upon acquisition. 
B) Valuing the liabilities upon acquisition. 
C) Measuring restructuring charges. 
D) Measuring the qualifications of personnel from the acquired company.

Question 6

Which of the following factors can mitigate concerns that the auditor might otherwise have about a material weakness that was identified at an interim date?

Accepted Answer

A) Remediation of the control deficiency after the interim date. 
B) Existence of a compensating control at the year-end date that was also present at the interim date. 
C) Weaknesses in the control environment. 
D) Ineffectiveness of oversight and governance. 
A) Remediation of the control deficiency after the interim date. 
B) Existence of a compensating control at the year-end date that was also present at the interim date. 
C) Weaknesses in the control environment. 
D) Ineffectiveness of oversight and governance.

Question 7

When assessing fair value of Level 2 assets,auditors will use information on the sale of identical items in active or inactive markets as a source of audit evidence.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following factors would be least likely to affect the estimate of the warranty liability?

Accepted Answer

A) Changes in the product. 
B) Changes in the nature of the warranty. 
C) Changes in the sales staff. 
D) Changes in sales volume. 
A) Changes in the product. 
B) Changes in the nature of the warranty. 
C) Changes in the sales staff. 
D) Changes in sales volume.

Question 9

In assessing the fair value of Level 1 assets,the auditor can perform an analysis of the volume of trading activity as part of obtaining audit evidence.

Accepted Answer

A) True 
 B)False

Question 10

The volume of transactions affected is one of the critical criteria in assessing identified internal control deficiencies.

Accepted Answer

A) True 
 B)False

Question 11

An audit of the other postemployment benefits does not require estimates with respect to which of the following?

Accepted Answer

A) Changes in medical expenses. 
B) Changes in coverage. 
C) Changes in average life expectancies. 
D) Changes in Human Resource personnel in charge of postemployment benefits. 
A) Changes in medical expenses. 
B) Changes in coverage. 
C) Changes in average life expectancies. 
D) Changes in Human Resource personnel in charge of postemployment benefits.

Question 12

When there is a ready market for financial instruments,the audit procedures related to valuation and disclosures are more straightforward than when the instrument is not readily marketable.

Accepted Answer

A) True 
 B)False

Question 13

According to SAB 108,what approach is used when assessing uncorrected misstatements?

Accepted Answer

A) Matrix approach. 
B) Dual approach. 
C) Percentage approach. 
D) Judgmental approach. 
A) Matrix approach. 
B) Dual approach. 
C) Percentage approach. 
D) Judgmental approach.

Question 14

Goodwill has to be evaluated for impairment once a year,as well as on an interim basis as the time events and circumstances warrant.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following factors is not relevant when assessing identified internal control deficiencies?

Accepted Answer

A) Weaknesses in the control environment. 
B) The absence of a material misstatement in the financial statements. 
C) Volume of transactions affected by the deficiency. 
D) Effectiveness of oversight/governance. 
A) Weaknesses in the control environment. 
B) The absence of a material misstatement in the financial statements. 
C) Volume of transactions affected by the deficiency. 
D) Effectiveness of oversight/governance.

Question 16

In a standard audit program for goodwill impairment testing,if the original reporting unit no longer exists because operations have been fully integrated into operations of the parent company,which approach should the auditor take?

Accepted Answer

A) Compare market value with carrying value.A market value less than carrying value is presumptive evidence that goodwill has been impaired. 
B) Compare fair value with realizable value.A fair value less than realizable value is presumptive evidence that goodwill has been impaired. 
C) Compare book value with realizable value.A book value less than realizable value is presumptive evidence that goodwill has been impaired. 
D) Compare book value with market value.A market value less than book value is presumptive evidence that goodwill has been impaired. 
A) Compare market value with carrying value.A market value less than carrying value is presumptive evidence that goodwill has been impaired. 
B) Compare fair value with realizable value.A fair value less than realizable value is presumptive evidence that goodwill has been impaired. 
C) Compare book value with realizable value.A book value less than realizable value is presumptive evidence that goodwill has been impaired. 
D) Compare book value with market value.A market value less than book value is presumptive evidence that goodwill has been impaired.

Question 17

Existing professional guidance notes that auditors must make materiality assessments for purposes of (1)audit planning and (2)evidence evaluation after audit procedures are completed.

Accepted Answer

A) True 
 B)False

Question 18

Goodwill is the excess of the purchase price over the fair market value of the acquired company's tangible assets,identifiable intangible assets,and liabilities.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not an element of pensions and other postemployment benefits that is difficult to estimate?

Accepted Answer

A) Projected lifetime of former employees that will receive a pension. 
B) The future earnings of employees prior to retiring for defined benefit plans. 
C) Long-term interest rates to discount future costs back to present value. 
D) Current amounts earned on pension plan assets. 
A) Projected lifetime of former employees that will receive a pension. 
B) The future earnings of employees prior to retiring for defined benefit plans. 
C) Long-term interest rates to discount future costs back to present value. 
D) Current amounts earned on pension plan assets.

Question 20

The adjustments arising from the audit that were considered to be material should be communicated by the auditor to which of the following?

Accepted Answer

A) Audit staff. 
B) Management. 
C) Audit committee. 
D) Internal auditors. 
A) Audit staff. 
B) Management. 
C) Audit committee. 
D) Internal auditors.

Which of the following is the international body that sets standards for the practice of internal auditing across the world?

Auditors are not responsible for making judgments regarding the fair value of securities.

When auditing financial hedges,the auditor should understand the product,identify relevant risks and controls,and understand the appropriate accounting.

Which of the following reflects the scope of services performed in external auditing by a CPA?

Which of the following is not a significant challenge related to valuation issues for audits of merger and acquisition transactions?

Which of the following factors can mitigate concerns that the auditor might otherwise have about a material weakness that was identified at an interim date?

When assessing fair value of Level 2 assets,auditors will use information on the sale of identical items in active or inactive markets as a source of audit evidence.

Which of the following factors would be least likely to affect the estimate of the warranty liability?

In assessing the fair value of Level 1 assets,the auditor can perform an analysis of the volume of trading activity as part of obtaining audit evidence.

The volume of transactions affected is one of the critical criteria in assessing identified internal control deficiencies.

An audit of the other postemployment benefits does not require estimates with respect to which of the following?

When there is a ready market for financial instruments,the audit procedures related to valuation and disclosures are more straightforward than when the instrument is not readily marketable.

According to SAB 108,what approach is used when assessing uncorrected misstatements?

Goodwill has to be evaluated for impairment once a year,as well as on an interim basis as the time events and circumstances warrant.

Which of the following factors is not relevant when assessing identified internal control deficiencies?

In a standard audit program for goodwill impairment testing,if the original reporting unit no longer exists because operations have been fully integrated into operations of the parent company,which approach should the auditor take?

Existing professional guidance notes that auditors must make materiality assessments for purposes of (1)audit planning and (2)evidence evaluation after audit procedures are completed.

Goodwill is the excess of the purchase price over the fair market value of the acquired company's tangible assets,identifiable intangible assets,and liabilities.

Which of the following is not an element of pensions and other postemployment benefits that is difficult to estimate?

The adjustments arising from the audit that were considered to be material should be communicated by the auditor to which of the following?

Auditing: Integral to the Economy

The Risk of Fraud and Mechanisms to Address Fraud: Regulation,corporate Governance,and Audit Quality

Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

Professional Liability and the Need for Quality Auditor Judgments and Ethical Decisions

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, use, impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Other Services Provided by Audit Firms

Filters

Exam 16: Advanced Topics Concerning Complex Auditing Judgments

Which of the following is the international body that sets standards for the practice of internal auditing across the world?

Auditors are not responsible for making judgments regarding the fair value of securities.

When auditing financial hedges,the auditor should understand the product,identify relevant risks and controls,and understand the appropriate accounting.

Which of the following reflects the scope of services performed in external auditing by a CPA?

Which of the following is not a significant challenge related to valuation issues for audits of merger and acquisition transactions?

Which of the following factors can mitigate concerns that the auditor might otherwise have about a material weakness that was identified at an interim date?

When assessing fair value of Level 2 assets,auditors will use information on the sale of identical items in active or inactive markets as a source of audit evidence.

Which of the following factors would be least likely to affect the estimate of the warranty liability?

In assessing the fair value of Level 1 assets,the auditor can perform an analysis of the volume of trading activity as part of obtaining audit evidence.

The volume of transactions affected is one of the critical criteria in assessing identified internal control deficiencies.

An audit of the other postemployment benefits does not require estimates with respect to which of the following?

When there is a ready market for financial instruments,the audit procedures related to valuation and disclosures are more straightforward than when the instrument is not readily marketable.

According to SAB 108,what approach is used when assessing uncorrected misstatements?

Goodwill has to be evaluated for impairment once a year,as well as on an interim basis as the time events and circumstances warrant.

Which of the following factors is not relevant when assessing identified internal control deficiencies?

In a standard audit program for goodwill impairment testing,if the original reporting unit no longer exists because operations have been fully integrated into operations of the parent company,which approach should the auditor take?

Existing professional guidance notes that auditors must make materiality assessments for purposes of (1)audit planning and (2)evidence evaluation after audit procedures are completed.

Goodwill is the excess of the purchase price over the fair market value of the acquired company's tangible assets,identifiable intangible assets,and liabilities.

Which of the following is not an element of pensions and other postemployment benefits that is difficult to estimate?

The adjustments arising from the audit that were considered to be material should be communicated by the auditor to which of the following?

Auditing: Integral to the Economy

The Risk of Fraud and Mechanisms to Address Fraud: Regulation,corporate Governance,and Audit Quality

Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

Professional Liability and the Need for Quality Auditor Judgments and Ethical Decisions

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, use, impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Other Services Provided by Audit Firms

Filters