Question 1

If an internal control exception is identified, the auditor_______.

Accepted Answer

A) must use their professional judgment to determine if the exception is a control deficiency, a significant deficiency, or a material weakness 
B) must use published frameworks to determine if the exception is a control deficiency, a significant deficiency, or a material weakness 
C) should notify the Securities and Exchange Commission (SE
C)  within 14 days 
D) should consider withdrawing from the engagement 
A) must use their professional judgment to determine if the exception is a control deficiency, a significant deficiency, or a material weakness 
B) must use published frameworks to determine if the exception is a control deficiency, a significant deficiency, or a material weakness 
C) should notify the Securities and Exchange Commission (SE
C)  within 14 days 
D) should consider withdrawing from the engagement A

Question 2

Adverse opinions on the effectiveness of internal control over financial reporting (ICFR) are frequently issued for large, well-established companies.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following is NOT a situation in which the auditor wants to draw users' attention to a material matter that is already presented and/or disclosed in the client's financial statements?

Accepted Answer

A) A major disaster that may not have a significant impact on the company's financial situation 
B) Uncertainties relating to the future outcome of litigation 
C) Significant subsequent events 
D) Material transactions with related parties 
A) A major disaster that may not have a significant impact on the company's financial situation 
B) Uncertainties relating to the future outcome of litigation 
C) Significant subsequent events 
D) Material transactions with related parties A

Question 4

When is a disclaimer of opinion issued?

Accepted Answer

A) When a scope limitation is material and pervasive 
B) When a scope limitation is materia l but not pervasive 
C) When a misstatement is material and pervasive 
D) When scope limitation is eliminated by alternative procedures 
A) When a scope limitation is material and pervasive 
B) When a scope limitation is materia l but not pervasive 
C) When a misstatement is material and pervasive 
D) When scope limitation is eliminated by alternative procedures

Question 5

When an adverse opinion is issued regarding internal control over financial reporting (ICFR), the auditor_______.

Accepted Answer

A) opines that the company has fairly reported its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) 
B) makes a clear statement that the company has not maintained effective internal control for the period under audit 
C) makes a clear statement that the company has maintained effective internal control for the period under audit 
D) is not entitled to receive full compensation for services rendered during the audit 
A) opines that the company has fairly reported its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) 
B) makes a clear statement that the company has not maintained effective internal control for the period under audit 
C) makes a clear statement that the company has maintained effective internal control for the period under audit 
D) is not entitled to receive full compensation for services rendered during the audit

Question 6

A key factor in determining which type of modified report to issue is _______.

Accepted Answer

A) objectivity 
B) independence 
C) materiality 
D) existence 
A) objectivity 
B) independence 
C) materiality 
D) existence

Question 7

Showing comparative financial statements helps users _______.

Accepted Answer

A) to calculate a definite future stock price 
B) to analyze the company's financial condition and profitability 
C) spot potential problems in the most recent years note disclosures 
D) understand the difference between basic and diluted earnings per share 
A) to calculate a definite future stock price 
B) to analyze the company's financial condition and profitability 
C) spot potential problems in the most recent years note disclosures 
D) understand the difference between basic and diluted earnings per share

Question 8

A scope limitation in regards to and audit of internal control over financial reporting (ICFR) occurs when the auditors_______.

Accepted Answer

A) are able to audit all of a client's accounts without issue 
B) cannot perform planned procedures to gather sufficient appropriate evidence regarding the design and effectiveness of a client's internal controls 
C) cannot perform planned procedures to gather sufficient appropriate evidence regarding the design and effectiveness of a client's financial statements 
D) have not been prepaid for audit services, and is unable to collect the associated receivable 
A) are able to audit all of a client's accounts without issue 
B) cannot perform planned procedures to gather sufficient appropriate evidence regarding the design and effectiveness of a client's internal controls 
C) cannot perform planned procedures to gather sufficient appropriate evidence regarding the design and effectiveness of a client's financial statements 
D) have not been prepaid for audit services, and is unable to collect the associated receivable

Question 9

The auditor's report can be in writing or it can be expressed orally.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following types of auditors perform audits of a component or subsidiary of the parent company?

Accepted Answer

A) Component auditor 
B) Subsidiary auditor 
C) Individual auditor 
D) Auditing firm 
A) Component auditor 
B) Subsidiary auditor 
C) Individual auditor 
D) Auditing firm

Question 11

The purpose of a/an _______ is to provide financial statement users with an opinion by an independent auditor on whether the financial statements are presented fairly in accordance with an applicable financial reporting framework.

Accepted Answer

The answer of The purpose of a/an _______ is to...

Question 12

The audit report represents the _______.

Accepted Answer

A) beginning of the audit process 
B) "end product" of the financial statement audit 
C) "end product" of the internal audit review and audit 
D) opinion of management with respect to the fairness and accuracy of the financial statements 
A) beginning of the audit process 
B) "end product" of the financial statement audit 
C) "end product" of the internal audit review and audit 
D) opinion of management with respect to the fairness and accuracy of the financial statements

Question 13

Compare the two scenarios that would cause auditors to modify the audit opinion and provide an example of each.

Accepted Answer

Student answers will vary but should cov

Question 14

A review engagement _______.

Accepted Answer

A) comes under the umbrella of non-attest services 
B) comes under the umbrella of assurance services 
C) is an attest engagement performed on the financial statements of a private company client 
D) is virtually identical to an audit of a client's financial statements 
A) comes under the umbrella of non-attest services 
B) comes under the umbrella of assurance services 
C) is an attest engagement performed on the financial statements of a private company client 
D) is virtually identical to an audit of a client's financial statements

Question 15

If management revises the financial statements due to subsequently discovered facts, auditors should_______.

Accepted Answer

A) perform no further audit procedures on the changes made by management 
B) perform audit procedures on the changes made by management 
C) always issue a qualified opinion with respect to the changes 
D) issue a scope limitation, even if they are able to audit the changes 
A) perform no further audit procedures on the changes made by management 
B) perform audit procedures on the changes made by management 
C) always issue a qualified opinion with respect to the changes 
D) issue a scope limitation, even if they are able to audit the changes

Question 16

An audit involves performing _______ to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

Accepted Answer

Procedures

Question 17

A compilation engagement is _______.

Accepted Answer

A) an audit of the financial statements, whereby an auditor expresses an opinion on the financial statements 
B) an audit of the system of internal control, whereby an auditor expresses an opinion on the system of internal control 
C) when an accounting firm assists management in the presentation of financial statements but does not audit, review, nor provide assurance as to whether the financial statements are presented fairly. 
D) when an audit firm assists management in the presentation of financial statements and attempts to provide assurance as to whether the financial statements are presented fairly 
A) an audit of the financial statements, whereby an auditor expresses an opinion on the financial statements 
B) an audit of the system of internal control, whereby an auditor expresses an opinion on the system of internal control 
C) when an accounting firm assists management in the presentation of financial statements but does not audit, review, nor provide assurance as to whether the financial statements are presented fairly. 
D) when an audit firm assists management in the presentation of financial statements and attempts to provide assurance as to whether the financial statements are presented fairly

Question 18

The audit process _______.

Accepted Answer

A) enhances the degree of confidence that intended users place in the financial statements 
B) has no effect on the degree of confidence that intended users place in the financial statements 
C) decreases the degree of confidence that intended users place in the financial statements 
D) is unrelated to the degree of confidence that intended users place in the financial statements 
A) enhances the degree of confidence that intended users place in the financial statements 
B) has no effect on the degree of confidence that intended users place in the financial statements 
C) decreases the degree of confidence that intended users place in the financial statements 
D) is unrelated to the degree of confidence that intended users place in the financial statements

Question 19

An integrated audit is defined as _______.

Accepted Answer

A) an audit of a client's financial statements 
B) an audit of a client's system of internal control 
C) performing the financial statement audit and the audit of the effectiveness of internal control over financial reporting (ICFR) at the same time 
D) both the external and internal auditors performing the financial statement audit 
A) an audit of a client's financial statements 
B) an audit of a client's system of internal control 
C) performing the financial statement audit and the audit of the effectiveness of internal control over financial reporting (ICFR) at the same time 
D) both the external and internal auditors performing the financial statement audit

Question 20

In a compilation engagement, the CPA will assist management in the presentation of financial statements and will provide assurance as to whether the financial statements are presented fairly in accordance with the applicable financial reporting framework.

Accepted Answer

A) True 
 B)False

If an internal control exception is identified, the auditor_______.

Adverse opinions on the effectiveness of internal control over financial reporting (ICFR) are frequently issued for large, well-established companies.

Which of the following is NOT a situation in which the auditor wants to draw users' attention to a material matter that is already presented and/or disclosed in the client's financial statements?

When is a disclaimer of opinion issued?

When an adverse opinion is issued regarding internal control over financial reporting (ICFR), the auditor_______.

A key factor in determining which type of modified report to issue is _______.

Showing comparative financial statements helps users _______.

A scope limitation in regards to and audit of internal control over financial reporting (ICFR) occurs when the auditors_______.

The auditor's report can be in writing or it can be expressed orally.

Which of the following types of auditors perform audits of a component or subsidiary of the parent company?

The purpose of a/an _______ is to provide financial statement users with an opinion by an independent auditor on whether the financial statements are presented fairly in accordance with an applicable financial reporting framework.

The audit report represents the _______.

Compare the two scenarios that would cause auditors to modify the audit opinion and provide an example of each.

A review engagement _______.

If management revises the financial statements due to subsequently discovered facts, auditors should_______.

An audit involves performing _______ to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

A compilation engagement is _______.

The audit process _______.

An integrated audit is defined as _______.

In a compilation engagement, the CPA will assist management in the presentation of financial statements and will provide assurance as to whether the financial statements are presented fairly in accordance with the applicable financial reporting framework.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Filters

Exam 15: Reporting on the Audit

If an internal control exception is identified, the auditor_______.

Adverse opinions on the effectiveness of internal control over financial reporting (ICFR) are frequently issued for large, well-established companies.

Which of the following is NOT a situation in which the auditor wants to draw users' attention to a material matter that is already presented and/or disclosed in the client's financial statements?

When is a disclaimer of opinion issued?

When an adverse opinion is issued regarding internal control over financial reporting (ICFR), the auditor_______.

A key factor in determining which type of modified report to issue is _______.

Showing comparative financial statements helps users _______.

A scope limitation in regards to and audit of internal control over financial reporting (ICFR) occurs when the auditors_______.

The auditor's report can be in writing or it can be expressed orally.

Which of the following types of auditors perform audits of a component or subsidiary of the parent company?

The purpose of a/an _______ is to provide financial statement users with an opinion by an independent auditor on whether the financial statements are presented fairly in accordance with an applicable financial reporting framework.

The audit report represents the _______.

Compare the two scenarios that would cause auditors to modify the audit opinion and provide an example of each.

A review engagement _______.

If management revises the financial statements due to subsequently discovered facts, auditors should_______.

An audit involves performing _______ to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

A compilation engagement is _______.

The audit process _______.

An integrated audit is defined as _______.

In a compilation engagement, the CPA will assist management in the presentation of financial statements and will provide assurance as to whether the financial statements are presented fairly in accordance with the applicable financial reporting framework.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Filters