Exam 1: Introduction and Overview of Audit and Assurance

What is the applicable financial reporting framework in the U.S.known as?

Who are the only licensed accounting professionals in the United States?

The audit related to which of the following is specifically meant to express an opinion on the effectiveness of the company's system of internal controls over financial reporting?

Who among the following users of the financial statement of a company may be particularly interested in evaluating whether the company is paying a fair amount of taxes given its reported earnings, and to gain a better understanding of the company's activities?

Smith Corp.orally engaged TRA CPAs, to audit its financial statements.The management of Smith Corp.informed TRA CPAs that it suspected that the accounts receivable was materially overstated.Although the financial statements audited by TRA CPAs did, in fact, include a materially overstated accounts receivable balance, TRA issued an unqualified opinion.Smith Corp then relied on the financial statements in deciding to obtain a loan from Town Bank to expand its operations and Town Bank relied on the financial statements in making the loan to Smith Corp.As a result of the overstated accounts receivable balance, Smith Corp.has defaulted on the loan and has incurred a substantial loss.If Smith Corp sues TRA CPAs for negligence in failing to discover the overstatement, what is TRA CPA's best defense?

Which of the following beliefs will narrow the audit expectation gap?

The nature of audit procedures refers to the ________.

Which is the most inclusive or broadest service provided by the auditor?

Compared to an audit of historical financial statements, a review engagement is _______.

In an audit report on the effectiveness of ICFR for a public company, the scope paragraph mentions that auditors are only required to obtain reasonable assurance about whether the company maintained, in all material respects, effective ICFR.

Pressures of time and money may affect the audit due to all of the following EXCEPT ________.

One of the reasons there is a demand for financial statement audits is that users of financial statements often lack accounting and legal knowledge to fully understand complex accounting and disclosure choices.

With regard to financial statements, the auditor is required to obtain reasonable assurance, which is a level of assurance that is _______.

In an audit report on the effectiveness of ICFR for a public company, which paragraph cautions not to use the current year opinion to assume that future internal controls will be effective?

Which two audits does an integrated audit combine?

Describe the auditor's responsibility regarding the detection of fraud.

Securities Exchange Act of 1934 regulates the ongoing trading of securities after the initial public offering and requires the annual audit of a public company's financial statements.

Among the various processes relating to auditing and assurance standards, the largest umbrella represents ________ services.

Which of the following is true of the PCAOB?

The paragraph of an unmodified audit report on the financial statements of a private firm explains that an audit was conducted and identifies the financial statements and the date of the financial statements is the _______ paragraph.