Question 1

Currently, there is a significant overlap between the rules of the PCAOB and the

Accepted Answer

A)  financial accounting standards board 
B)  statements on auditing standards 
C)  internal revenue service 
D)  financial information regulation organization 
E)  statements on financial information systems 
A)  financial accounting standards board 
B)  statements on auditing standards 
C)  internal revenue service 
D)  financial information regulation organization 
E)  statements on financial information systems

Question 2

The fourth reporting standard requires the auditor to express an opinion either on the financial statements taken as a whole or on selected major components of the financial statements.

Accepted Answer

A) True 
 B)False

Question 3

No provisions exist for meeting the first reporting standard when a company uses a comprehensive basis of accounting other than GAAP.

Accepted Answer

A) True 
 B)False

Question 4

The main purpose of the audit committee is to monitor the competence of the external auditors during the course of the engagement.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following best describes the relationship that should exist between the external auditor and the management of the client company?

Accepted Answer

A)  adversarial relationship 
B)  mutual trust and respect 
C)  advocacy of management's position 
D)  mutual caution and suspicion 
E)  skeptical vigilance 
A)  adversarial relationship 
B)  mutual trust and respect 
C)  advocacy of management's position 
D)  mutual caution and suspicion 
E)  skeptical vigilance

Question 6

The payment of a bribe is an example of an error.

Accepted Answer

A) True 
 B)False

Question 7

Compliance with "Statements on Auditing Standards" is mandatory for all auditors.

Accepted Answer

A) True 
 B)False

Question 8

SAS 59 establishes auditor responsibility for evaluating whether there is any doubt about the entity's ability to continue as a going concern for a reasonable period of time. This reasonable period of time is defined as:

Accepted Answer

A)  at least one year past the date of the statements under audit. 
B)  at least one year past the date of the audit report. 
C)  not to exceed two years past the date of the audit report. 
D)  not to exceed one year past the date of the statements under audit. 
E)  not to exceed one year past the date of the audit report. 
A)  at least one year past the date of the statements under audit. 
B)  at least one year past the date of the audit report. 
C)  not to exceed two years past the date of the audit report. 
D)  not to exceed one year past the date of the statements under audit. 
E)  not to exceed one year past the date of the audit report.

Question 9

The introductory paragraph in the standard audit report identifies all of the following except:

Accepted Answer

A)  the existence of the management responsibility letter. 
B)  the entity audited. 
C)  the dates of the statements. 
D)  the auditor's responsibility for the opinion. 
E)  management's responsibility for the statements. 
A)  the existence of the management responsibility letter. 
B)  the entity audited. 
C)  the dates of the statements. 
D)  the auditor's responsibility for the opinion. 
E)  management's responsibility for the statements.

Question 10

The auditor's report should make explicit reference to the management responsibility for the financial statements.

Accepted Answer

A) True 
 B)False

Question 11

Identify the specific generally accepted auditing standard for each one of the following descriptions.
1.The report shall either contain an expression of opinion regarding the financial statements, taken as a whole, or an assertion to the effect that an opinion cannot be expressed.
2.In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors.
3.Sufficient competent evidential matter is to be obtained through inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit.
4.Due professional care is to be exercised in the performance of the audit and the preparation of the report.
5.The work is to be adequately planned, and assistants, if any, are to be properly supervised.
6.The report shall identify those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period.
7.The audit is to be performed by a person or persons having adequate technical training and proficiency as an auditor.
8.Informative disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report.
9.A sufficient understanding of the internal control structure is to be obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed.
10.The report shall state whether the financial statements are presented in accordance with generally accepted accounting principles.

Accepted Answer

1.Fourth Standard of Reporting
2.Second

Question 12

The use of the phrase "present fairly, in all material respects" in the opinion paragraph is most closely associated with which of the following concepts from the scope paragraph?

Accepted Answer

A)  test basis 
B)  substantial guarantee 
C)  positive conclusion 
D)  basis for an opinion 
E)  significant estimates 
A)  test basis 
B)  substantial guarantee 
C)  positive conclusion 
D)  basis for an opinion 
E)  significant estimates

Question 13

ASB refers to the Auditing Standards Board.

Accepted Answer

A) True 
 B)False

Question 14

An audit made in accordance with GAAS provides strong assurance that all illegal acts will be detected.

Accepted Answer

A) True 
 B)False

Question 15

The auditor's standard report on internal control over financial reporting includes an introductory paragraph. Identify the key elements within this introductory paragraph

Accepted Answer

1.Type of service performed("We have aud

Question 16

The concept of reasonable assurance does not guarantee the accuracy of the financial statements.

Accepted Answer

A) True 
 B)False

Question 17

The following audit report was issued by the CPA firm of Wong and Lee on a basic set of financial statements:(0) We have examined the accompanying balance sheet of X Company as of December
31, 19XX, and the related statements of (1) income and retained earnings for the year then ended. These financial statements are the responsibility of the Company's (2) board of directors. Our responsibility is to express an opinion on these financial statements based on our (3) examination.
We conducted our audit in accordance with (4) professional auditing standards. Those
standards require that we (5) plan and perform the audit to obtain reasonable assurance about whether the financial statements (6) are fairly stated. An audit includes examining, (7) on a detailed basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes (8) judging the accounting practices used and significant (9) decisions made by management, as well as evaluating the (10) completeness of the financial statement presentation. We believe that our audit provides (11) reliable evidence for our opinion.
(12) We believe the financial statements referred to above (13) present fairly, in all
respects, the financial position of X Company as of December 31, 19XX, and (14) the results of its operations and its cash flows for the year then ended (15) in conformity with promulgated accounting principles.
REQUIRED: If the wording of each numbered item is correct, enter OK. If the wording is incorrect, give the correct wording.
Answer (0) is given as an example.
(0) We have audited.

Accepted Answer

(1)income, retained earnings, and cash f

Question 18

How many different opinions must an auditor of a publicly held company issue?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
E)  5 
A)  1 
B)  2 
C)  3 
D)  4 
E)  5

Question 19

A disclaimer of opinion may be substituted for an adverse opinion.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following terms relates to the embezzling of receipts?

Accepted Answer

A)  manipulation 
B)  misrepresentation 
C)  misappropriation 
D)  misapplication 
E)  misleading 
A)  manipulation 
B)  misrepresentation 
C)  misappropriation 
D)  misapplication 
E)  misleading

Currently, there is a significant overlap between the rules of the PCAOB and the

The fourth reporting standard requires the auditor to express an opinion either on the financial statements taken as a whole or on selected major components of the financial statements.

No provisions exist for meeting the first reporting standard when a company uses a comprehensive basis of accounting other than GAAP.

The main purpose of the audit committee is to monitor the competence of the external auditors during the course of the engagement.

Which of the following best describes the relationship that should exist between the external auditor and the management of the client company?

The payment of a bribe is an example of an error.

Compliance with "Statements on Auditing Standards" is mandatory for all auditors.

SAS 59 establishes auditor responsibility for evaluating whether there is any doubt about the entity's ability to continue as a going concern for a reasonable period of time. This reasonable period of time is defined as:

The introductory paragraph in the standard audit report identifies all of the following except:

The auditor's report should make explicit reference to the management responsibility for the financial statements.

The use of the phrase "present fairly, in all material respects" in the opinion paragraph is most closely associated with which of the following concepts from the scope paragraph?

ASB refers to the Auditing Standards Board.

An audit made in accordance with GAAS provides strong assurance that all illegal acts will be detected.

The auditor's standard report on internal control over financial reporting includes an introductory paragraph. Identify the key elements within this introductory paragraph

The concept of reasonable assurance does not guarantee the accuracy of the financial statements.

How many different opinions must an auditor of a publicly held company issue?

A disclaimer of opinion may be substituted for an adverse opinion.

Which one of the following terms relates to the embezzling of receipts?

Auditing and the Public Accounting

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters

Exam 2: Financial Statement Audits and

Currently, there is a significant overlap between the rules of the PCAOB and the

The fourth reporting standard requires the auditor to express an opinion either on the financial statements taken as a whole or on selected major components of the financial statements.

No provisions exist for meeting the first reporting standard when a company uses a comprehensive basis of accounting other than GAAP.

The main purpose of the audit committee is to monitor the competence of the external auditors during the course of the engagement.

Which of the following best describes the relationship that should exist between the external auditor and the management of the client company?

The payment of a bribe is an example of an error.

Compliance with "Statements on Auditing Standards" is mandatory for all auditors.

SAS 59 establishes auditor responsibility for evaluating whether there is any doubt about the entity's ability to continue as a going concern for a reasonable period of time. This reasonable period of time is defined as:

The introductory paragraph in the standard audit report identifies all of the following except:

The auditor's report should make explicit reference to the management responsibility for the financial statements.

The use of the phrase "present fairly, in all material respects" in the opinion paragraph is most closely associated with which of the following concepts from the scope paragraph?

ASB refers to the Auditing Standards Board.

An audit made in accordance with GAAS provides strong assurance that all illegal acts will be detected.

The auditor's standard report on internal control over financial reporting includes an introductory paragraph. Identify the key elements within this introductory paragraph

The concept of reasonable assurance does not guarantee the accuracy of the financial statements.

How many different opinions must an auditor of a publicly held company issue?

A disclaimer of opinion may be substituted for an adverse opinion.

Which one of the following terms relates to the embezzling of receipts?

Auditing and the Public Accounting

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters