Question 1

List the components of the auditor's professional judgment framework.

Accepted Answer

Following are the five components of aud

Question 2

One difference between auditors and other professionals is that most professionals

Accepted Answer

A)  need not be concerned about maintaining independence. 
B)  don't have requirements for continuing education beyond university. 
C)  don't have to pass a rigorous examination. 
D)  aren't expected to act in the public interest. 
A)  need not be concerned about maintaining independence. 
B)  don't have requirements for continuing education beyond university. 
C)  don't have to pass a rigorous examination. 
D)  aren't expected to act in the public interest.

Question 3

Discuss the ways the accounting profession and society encourage public accountants to conduct themselves in a professional manner (i.e., the factors that influence the ethical conduct of audit practitioners).

Accepted Answer

There are many factors that encourage pu

Question 4

Formal frameworks have been developed to help people resolve ethical dilemmas. After obtaining the relevant facts and identifying the ethical issues from the facts, what is the next step in the five-step ethical framework described in the chapter?

Accepted Answer

A)  Decide on the appropriate action to be taken in resolving the ethical dilemma. 
B)  Identify the likely consequences of actions that will be taken. 
C)  Identify who is affected and how each is affected. 
D)  Identify the alternatives available to the person who must resolve the dilemma. 
A)  Decide on the appropriate action to be taken in resolving the ethical dilemma. 
B)  Identify the likely consequences of actions that will be taken. 
C)  Identify who is affected and how each is affected. 
D)  Identify the alternatives available to the person who must resolve the dilemma.

Question 5

How do quality control processes for the financial statement audit process incorporate consideration of legislation that affects the client?

Accepted Answer

A)  they require second partner review of all working partners that relate to legislative matters 
B)  they provide auditors with copies of legislation that affects their client 
C)  they require the training of all auditors in legislation details that could affect all clients 
D)  they include in audit checklists questions that address relevant new legislation 
A)  they require second partner review of all working partners that relate to legislative matters 
B)  they provide auditors with copies of legislation that affects their client 
C)  they require the training of all auditors in legislation details that could affect all clients 
D)  they include in audit checklists questions that address relevant new legislation

Question 6

The rules of accounting bodies in Canada require their members to behave in the best interest of the profession and the public. Identify the situation where the accountant is acting in the best interest of the profession. An accountant

Accepted Answer

A)  reports a fellow accountant after noticing that the accountant helped a client with tax evasion. 
B)  openly criticizes a fellow accountant's competencies after having lost a bid for a new client. 
C)  brags about his competence and professional title, and encourages clients to invest in a new venture he is starting. 
D)  refuses to cooperate with the new auditor after having lost a client. 
A)  reports a fellow accountant after noticing that the accountant helped a client with tax evasion. 
B)  openly criticizes a fellow accountant's competencies after having lost a bid for a new client. 
C)  brags about his competence and professional title, and encourages clients to invest in a new venture he is starting. 
D)  refuses to cooperate with the new auditor after having lost a client.

Question 7

What are the qualities of professional skepticism?

Accepted Answer

Following are the six qualities of profe

Question 8

Each of the following situations involves a possible violation of the provincial institutes Rules of Professional Conduct. For each situation (1) decide whether or not the rules have been violated, and (2) briefly explain how the situation violates (or does not violate) the rules.
A) Carla is the CFO of Xenon Company. Carla was very happy after her husband Dwayne, a partner at a large PA firm was assigned as the new auditor of the company. Carla is confident that this will be helpful to Xenon since Dwayne already knows so much about the business. Violation? Yes No

Accepted Answer

A)Violation. Independence is violated as

Question 9

Which of the following situations would be an example a of self-review threat? Prior to commencing the audit engagement, PA has completed

Accepted Answer

A)  personal and corporate tax returns. 
B)  audit of a company where the client owns a minority interest. 
C)  purchase price allocation calculation for a company that the client purchased during the year. 
D)  audit of the non-for profit organization of the client. 
A)  personal and corporate tax returns. 
B)  audit of a company where the client owns a minority interest. 
C)  purchase price allocation calculation for a company that the client purchased during the year. 
D)  audit of the non-for profit organization of the client.

Question 10

You are having lunch with a former employee of your firm, a friend of yours. Gino had been laid off last year when he had failed to pass his professional examinations for the third year in a row. Gino told you that he managed to obtain a CPA designation in the past year, and has started his public practice.
He has been circulating flyers and electronic email announcements with fixed rates: $400 for a compilation engagement, $1000 for a review, and $5000 for an audit where revenues are less than $1 million, $15 000 for an audit for a client with revenues up to $5 million. He already has clients to keep him busy for the next three months. He even has some feelers for clients that he personally handled while he was working for your firm - there were a lot of contacts developed during the five years that he was working there! To help attract some of the larger clients, he is considering not charging any fee for the first ten hours spent on tax-related services.
Gino ended the conversation by asking you if you would like to join him in his new firm, because at this rate he'll need a second person real soon!
Required:
Identify the violations in the professional rules of conduct and explain why they are violations.

Accepted Answer

Gino is actively soliciting clients of o

Question 11

Where an independence threat occurs, it may be that only the person affected needs to be removed from the engagement. In this case, other members of the firm can complete the engagement. An example of a situation where only the student or member would be excluded from the engagement is where PA

Accepted Answer

A)  has a significant financial interest in the client, such that influence could be exerted. 
B)  used to be a controller at the client, but now works for the PA firm. 
C)  owns ten percent of the shares of the client. 
D)  is a board member of the client with signing authority for cheques. 
A)  has a significant financial interest in the client, such that influence could be exerted. 
B)  used to be a controller at the client, but now works for the PA firm. 
C)  owns ten percent of the shares of the client. 
D)  is a board member of the client with signing authority for cheques.

Question 12

In applying professional judgment, the auditor must be able to justify a decision on the basis that it

Accepted Answer

A)  is carried out with truthfulness and forthrightness. 
B)  meets the underlying principles of only GAAS. 
C)  considers the impact on management's performance. 
D)  helps the company improve its profitability. 
A)  is carried out with truthfulness and forthrightness. 
B)  meets the underlying principles of only GAAS. 
C)  considers the impact on management's performance. 
D)  helps the company improve its profitability.

List the components of the auditor's professional judgment framework.

One difference between auditors and other professionals is that most professionals

Discuss the ways the accounting profession and society encourage public accountants to conduct themselves in a professional manner (i.e., the factors that influence the ethical conduct of audit practitioners).

Formal frameworks have been developed to help people resolve ethical dilemmas. After obtaining the relevant facts and identifying the ethical issues from the facts, what is the next step in the five-step ethical framework described in the chapter?

How do quality control processes for the financial statement audit process incorporate consideration of legislation that affects the client?

The rules of accounting bodies in Canada require their members to behave in the best interest of the profession and the public. Identify the situation where the accountant is acting in the best interest of the profession. An accountant

What are the qualities of professional skepticism?

Which of the following situations would be an example a of self-review threat? Prior to commencing the audit engagement, PA has completed

Where an independence threat occurs, it may be that only the person affected needs to be removed from the engagement. In this case, other members of the firm can complete the engagement. An example of a situation where only the student or member would be excluded from the engagement is where PA

In applying professional judgment, the auditor must be able to justify a decision on the basis that it

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 4: Professional Judgment and Ethics

List the components of the auditor's professional judgment framework.

One difference between auditors and other professionals is that most professionals

Discuss the ways the accounting profession and society encourage public accountants to conduct themselves in a professional manner (i.e., the factors that influence the ethical conduct of audit practitioners).

Formal frameworks have been developed to help people resolve ethical dilemmas. After obtaining the relevant facts and identifying the ethical issues from the facts, what is the next step in the five-step ethical framework described in the chapter?

How do quality control processes for the financial statement audit process incorporate consideration of legislation that affects the client?

The rules of accounting bodies in Canada require their members to behave in the best interest of the profession and the public. Identify the situation where the accountant is acting in the best interest of the profession. An accountant

What are the qualities of professional skepticism?

Which of the following situations would be an example a of self-review threat? Prior to commencing the audit engagement, PA has completed

Where an independence threat occurs, it may be that only the person affected needs to be removed from the engagement. In this case, other members of the firm can complete the engagement. An example of a situation where only the student or member would be excluded from the engagement is where PA

In applying professional judgment, the auditor must be able to justify a decision on the basis that it

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters