Question 1

If the auditor were responsible for making certain that all of management's assertions in the financial statements were absolutely correct,

Accepted Answer

A) bankruptcies could no longer occur. 
B) bankruptcies would be reduced to a very small number. 
C) audits would be much easier to complete. 
D) audits would not be economically practical. 
A) bankruptcies could no longer occur. 
B) bankruptcies would be reduced to a very small number. 
C) audits would be much easier to complete. 
D) audits would not be economically practical.

Question 2

Which balance sheet accounts are included in the payroll and personnel cycle?

Accepted Answer

A) cash in bank,accrued payroll,trade accounts receivable 
B) accrued payroll,notes payable,and deferred tax 
C) accrued payroll,cash in bank,and accrued payroll taxes 
D) salaries and commissions,cash in bank,accrued payroll taxes 
A) cash in bank,accrued payroll,trade accounts receivable 
B) accrued payroll,notes payable,and deferred tax 
C) accrued payroll,cash in bank,and accrued payroll taxes 
D) salaries and commissions,cash in bank,accrued payroll taxes

Question 3

Briefly explain each management assertion related to classes of transactions and events for the period under audit.

Accepted Answer

•Occurrence.Transactions and events that

Question 4

Obtaining an understanding of the entity and its environment is part of the analytical procedures phase of the audit.

Accepted Answer

A) True 
 B)False

Question 5

Rights and obligations is the only balance-related assertion without a similar transaction-related assertion.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the auditor least likely to do when aware of an illegal act?

Accepted Answer

A) discuss the matter with the client's legal counsel 
B) obtain evidence about the potential effect of the illegal act on the financial statements 
C) contact the local law enforcement officials regarding potential criminal wrongdoing 
D) consider the impact of the illegal act on the relationship with the company's management 
A) discuss the matter with the client's legal counsel 
B) obtain evidence about the potential effect of the illegal act on the financial statements 
C) contact the local law enforcement officials regarding potential criminal wrongdoing 
D) consider the impact of the illegal act on the relationship with the company's management

Question 7

Balance-related audit objectives are usually applied to the ending balance in income statement accounts;transaction-related audit objectives are usually applied to transactions reflected in balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is not correct?

Accepted Answer

A) There are many ways an auditor can accumulate evidence to meet overall audit objectives. 
B) Sufficient appropriate evidence must be accumulated to meet the auditor's professional responsibility. 
C) It is appropriate to minimize the cost of accumulating evidence. 
D) Gathering evidence and minimizing costs are equally important considerations that affect the approach the auditor selects. 
A) There are many ways an auditor can accumulate evidence to meet overall audit objectives. 
B) Sufficient appropriate evidence must be accumulated to meet the auditor's professional responsibility. 
C) It is appropriate to minimize the cost of accumulating evidence. 
D) Gathering evidence and minimizing costs are equally important considerations that affect the approach the auditor selects.

Question 9

The effect of a violation of the completeness transaction-related audit objective for cash disbursements transactions would be an overstatement of cash disbursements.

Accepted Answer

A) True 
 B)False

Question 10

International auditing standards and U.S.GAAP classify assertions into three categories.Which of the following is not a category of assertions that management makes about the accounting information in financial statements?

Accepted Answer

A) assertions about classes of transactions for the period under audit 
B) assertions about account balances at period end 
C) assertions about the quality of source documents used to prepare the financial statements 
D) assertions about presentation and disclosure 
A) assertions about classes of transactions for the period under audit 
B) assertions about account balances at period end 
C) assertions about the quality of source documents used to prepare the financial statements 
D) assertions about presentation and disclosure

Question 11

Although auditors need to consider the interrelationships between cycles,they typically treat cycles independently to the extent practical to manage complex audits effectively.

Accepted Answer

A) True 
 B)False

Question 12

Balance-related audit objectives

Accepted Answer

A) are never applied to income statement accounts. 
B) are designed to detect fraud. 
C) provide a framework to help the auditor accumulate sufficient appropriate evidence related to account balances. 
D) can have only one specific-related audit objectives. 
A) are never applied to income statement accounts. 
B) are designed to detect fraud. 
C) provide a framework to help the auditor accumulate sufficient appropriate evidence related to account balances. 
D) can have only one specific-related audit objectives.

Question 13

Describe what analytical procedures and tests of details of balances are and give an example of each.

Accepted Answer

Analytical procedures consist of evaluat

Question 14

Discuss three reasons why auditors are responsible for "reasonable" but not "absolute" assurance.

Accepted Answer

•Most audit evidence results from testin

Question 15

The term audit objective refers to all of the following except for

Accepted Answer

A) transaction-related audit objectives. 
B) presentation and disclosure-related audit objectives. 
C) balance-related audit objectives. 
D) cycle-related audit objectives. 
A) transaction-related audit objectives. 
B) presentation and disclosure-related audit objectives. 
C) balance-related audit objectives. 
D) cycle-related audit objectives.

Question 16

Which of the following statements is the most correct regarding errors and fraud?

Accepted Answer

A) An error is unintentional,whereas fraud is intentional. 
B) Frauds occur more often than errors in financial statements. 
C) Errors are always fraud and frauds are always errors. 
D) Auditors have more responsibility for finding fraud than errors. 
A) An error is unintentional,whereas fraud is intentional. 
B) Frauds occur more often than errors in financial statements. 
C) Errors are always fraud and frauds are always errors. 
D) Auditors have more responsibility for finding fraud than errors.

Question 17

Which of the following statements best describes the auditor's responsibility with respect to illegal acts that do not have a material effect on the client's financial statements?

Accepted Answer

A) Generally,the auditor is under no obligation to notify parties other than personnel within the client's organization. 
B) Generally,the auditor is under an obligation to inform the PCAOB. 
C) Generally,the auditor is obligated to disclose the relevant facts in the auditor's report. 
D) Generally,the auditor is expected to compel the client to adhere to requirements of the Foreign Corrupt Practices Act. 
A) Generally,the auditor is under no obligation to notify parties other than personnel within the client's organization. 
B) Generally,the auditor is under an obligation to inform the PCAOB. 
C) Generally,the auditor is obligated to disclose the relevant facts in the auditor's report. 
D) Generally,the auditor is expected to compel the client to adhere to requirements of the Foreign Corrupt Practices Act.

Question 18

When the auditor identifies or suspects noncompliance with laws and regulations,the auditor

Accepted Answer

A) should discuss the matter with those whom they believe committed the illegal act. 
B) begin communication with the FASB in accordance with PCAOB regulations. 
C) may disclaim an opinion on the basis of scope limitations if he is precluded by management from obtaining sufficient appropriate evidence. 
D) should withdraw from the engagement. 
A) should discuss the matter with those whom they believe committed the illegal act. 
B) begin communication with the FASB in accordance with PCAOB regulations. 
C) may disclaim an opinion on the basis of scope limitations if he is precluded by management from obtaining sufficient appropriate evidence. 
D) should withdraw from the engagement.

Question 19

As the impact from noncompliance is further removed from affecting the financial statements,the less likely the auditor is to become aware of or recognize noncompliance when auditing the financial statements.

Accepted Answer

A) True 
 B)False

Question 20

In certifying their annual financial statements,the CEO and CFO of a public company certify that the financial statements comply with the requirements of

Accepted Answer

A) GAAP. 
B) the Sarbanes-Oxley Act. 
C) the Securities Exchange Act of 1934. 
D) GAAS. 
A) GAAP. 
B) the Sarbanes-Oxley Act. 
C) the Securities Exchange Act of 1934. 
D) GAAS.

Exam 6: Audit Responsibilities and Objectives

If the auditor were responsible for making certain that all of management's assertions in the financial statements were absolutely correct,

Which balance sheet accounts are included in the payroll and personnel cycle?

Briefly explain each management assertion related to classes of transactions and events for the period under audit.

Obtaining an understanding of the entity and its environment is part of the analytical procedures phase of the audit.

Rights and obligations is the only balance-related assertion without a similar transaction-related assertion.

Which of the following is the auditor least likely to do when aware of an illegal act?

Balance-related audit objectives are usually applied to the ending balance in income statement accounts;transaction-related audit objectives are usually applied to transactions reflected in balance sheet accounts.

Which of the following statements is not correct?

The effect of a violation of the completeness transaction-related audit objective for cash disbursements transactions would be an overstatement of cash disbursements.

International auditing standards and U.S.GAAP classify assertions into three categories.Which of the following is not a category of assertions that management makes about the accounting information in financial statements?

Although auditors need to consider the interrelationships between cycles,they typically treat cycles independently to the extent practical to manage complex audits effectively.

Balance-related audit objectives

Describe what analytical procedures and tests of details of balances are and give an example of each.

Discuss three reasons why auditors are responsible for "reasonable" but not "absolute" assurance.

The term audit objective refers to all of the following except for

Which of the following statements is the most correct regarding errors and fraud?

Which of the following statements best describes the auditor's responsibility with respect to illegal acts that do not have a material effect on the client's financial statements?

When the auditor identifies or suspects noncompliance with laws and regulations,the auditor

As the impact from noncompliance is further removed from affecting the financial statements,the less likely the auditor is to become aware of or recognize noncompliance when auditing the financial statements.

In certifying their annual financial statements,the CEO and CFO of a public company certify that the financial statements comply with the requirements of

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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