Question 1

PCAOB Standard 7 addresses engagement quality reviews and have as its objectives to:

Accepted Answer

A) Assess how an audit has been conducted and the appropriateness of the audit opinion 
B) Assess the firm's own quality controls and the appropriateness of the audit opinion 
C) Assess how an audit has been conducted and the firm's own quality control procedures 
D) Assess whether materiality has been properly evaluated 
A) Assess how an audit has been conducted and the appropriateness of the audit opinion 
B) Assess the firm's own quality controls and the appropriateness of the audit opinion 
C) Assess how an audit has been conducted and the firm's own quality control procedures 
D) Assess whether materiality has been properly evaluated

Question 2

An example of fraudulent financial statements is:

Accepted Answer

A) Misrepresentation of events,transactions,and other significant events in the financial statements 
B) Failure to provide adequate documentation to support financial statements assertions 
C) Aggressive accounting for transactions,events,or other significant matters 
D) Misappropriation of assets 
A) Misrepresentation of events,transactions,and other significant events in the financial statements 
B) Failure to provide adequate documentation to support financial statements assertions 
C) Aggressive accounting for transactions,events,or other significant matters 
D) Misappropriation of assets

Question 3

Typically,when a going concern issue exists the auditor should:

Accepted Answer

A) Issue an unmodified opinion with an emphasis-of-matter paragraph 
B) Issue a modified opinion and explain the reasons for the going concern issue 
C) Issue a disclaimer of opinion 
D) Withdraw from the engagement 
A) Issue an unmodified opinion with an emphasis-of-matter paragraph 
B) Issue a modified opinion and explain the reasons for the going concern issue 
C) Issue a disclaimer of opinion 
D) Withdraw from the engagement

Question 4

In gathering audit evidence,the accessibility of information may be a factor thereby influencing which judgment trigger?

Accepted Answer

A) Confirmation 
B) Overconfidence 
C) Anchoring 
D) Availability 
A) Confirmation 
B) Overconfidence 
C) Anchoring 
D) Availability

Question 5

When would it be appropriate for an auditor to withdraw from an engagement?

Accepted Answer

A) In order to avoid issuing an adverse opinion 
B) When that auditor cannot observe the taking of inventory or is unable to confirm receivables 
C) When the auditor concludes that management cannot be trusted 
D) When the auditor has overbooked too much work 
A) In order to avoid issuing an adverse opinion 
B) When that auditor cannot observe the taking of inventory or is unable to confirm receivables 
C) When the auditor concludes that management cannot be trusted 
D) When the auditor has overbooked too much work

Question 6

Under which of the following set of circumstances might the auditors disclaim an opinion?

Accepted Answer

A) The financial statements contain a departure from generally accepted accounting principles,the effect of which is material 
B) The auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion 
C) There has been a material change between periods in the method of the application of accounting principles 
D) Differences with management that lead to trust issues on the part of the auditor 
A) The financial statements contain a departure from generally accepted accounting principles,the effect of which is material 
B) The auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion 
C) There has been a material change between periods in the method of the application of accounting principles 
D) Differences with management that lead to trust issues on the part of the auditor

Question 7

One difference between the AICPA auditor's report and that of the PCAOB is:

Accepted Answer

A) The PCAOB report is not signed by the auditor 
B) The AICPA report is not signed by the auditor 
C) The PCAOB report does not have section headings 
D) Both reports are the same 
A) The PCAOB report is not signed by the auditor 
B) The AICPA report is not signed by the auditor 
C) The PCAOB report does not have section headings 
D) Both reports are the same

Question 8

In the Loyalty and Fraud Reporting case,Ethan Lester pressured his friend Vic Jensen to:

Accepted Answer

A) Misappropriate funds from the company 
B) Cover up Ethan's fraud 
C) Be silent and not report Ethan's fraud to the audit committee 
D) Give an unmodified audit report 
A) Misappropriate funds from the company 
B) Cover up Ethan's fraud 
C) Be silent and not report Ethan's fraud to the audit committee 
D) Give an unmodified audit report

Question 9

The Tax Inversion case deals with:

Accepted Answer

A) Whether IFRS should be used for all subsidiaries following an acquisition 
B) Whether IFRS should replace U.S.GAAP 
C) Whether a quality reviewer should be chosen from outside the company 
D) Whether a tax inversion should occur 
A) Whether IFRS should be used for all subsidiaries following an acquisition 
B) Whether IFRS should replace U.S.GAAP 
C) Whether a quality reviewer should be chosen from outside the company 
D) Whether a tax inversion should occur

Question 10

The Groupon case deals with all but the following issues:

Accepted Answer

A) Improperly estimated customer returns 
B) Improper recognition of gross revenue 
C) Used a new innovative metric of "Adjusted Consolidated Segment Operating Income" 
D) Blamed material weakness on their auditors EY 
A) Improperly estimated customer returns 
B) Improper recognition of gross revenue 
C) Used a new innovative metric of "Adjusted Consolidated Segment Operating Income" 
D) Blamed material weakness on their auditors EY

Question 11

Which of the following summarizes the essence of field work standards of GAAS?

Accepted Answer

A) Quality of professionals that perform an audit 
B) Criteria for judging the quality of audit work 
C) Whether the auditor was independent in conducting the audit 
D) Whether the auditor reviewed the client's financial statements for adherence to GAAP 
A) Quality of professionals that perform an audit 
B) Criteria for judging the quality of audit work 
C) Whether the auditor was independent in conducting the audit 
D) Whether the auditor reviewed the client's financial statements for adherence to GAAP

Question 12

Misstatements in the financial statements can result from:

Accepted Answer

A) Errors 
B) Fraud 
C) Illegal acts improperly recorded 
D) All of the above 
A) Errors 
B) Fraud 
C) Illegal acts improperly recorded 
D) All of the above

Question 13

What is enterprise risk management (ERM)?

Accepted Answer

A) A process of evaluating internal controls to ensure operations are carried out efficiently and effectively 
B) A process designed to identify material events that may affect the financial statements and to manage risk within the entity's risk appetite 
C) A process,effected by an entity's board of directors,management,and other personnel designed to identify potential events that may affect the entity and to manage risk within its risk appetite 
D) A process by which compliance with laws and regulations can be assessed 
A) A process of evaluating internal controls to ensure operations are carried out efficiently and effectively 
B) A process designed to identify material events that may affect the financial statements and to manage risk within the entity's risk appetite 
C) A process,effected by an entity's board of directors,management,and other personnel designed to identify potential events that may affect the entity and to manage risk within its risk appetite 
D) A process by which compliance with laws and regulations can be assessed

Question 14

The Committee of Sponsoring Organizations of the Treadway Committee (COSO) analyzed the financial reporting of public companies during the 1998-2007 periods when business failures due to accounting fraud were high and found that:

Accepted Answer

A) Top management was frequently involved in the fraud with the CEO and/or CFO being the most frequently involved 
B) The most common fraud technique involved understating expenses 
C) The audit committee always sanctioned the fraud 
D) A minority of audit reports issued during the fraud period contained unqualified audit opinions 
A) Top management was frequently involved in the fraud with the CEO and/or CFO being the most frequently involved 
B) The most common fraud technique involved understating expenses 
C) The audit committee always sanctioned the fraud 
D) A minority of audit reports issued during the fraud period contained unqualified audit opinions

Question 15

In the Imperial Valley Community Bank case,each of the following were reasons for the going concern issue except:

Accepted Answer

A) The magnitude of loan losses 
B) Insufficient equity capital 
C) Operating losses over an extended period of time 
D) Questions about the collectability of outstanding loans 
A) The magnitude of loan losses 
B) Insufficient equity capital 
C) Operating losses over an extended period of time 
D) Questions about the collectability of outstanding loans

Question 16

All of the following are in a position to commit fraud except:

Accepted Answer

A) Employees who have access to assets 
B) Top management who can override internal controls 
C) External auditors who audit the financial statements 
D) All of the above are in a position to commit fraud 
A) Employees who have access to assets 
B) Top management who can override internal controls 
C) External auditors who audit the financial statements 
D) All of the above are in a position to commit fraud

Question 17

Gathering and objectively evaluating audit evidence requires the auditor to consider:

Accepted Answer

A) Whether an unmodified opinion should be issued 
B) Whether a modified opinion should be issued 
C) Whether the evidence is adequate to complete the audit 
D) Whether the evidence is competent and sufficient enough to render an audit opinion 
A) Whether an unmodified opinion should be issued 
B) Whether a modified opinion should be issued 
C) Whether the evidence is adequate to complete the audit 
D) Whether the evidence is competent and sufficient enough to render an audit opinion

Question 18

Which of the following is not part of the fraud triangle?

Accepted Answer

A) Incentives 
B) Opportunity 
C) Materiality 
D) Rationalization 
A) Incentives 
B) Opportunity 
C) Materiality 
D) Rationalization

Question 19

The first step for an auditor who concludes an illegal act exists is to:

Accepted Answer

A) Bring the matter to the attention of the audit committee 
B) Bring the matter to the attention of the SEC 
C) Assess the impact of the illegal act on the financial statements 
D) Assess the impact of the illegal act on the auditor's opinion 
A) Bring the matter to the attention of the audit committee 
B) Bring the matter to the attention of the SEC 
C) Assess the impact of the illegal act on the financial statements 
D) Assess the impact of the illegal act on the auditor's opinion

Question 20

Which of the following is an element of the introductory paragraph of an auditor's report under AICPA standards?

Accepted Answer

A) Identifies the type of opinion the auditor is giving 
B) Identifies the entity,financial statements being audited and time period 
C) Identifies audit testing and procedures used 
D) Identifies the generally accepted auditing standards followed in conducting the audit 
A) Identifies the type of opinion the auditor is giving 
B) Identifies the entity,financial statements being audited and time period 
C) Identifies audit testing and procedures used 
D) Identifies the generally accepted auditing standards followed in conducting the audit

PCAOB Standard 7 addresses engagement quality reviews and have as its objectives to:

An example of fraudulent financial statements is:

Typically,when a going concern issue exists the auditor should:

In gathering audit evidence,the accessibility of information may be a factor thereby influencing which judgment trigger?

When would it be appropriate for an auditor to withdraw from an engagement?

Under which of the following set of circumstances might the auditors disclaim an opinion?

One difference between the AICPA auditor's report and that of the PCAOB is:

In the Loyalty and Fraud Reporting case,Ethan Lester pressured his friend Vic Jensen to:

The Tax Inversion case deals with:

The Groupon case deals with all but the following issues:

Which of the following summarizes the essence of field work standards of GAAS?

Misstatements in the financial statements can result from:

What is enterprise risk management (ERM)?

The Committee of Sponsoring Organizations of the Treadway Committee (COSO) analyzed the financial reporting of public companies during the 1998-2007 periods when business failures due to accounting fraud were high and found that:

In the Imperial Valley Community Bank case,each of the following were reasons for the going concern issue except:

All of the following are in a position to commit fraud except:

Gathering and objectively evaluating audit evidence requires the auditor to consider:

Which of the following is not part of the fraud triangle?

The first step for an auditor who concludes an illegal act exists is to:

Which of the following is an element of the introductory paragraph of an auditor's report under AICPA standards?

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Organizational Ethics and Corporate Governance

Ethics and Professional Judgment in Accounting

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters

Exam 5: Fraud in Financial Statements and Auditor Responsibilities

PCAOB Standard 7 addresses engagement quality reviews and have as its objectives to:

An example of fraudulent financial statements is:

Typically,when a going concern issue exists the auditor should:

In gathering audit evidence,the accessibility of information may be a factor thereby influencing which judgment trigger?

When would it be appropriate for an auditor to withdraw from an engagement?

Under which of the following set of circumstances might the auditors disclaim an opinion?

One difference between the AICPA auditor's report and that of the PCAOB is:

In the Loyalty and Fraud Reporting case,Ethan Lester pressured his friend Vic Jensen to:

The Tax Inversion case deals with:

The Groupon case deals with all but the following issues:

Which of the following summarizes the essence of field work standards of GAAS?

Misstatements in the financial statements can result from:

What is enterprise risk management (ERM)?

The Committee of Sponsoring Organizations of the Treadway Committee (COSO) analyzed the financial reporting of public companies during the 1998-2007 periods when business failures due to accounting fraud were high and found that:

In the Imperial Valley Community Bank case,each of the following were reasons for the going concern issue except:

All of the following are in a position to commit fraud except:

Gathering and objectively evaluating audit evidence requires the auditor to consider:

Which of the following is not part of the fraud triangle?

The first step for an auditor who concludes an illegal act exists is to:

Which of the following is an element of the introductory paragraph of an auditor's report under AICPA standards?

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Organizational Ethics and Corporate Governance

Ethics and Professional Judgment in Accounting

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management

Ethical Leadership and Decision-Making in Accounting

Filters