Question 1

Which of the following is not a main goal of the internal auditing profession?

Accepted Answer

A)  Add value to an organization's operations. 
B)  Help an organization to accomplish its objectives. 
C)  Provide reliable information to external users. 
D)  Improve the effectiveness of risk management of an organization. 
A)  Add value to an organization's operations. 
B)  Help an organization to accomplish its objectives. 
C)  Provide reliable information to external users. 
D)  Improve the effectiveness of risk management of an organization. C

Question 2

An attestation report should state that the use of the report is restricted to specified parties under all of the following circumstances except when:

Accepted Answer

A)  The criteria used to evaluate the subject matter are available only to specified parties. 
B)  The report is an attest engagement to apply agreed-upon procedures. 
C)  A written assertion on the subject matter of the report has not been provided by the responsible party. 
D)  All of the listed scenarios are circumstances that would dictate that the use of the report is restricted to specific parties. 
A)  The criteria used to evaluate the subject matter are available only to specified parties. 
B)  The report is an attest engagement to apply agreed-upon procedures. 
C)  A written assertion on the subject matter of the report has not been provided by the responsible party. 
D)  All of the listed scenarios are circumstances that would dictate that the use of the report is restricted to specific parties. D

Question 3

In your own words, describe how the Institute of Internal Auditors (IIA) defines internal auditing?

Accepted Answer

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Question 4

A SysTrust engagement is conducted under which of the following sets of standards?

Accepted Answer

A)  AICPA. 
B)  Review. 
C)  Attestation. 
D)  Audit. 
A)  AICPA. 
B)  Review. 
C)  Attestation. 
D)  Audit.

Question 5

In a review engagement, the accountant must make all of the following inquiries except those to:

Accepted Answer

A)  Identify subsequent events having a material effect on the statements. 
B)  Understand internal controls. 
C)  Identify actions taken at stockholders' meetings. 
D)  Ascertain whether statements are in accordance with GAAP. 
A)  Identify subsequent events having a material effect on the statements. 
B)  Understand internal controls. 
C)  Identify actions taken at stockholders' meetings. 
D)  Ascertain whether statements are in accordance with GAAP.

Question 6

IIA Standards include

Accepted Answer

A)  Practice advisories. 
B)  Code of Ethics. 
C)  Interpretations. 
D)  Both practice advisories and the Code of Ethics. 
A)  Practice advisories. 
B)  Code of Ethics. 
C)  Interpretations. 
D)  Both practice advisories and the Code of Ethics.

Question 7

An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that

Accepted Answer

A)  Distribution of the report is restricted to the specified users involved. 
B)  The prospective financial statements also are examined. 
C)  Responsibility for the adequacy of the procedures performed is taken by the accountant. 
D)  Negative assurance is expressed on the prospective financial statements taken as a whole. 
A)  Distribution of the report is restricted to the specified users involved. 
B)  The prospective financial statements also are examined. 
C)  Responsibility for the adequacy of the procedures performed is taken by the accountant. 
D)  Negative assurance is expressed on the prospective financial statements taken as a whole.

Question 8

To bridge the gap between a changing business environment and the guidance that was then available, the IIA developed a Professional Practices Framework. This framework consists of two broad categories of guidance. List these categories of guidance and what they include.

Accepted Answer

a. Mandatory guidance (definit

Question 9

Which of the following is not an attestation standard?

Accepted Answer

A)  Sufficient evidence shall be obtained to provide a reasonable basis for the conclusion that is expressed in the report. 
B)  The report shall identify the subject matter or assertion being reported on and state the character of the engagement. 
C)  The work shall be adequately planned and assistants, if any, shall be properly supervised. 
D)  A sufficient understanding of internal controls shall be obtained to plan the engagement. 
A)  Sufficient evidence shall be obtained to provide a reasonable basis for the conclusion that is expressed in the report. 
B)  The report shall identify the subject matter or assertion being reported on and state the character of the engagement. 
C)  The work shall be adequately planned and assistants, if any, shall be properly supervised. 
D)  A sufficient understanding of internal controls shall be obtained to plan the engagement.

Question 10

A compilation of prospective financial statements involves all of the following except:

Accepted Answer

A)  Performing analytical procedures. 
B)  Assembling the statements based on the responsible party's assumptions. 
C)  Issuing a compilation report. 
D)  Considering whether the statements appear to be not obviously inappropriate. 
A)  Performing analytical procedures. 
B)  Assembling the statements based on the responsible party's assumptions. 
C)  Issuing a compilation report. 
D)  Considering whether the statements appear to be not obviously inappropriate.

Question 11

The type of report issued under a PrimePlus assurance engagement is likely which of the following?

Accepted Answer

A)  Unqualified. 
B)  Assurance. 
C)  Audit. 
D)  Agreed-upon procedures. 
A)  Unqualified. 
B)  Assurance. 
C)  Audit. 
D)  Agreed-upon procedures.

Question 12

During a review of financial statements of a nonpublic entity, the CPA would be least likely to

Accepted Answer

A)  Perform analytical procedures designed to identify relationships that appear to be unusual. 
B)  Obtain written confirmation from banks regarding loans to the entity. 
C)  Obtain reports from other accountants who reviewed a portion of the total entity. 
D)  Read the financial statements and consider their conformance with generally accepted accounting principles. 
A)  Perform analytical procedures designed to identify relationships that appear to be unusual. 
B)  Obtain written confirmation from banks regarding loans to the entity. 
C)  Obtain reports from other accountants who reviewed a portion of the total entity. 
D)  Read the financial statements and consider their conformance with generally accepted accounting principles.

Question 13

Limited assurance is provided in a review engagement.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards?

Accepted Answer

A)  The attestation standards provide a framework for the attest function beyond historical financial statements. 
B)  The requirement that the practitioner be independent in mental attitude is omitted from the attestation standards. 
C)  The attestation standards do not permit an attest engagement to be part of a business acquisition study or a feasibility study. 
D)  None of the standards of fieldwork in generally accepted auditing standards are included in the attestation standards. 
A)  The attestation standards provide a framework for the attest function beyond historical financial statements. 
B)  The requirement that the practitioner be independent in mental attitude is omitted from the attestation standards. 
C)  The attestation standards do not permit an attest engagement to be part of a business acquisition study or a feasibility study. 
D)  None of the standards of fieldwork in generally accepted auditing standards are included in the attestation standards.

Question 15

Responding to a question such as "What would happen if..." is an attribute of which of the following types of engagements?

Accepted Answer

A)  Financial projection. 
B)  Financial forecast. 
C)  Financial forecast and financial projection. 
D)  Review. 
A)  Financial projection. 
B)  Financial forecast. 
C)  Financial forecast and financial projection. 
D)  Review.

Question 16

Given one or more hypothetical assumptions, a responsible party may prepare, to the best of his knowledge and belief, an entity's expected financial position, results of operations, and changes in cash flows. Such prospective financial statements are known as

Accepted Answer

A)  Pro forma financial statements. 
B)  Financial projections. 
C)  Partial presentations. 
D)  Financial forecasts. 
A)  Pro forma financial statements. 
B)  Financial projections. 
C)  Partial presentations. 
D)  Financial forecasts.

Question 17

Which of the following should be included in an accountant's standard report based upon the review of a nonpublic entity's financial statements?

Accepted Answer

A)  A statement that the review was performed in accordance with generally accepted review standards. 
B)  A statement that a review consists principally of inquiries and analytical procedures. 
C)  A statement that the accountant is independent with respect to the entity. 
D)  A statement that a review is substantially greater in scope than a compilation. 
A)  A statement that the review was performed in accordance with generally accepted review standards. 
B)  A statement that a review consists principally of inquiries and analytical procedures. 
C)  A statement that the accountant is independent with respect to the entity. 
D)  A statement that a review is substantially greater in scope than a compilation.

Question 18

Attestation standards provide guidance for performing assurance services with respect to several types of engagements, including prospective financial statements.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is not true concerning assurance services?

Accepted Answer

A)  The growth in assurance services has been driven in part by users' demands for more relevant information. 
B)  Assurance services focus on improving the quality of information or its context, for decision makers. 
C)  Unlike audit and attestation engagements, an engagement to perform assurance services does not require the CPA to consider information reliability. 
D)  Auditing and attestation services can be viewed as subsets of assurance services since there is overlap in their objectives. 
A)  The growth in assurance services has been driven in part by users' demands for more relevant information. 
B)  Assurance services focus on improving the quality of information or its context, for decision makers. 
C)  Unlike audit and attestation engagements, an engagement to perform assurance services does not require the CPA to consider information reliability. 
D)  Auditing and attestation services can be viewed as subsets of assurance services since there is overlap in their objectives.

Question 20

During a review of the financial statements of a nonpublic entity, an accountant becomes aware of inadequate disclosure that is material to the financial statements. If management refuses to correct the financial statement presentations, the accountant should

Accepted Answer

A)  Issue an adverse opinion. 
B)  Issue an "except for" qualified opinion. 
C)  Disclose this departure from generally accepted accounting principles in a separate paragraph of the report. 
D)  Express only limited assurance on the financial statement presentations. 
A)  Issue an adverse opinion. 
B)  Issue an "except for" qualified opinion. 
C)  Disclose this departure from generally accepted accounting principles in a separate paragraph of the report. 
D)  Express only limited assurance on the financial statement presentations.

Exam 21: Assurance, Attestation, and Internal Auditing Services

Which of the following is not a main goal of the internal auditing profession?

An attestation report should state that the use of the report is restricted to specified parties under all of the following circumstances except when:

In your own words, describe how the Institute of Internal Auditors (IIA) defines internal auditing?

A SysTrust engagement is conducted under which of the following sets of standards?

In a review engagement, the accountant must make all of the following inquiries except those to:

IIA Standards include

An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that

To bridge the gap between a changing business environment and the guidance that was then available, the IIA developed a Professional Practices Framework. This framework consists of two broad categories of guidance. List these categories of guidance and what they include.

Which of the following is not an attestation standard?

A compilation of prospective financial statements involves all of the following except:

The type of report issued under a PrimePlus assurance engagement is likely which of the following?

During a review of financial statements of a nonpublic entity, the CPA would be least likely to

Limited assurance is provided in a review engagement.

Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards?

Responding to a question such as "What would happen if..." is an attribute of which of the following types of engagements?

Given one or more hypothetical assumptions, a responsible party may prepare, to the best of his knowledge and belief, an entity's expected financial position, results of operations, and changes in cash flows. Such prospective financial statements are known as

Which of the following should be included in an accountant's standard report based upon the review of a nonpublic entity's financial statements?

Attestation standards provide guidance for performing assurance services with respect to several types of engagements, including prospective financial statements.

Which of the following statements is not true concerning assurance services?

During a review of the financial statements of a nonpublic entity, an accountant becomes aware of inadequate disclosure that is material to the financial statements. If management refuses to correct the financial statement presentations, the accountant should

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financing Investing Process: Prepaid Expenses Intangible Assets and Property Plant and Equipment

Auditing the Financing Investing Process: Long-Term Liabilities Stockholders Equity and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

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