Exam 2: The Financial Statement Auditing Environment

What auditing standards are used to conduct an audit for a privately-held corporation? What auditing standards are used to conduct an audit for a publicly-traded corporation? What organization is responsible for setting each of these sets of standards?

Which of the following best describes the concept of risk assessment on which auditors can provide independent assurance?

The authoritative body designed to promulgate standards concerning a CPA's association with audited financial statements of an entity that is required to file financial statements with the SEC is the

Typically, an external auditor first gets supervisory experience at what level of authority?

PCAOB auditing standards must be followed on all audits of public companies' financial statements.

Which of the following is NOT a requirement of the Sarbanes-Oxley Act?

A financial statement audit is generally organized based on the five basic business processes or cycles.

Which of the following is not included in the broad category of assurance services?

The audit committee generally includes senior executives of the organization.

Jane Goodperson performed an audit on the Quagmire Corporation and issued an unqualified opinion. Jane performed the audit with due professional care and in accordance with generally accepted auditing standards. Two months after the report is issued, Jane discovers on the news that the CEO of Quagmire, Johnny Best, had been stealing small amounts of inventory. The amount, however, is immaterial compared to the overall inventory of the corporation. Jane soon receives a call from Quagmire's CFO, Mark Beastly. Mark wants Jane to refund her audit fees. Mark thinks Jane did not properly perform the audit, as she did not discover this fraud. Further, he feels that now Quagmire's financial statements are not fairly stated because of Jane. How should Jane respond to this claim?

What organization is responsible for setting auditing standards for audits of publicly-traded companies in the U.S.?

The IAASB and the ASB have collaborated on the principles underlying an audit conducted in accordance with generally accepted auditing standards. These principles are grouped into four categories. What are the four categories?

The three PCAOB standards of fieldwork are concerned with

Which of the following best describes the role of corporate governance?

Generally, the financial statements of U.S. companies must be prepared based on GAAP.

Which of the following describes the PCAOB generally accepted auditing standard requiring a critical review of the work done and the judgment exercised by those assisting in an audit at every level of supervision?

With respect to an entity's financial statements, describe both the responsibility of management and that of the auditor.

Due professional care requires auditors to

Forensic audits include all of the following except

The four PCAOB standards of reporting are concerned with all of the following except