Question 1

Engagement risk is defined as:

Accepted Answer

A)  the risk that the client will not pay you on time. 
B)  the risk that being associated with the client will not be good for the accounting firm. 
C)  the risk that the client will not reappoint the auditor after the first year. 
D)  All of the above. 
A)  the risk that the client will not pay you on time. 
B)  the risk that being associated with the client will not be good for the accounting firm. 
C)  the risk that the client will not reappoint the auditor after the first year. 
D)  All of the above. B

Question 2

An integrated audit consists of:

Accepted Answer

A)  examining the effectiveness of internal control. 
B)  examining the fairness of the financial statements. 
C)  Both a and b. 
D)  Neither a nor b. 
A)  examining the effectiveness of internal control. 
B)  examining the fairness of the financial statements. 
C)  Both a and b. 
D)  Neither a nor b. C

Question 3

Auditors auditing nonpublic companies must follow:

Accepted Answer

A)  all audit standards. 
B)  only those standards issued by the PCAOB. 
C)  only those standards issued by the AICPA. 
D)  None of the above. 
A)  all audit standards. 
B)  only those standards issued by the PCAOB. 
C)  only those standards issued by the AICPA. 
D)  None of the above. C

Question 4

Judgment errors indicate:

Accepted Answer

A)  the auditor behaved in a negligent manner. 
B)  the auditor failed to exhibit professional care. 
C)  the auditor failed to exhibit professional skepticism. 
D)  None of the above. 
A)  the auditor behaved in a negligent manner. 
B)  the auditor failed to exhibit professional care. 
C)  the auditor failed to exhibit professional skepticism. 
D)  None of the above.

Question 5

List the steps required in client acceptance, in exact order. Also include important factors the auditor would consider in deciding whether or not to accept the client.

Accepted Answer

Upon receiving a request for a proposal,

Question 6

Assessing the design effectiveness of the internal control system involves:

Accepted Answer

A)  reviewing the controls that are missing. 
B)  reviewing the controls present. 
C)  deciding if those controls are operating as intended. 
D)  All of the above. 
A)  reviewing the controls that are missing. 
B)  reviewing the controls present. 
C)  deciding if those controls are operating as intended. 
D)  All of the above.

Question 7

The audit is concluded with:

Accepted Answer

A)  the audit opinion on the financial statements. 
B)  the audit opinion on the ICFR. 
C)  wrap-up procedures. 
D)  All of the above. 
A)  the audit opinion on the financial statements. 
B)  the audit opinion on the ICFR. 
C)  wrap-up procedures. 
D)  All of the above.

Question 8

One of the fundamental concepts concerns valuation and allocation.

Accepted Answer

A) True 
 B)False

Question 9

What is the value of auditors going through a formal process of linking management assertions to audit procedures to collect evidence? How does this process improve the audit?

Accepted Answer

The linkage is as follows: Management ma

Question 10

Match the scenario below with the audit standard(s) and the number within the standard . Some examples may have more than one standard that applies.
Audit standards:
-General #1, #2, or #3
-Field work #1, #2, or #3
-Reporting #1, #2, #3, or #4

SCENARIOS:
(a) Larry works for a CPA firm that has few supervisory auditors.
(b) Mary-Ellen becomes bored with auditing payroll, so she simply checks off the steps on a work program as being completed without doing the work.
(c) Bruce refuses to attend his firm's training sessions, attending a baseball game instead. He has another staff member sign him in and out.
(d) The audit firm runs out of time and thus stops collecting evidence despite worries that there might be errors in one account.
(e) The staff at a firm like the client, so they raise the materiality threshold beyond the limit generally set by the firm.
(f) The audit report states that GAAP was used in preparing the financial statements, even though the client deviated from GAAP in several material respects.
(g) The auditors withhold the audit report because they have not been paid.
(h) The auditors perform the tests of internal control as they perform the substantive tests in order to save the client money.
(i) The client changes accounting methods with respect to inventory, but failed to restate its financial statements for the prior periods. The auditors decided to let it go since they ran out of time.
(j) The auditors fail to audit the footnote disclosures provided by the client.
(k) The auditor is concerned that there are material errors he has not found and so refuses to issue an audit report.

Accepted Answer

(a) Field work #1
(b) General #3 (could

Question 11

An audit of a non-public firm is identical to that for a public firm.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would be a violation of the general auditing standards:

Accepted Answer

A)  the auditor accepts an engagement from a firm for whom his brother-in-law works as the controller. 
B)  the auditor hires marketing majors because it cannot afford accounting graduates but trains them thoroughly. 
C)  the auditor allows second-year staff to supervise beginning staff. 
D)  All of the above are violations. 
A)  the auditor accepts an engagement from a firm for whom his brother-in-law works as the controller. 
B)  the auditor hires marketing majors because it cannot afford accounting graduates but trains them thoroughly. 
C)  the auditor allows second-year staff to supervise beginning staff. 
D)  All of the above are violations.

Question 13

The PCAOB oversees the securities markets.

Accepted Answer

A) True 
 B)False

Question 14

The auditor's finding with respect to internal control is:

Accepted Answer

A)  assessed at the beginning of the audit as part of the ICFR review. 
B)  assessed during substantive testing procedures. 
C)  assessed during testing of internal control. 
D)  All of the above. 
A)  assessed at the beginning of the audit as part of the ICFR review. 
B)  assessed during substantive testing procedures. 
C)  assessed during testing of internal control. 
D)  All of the above.

Question 15

Management assertions contain which of the following:

Accepted Answer

A)  statements concerning that accounts exist. 
B)  statements that all liabilities are included in the balance sheet. 
C)  statements that the financial statements are presented fairly. 
D)  All of the above. 
A)  statements concerning that accounts exist. 
B)  statements that all liabilities are included in the balance sheet. 
C)  statements that the financial statements are presented fairly. 
D)  All of the above.

Question 16

Planning an audit involves which of the following steps:

Accepted Answer

A)  risk assessment. 
B)  collecting information concerning the client's information system. 
C)  collecting information about the client. 
D)  All of the above. 
A)  risk assessment. 
B)  collecting information concerning the client's information system. 
C)  collecting information about the client. 
D)  All of the above.

Question 17

Absolute assurance:

Accepted Answer

A)  is desired and strived for by auditors. 
B)  is not cost-effective. 
C)  is not possible given the estimation of many numbers in the financial statements. 
D)  Both b and c 
A)  is desired and strived for by auditors. 
B)  is not cost-effective. 
C)  is not possible given the estimation of many numbers in the financial statements. 
D)  Both b and c

Question 18

If the auditor disagrees with management's assertion of internal control, the auditor:

Accepted Answer

A)  ignores this and issues the proper opinion. 
B)  notes this in the footnotes. 
C)  notes this in the audit report. 
D)  None of the above. 
A)  ignores this and issues the proper opinion. 
B)  notes this in the footnotes. 
C)  notes this in the audit report. 
D)  None of the above.

Question 19

The ICFR is important because:

Accepted Answer

A)  it links the client's financial statements and the risks associated with financial reporting. 
B)  it links the information system and the risks associated with financial reporting. 
C)  it provides readers with an assessment of how effective the internal control system is. 
D)  All of the above. 
A)  it links the client's financial statements and the risks associated with financial reporting. 
B)  it links the information system and the risks associated with financial reporting. 
C)  it provides readers with an assessment of how effective the internal control system is. 
D)  All of the above.

Question 20

Which of the following assertions do NOT address classes of transactions and events for the period under audit:

Accepted Answer

A)  rights and obligations. 
B)  completeness. 
C)  cut-off. 
D)  None of the above. 
A)  rights and obligations. 
B)  completeness. 
C)  cut-off. 
D)  None of the above.

Engagement risk is defined as:

An integrated audit consists of:

Auditors auditing nonpublic companies must follow:

Judgment errors indicate:

List the steps required in client acceptance, in exact order. Also include important factors the auditor would consider in deciding whether or not to accept the client.

Assessing the design effectiveness of the internal control system involves:

The audit is concluded with:

One of the fundamental concepts concerns valuation and allocation.

What is the value of auditors going through a formal process of linking management assertions to audit procedures to collect evidence? How does this process improve the audit?

An audit of a non-public firm is identical to that for a public firm.

Which of the following would be a violation of the general auditing standards:

The PCAOB oversees the securities markets.

The auditor's finding with respect to internal control is:

Management assertions contain which of the following:

Planning an audit involves which of the following steps:

Absolute assurance:

If the auditor disagrees with management's assertion of internal control, the auditor:

The ICFR is important because:

Which of the following assertions do NOT address classes of transactions and events for the period under audit:

An Introduction to Auditing

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

Substantive Procedures and the Financial Statement Audit

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Assets, Liabilities and Equity Related to the Financing Cycle

Topics Beyond the Integrated Audit

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Exam 2: Overview of an Integrated Audit

Engagement risk is defined as:

An integrated audit consists of:

Auditors auditing nonpublic companies must follow:

Judgment errors indicate:

List the steps required in client acceptance, in exact order. Also include important factors the auditor would consider in deciding whether or not to accept the client.

Assessing the design effectiveness of the internal control system involves:

The audit is concluded with:

One of the fundamental concepts concerns valuation and allocation.

What is the value of auditors going through a formal process of linking management assertions to audit procedures to collect evidence? How does this process improve the audit?

An audit of a non-public firm is identical to that for a public firm.

Which of the following would be a violation of the general auditing standards:

The PCAOB oversees the securities markets.

The auditor's finding with respect to internal control is:

Management assertions contain which of the following:

Planning an audit involves which of the following steps:

Absolute assurance:

If the auditor disagrees with management's assertion of internal control, the auditor:

The ICFR is important because:

Which of the following assertions do NOT address classes of transactions and events for the period under audit:

An Introduction to Auditing

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

Substantive Procedures and the Financial Statement Audit

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Assets, Liabilities and Equity Related to the Financing Cycle

Topics Beyond the Integrated Audit

Filters