Question 1

Comparability is one of the five management assertions.

Accepted Answer

A) True 
 B)False

Question 2

An audit must be performed by persons who can make sound judgments relating to complex accounting issues.

Accepted Answer

A) True 
 B)False

Question 3

A controls reliance audit includes substantive procedures and does not include tests of controls.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following groups are committed to the convergence of the auditing standards?

Accepted Answer

A) IAASB. 
B) PCAOB. 
C) AICPA. 
D) Both A and C. 
E) All of the above. 
A) IAASB. 
B) PCAOB. 
C) AICPA. 
D) Both A and C. 
E) All of the above.

Question 5

Which of the following is not a component of business risk?

Accepted Answer

A) Regulatory risk and changes. 
B) Economic or competitive changes. 
C) Changes in stock market performance. 
D) Changes in fair market values of assets or liabilities. 
A) Regulatory risk and changes. 
B) Economic or competitive changes. 
C) Changes in stock market performance. 
D) Changes in fair market values of assets or liabilities.

Question 6

The common purpose of auditing standards created by the various authorities is to provide reasonable assurance that audits are conducted in a quality manner.

Accepted Answer

A) True 
 B)False

Question 7

PCAOB guidance includes standards on certain auditor responsibilities related to SEC filings.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about the auditing standards issued by the AICPA is true?

Accepted Answer

A) The auditing standards issued by the AICPA are no longer recognized by the PCAOB. 
B) The auditing standards issued by the AICPA are no longer recognized by the profession because the AICPA voted itself out of existence. 
C) The auditing standards issued by the AICPA continue to be issued by that organization for audits of public companies. 
D) The auditing standards issued by the AICPA were used by the PCAOB as a starting point. 
A) The auditing standards issued by the AICPA are no longer recognized by the PCAOB. 
B) The auditing standards issued by the AICPA are no longer recognized by the profession because the AICPA voted itself out of existence. 
C) The auditing standards issued by the AICPA continue to be issued by that organization for audits of public companies. 
D) The auditing standards issued by the AICPA were used by the PCAOB as a starting point.

Question 9

Which of the following is not required by the PCAOB's General Auditing Standards category?

Accepted Answer

A) Exercise due professional care. 
B) Obtain reasonable assurance as to whether internal controls are effective. 
C) Maintain an independence in mental attitude. 
D) Exercise professional skepticism. 
A) Exercise due professional care. 
B) Obtain reasonable assurance as to whether internal controls are effective. 
C) Maintain an independence in mental attitude. 
D) Exercise professional skepticism.

Question 10

Inherent risk refers to the susceptibility of an assertion about a class of transaction,account balance,or disclosure to a misstatement that could be immaterial,either individually or when aggregated with other misstatements,before consideration of any related controls.

Accepted Answer

A) True 
 B)False

Question 11

The auditor is not required to test every control related to relevant assertions in a significant account.

Accepted Answer

A) True 
 B)False

Question 12

In performing substantive tests on account balances,the auditor performs tests for all five assertions.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following organizations provides auditing standards for public companies?

Accepted Answer

A) GAO. 
B) AICPA. 
C) GAAP. 
D) PCAOB. 
A) GAO. 
B) AICPA. 
C) GAAP. 
D) PCAOB.

Question 14

Assertions are relevant to the audit process because they are the representations of management embodied in the financial statements.

Accepted Answer

A) True 
 B)False

Question 15

Making client acceptance and continuance decisions is the first phase of the audit opinion formulation process.

Accepted Answer

A) True 
 B)False

Question 16

The auditing standards issued by the PCAOB are identical to the auditing standards issued by the AICPA.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a question an auditor considers in deciding whether to pursue a lower control risk approach prior to substantive testing?

Accepted Answer

A) Is the design of the control effective? 
B) Does the control promote operational efficiency? 
C) Is it cost effective to test controls? 
D) Are controls operating effectively? 
A) Is the design of the control effective? 
B) Does the control promote operational efficiency? 
C) Is it cost effective to test controls? 
D) Are controls operating effectively?

Question 18

Tests of controls are procedures are procedures performed by the auditor to obtain information for identifying and assessing the risks of material misstatement in the financial statements.

Accepted Answer

A) True 
 B)False

Question 19

If the auditor's assessment of the materiality of the account balance is high,what would be the respective effect on (1)the extent of substantive testing and (2)the nature of procedures performed?

Accepted Answer

A) (1)Less (2)More rigorous 
B) (1)Less (2)Less rigorous. 
C) (1)More (2)Less rigorous 
D) (1)More (2)More rigorous 
A) (1)Less (2)More rigorous 
B) (1)Less (2)Less rigorous. 
C) (1)More (2)Less rigorous 
D) (1)More (2)More rigorous

Question 20

The PCAOB's General Auditing Standards requires that an audit be performed by which type of person?

Accepted Answer

A) An auditor with seasoned judgment in varying degrees of supervision and review. 
B) An auditor having the appropriate professional qualifications. 
C) An auditor with adequate technical and leadership skills. 
D) All of the above. 
A) An auditor with seasoned judgment in varying degrees of supervision and review. 
B) An auditor having the appropriate professional qualifications. 
C) An auditor with adequate technical and leadership skills. 
D) All of the above.

Comparability is one of the five management assertions.

An audit must be performed by persons who can make sound judgments relating to complex accounting issues.

A controls reliance audit includes substantive procedures and does not include tests of controls.

Which of the following groups are committed to the convergence of the auditing standards?

Which of the following is not a component of business risk?

The common purpose of auditing standards created by the various authorities is to provide reasonable assurance that audits are conducted in a quality manner.

PCAOB guidance includes standards on certain auditor responsibilities related to SEC filings.

Which of the following statements about the auditing standards issued by the AICPA is true?

Which of the following is not required by the PCAOB's General Auditing Standards category?

Inherent risk refers to the susceptibility of an assertion about a class of transaction,account balance,or disclosure to a misstatement that could be immaterial,either individually or when aggregated with other misstatements,before consideration of any related controls.

The auditor is not required to test every control related to relevant assertions in a significant account.

In performing substantive tests on account balances,the auditor performs tests for all five assertions.

Which of the following organizations provides auditing standards for public companies?

Assertions are relevant to the audit process because they are the representations of management embodied in the financial statements.

Making client acceptance and continuance decisions is the first phase of the audit opinion formulation process.

The auditing standards issued by the PCAOB are identical to the auditing standards issued by the AICPA.

Which of the following is not a question an auditor considers in deciding whether to pursue a lower control risk approach prior to substantive testing?

Tests of controls are procedures are procedures performed by the auditor to obtain information for identifying and assessing the risks of material misstatement in the financial statements.

If the auditor's assessment of the materiality of the account balance is high,what would be the respective effect on (1)the extent of substantive testing and (2)the nature of procedures performed?

The PCAOB's General Auditing Standards requires that an audit be performed by which type of person?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters

Exam 5: Professional Auditing Standards and the Audit Opinion Formulation Process

Comparability is one of the five management assertions.

An audit must be performed by persons who can make sound judgments relating to complex accounting issues.

A controls reliance audit includes substantive procedures and does not include tests of controls.

Which of the following groups are committed to the convergence of the auditing standards?

Which of the following is not a component of business risk?

The common purpose of auditing standards created by the various authorities is to provide reasonable assurance that audits are conducted in a quality manner.

PCAOB guidance includes standards on certain auditor responsibilities related to SEC filings.

Which of the following statements about the auditing standards issued by the AICPA is true?

Which of the following is not required by the PCAOB's General Auditing Standards category?

Inherent risk refers to the susceptibility of an assertion about a class of transaction,account balance,or disclosure to a misstatement that could be immaterial,either individually or when aggregated with other misstatements,before consideration of any related controls.

The auditor is not required to test every control related to relevant assertions in a significant account.

In performing substantive tests on account balances,the auditor performs tests for all five assertions.

Which of the following organizations provides auditing standards for public companies?

Assertions are relevant to the audit process because they are the representations of management embodied in the financial statements.

Making client acceptance and continuance decisions is the first phase of the audit opinion formulation process.

The auditing standards issued by the PCAOB are identical to the auditing standards issued by the AICPA.

Which of the following is not a question an auditor considers in deciding whether to pursue a lower control risk approach prior to substantive testing?

Tests of controls are procedures are procedures performed by the auditor to obtain information for identifying and assessing the risks of material misstatement in the financial statements.

If the auditor's assessment of the materiality of the account balance is high,what would be the respective effect on (1)the extent of substantive testing and (2)the nature of procedures performed?

The PCAOB's General Auditing Standards requires that an audit be performed by which type of person?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters