Question 1

Congress authorized which of the following organizations to establish generally accepted accounting principles?

Accepted Answer

A) SEC. 
B) PCAOB. 
C) AICPA. 
D) FASB. 
A) SEC. 
B) PCAOB. 
C) AICPA. 
D) FASB.

Question 2

Contingent fees are prohibited for any client for which the auditor performs audit services,but are otherwise permitted.

Accepted Answer

A) True 
 B)False

Question 3

Independence in mental attitude is required of auditors on all audit engagements.Which statement best describes the highest goal for independence?

Accepted Answer

A) To comply with the AICPA Code of Professional Conduct. 
B) To be independent in fact and appearance. 
C) To be an advocate for shareholders and other users of financial information. 
D) To comply with SEC regulations. 
A) To comply with the AICPA Code of Professional Conduct. 
B) To be independent in fact and appearance. 
C) To be an advocate for shareholders and other users of financial information. 
D) To comply with SEC regulations.

Question 4

Commissions and referral fees are not permitted for which types of services?

Accepted Answer

A) Tax services. 
B) Financial planning services. 
C) Audits. 
D) Both B and C. 
A) Tax services. 
B) Financial planning services. 
C) Audits. 
D) Both B and C.

Question 5

How is the audit report referred to when the auditor has no reservations about management's financial statements?

Accepted Answer

A) An unqualified report. 
B) A qualified report. 
C) An adverse report. 
D) An integrated report. 
A) An unqualified report. 
B) A qualified report. 
C) An adverse report. 
D) An integrated report.

Question 6

In the United States,auditors form conclusions about whether the financial statements are presented fairly in accordance with generally accepted auditing standards (GAAS).

Accepted Answer

A) True 
 B)False

Question 7

What does utilitarian theory hold?

Accepted Answer

A) There is a decision that exists that is optimal for all people. 
B) What is ethical is the action that achieves the least bad for the greatest number of people. 
C) What is ethical is the action that achieves the greatest good for the greatest number of people. 
D) What is ethical is the action that achieves the greatest good for all people. 
A) There is a decision that exists that is optimal for all people. 
B) What is ethical is the action that achieves the least bad for the greatest number of people. 
C) What is ethical is the action that achieves the greatest good for the greatest number of people. 
D) What is ethical is the action that achieves the greatest good for all people.

Question 8

The AICPA Code of Professional Conduct prohibits an auditor from providing any non-audit services to audit clients because of the threat posed to the auditor's independence.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an important consideration in client acceptance and continuance decisions?

Accepted Answer

A) Integrity of the client company's management. 
B) Effectiveness of the client company's internal controls. 
C) The audit firm's growth strategy. 
D) All of the above. 
A) Integrity of the client company's management. 
B) Effectiveness of the client company's internal controls. 
C) The audit firm's growth strategy. 
D) All of the above.

Question 10

An ethical dilemma occurs in a situation in which moral duties or obligations conflict.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a reason for audits of financial statements of public companies?

Accepted Answer

A) Potential bias in providing information. 
B) Greater likelihood of fraud in large public companies. 
C) Complexity of the processing systems. 
D) Remoteness between a user and the organization. 
A) Potential bias in providing information. 
B) Greater likelihood of fraud in large public companies. 
C) Complexity of the processing systems. 
D) Remoteness between a user and the organization.

Question 12

An ethical dilemma occurs when an ethically correct action may conflict with an individual's immediate self-interest.

Accepted Answer

A) True 
 B)False

Question 13

According to Rights Theory,the highest-order rights include rights granted by the government,such as civil rights,legal rights,rights to own property,and license privileges.

Accepted Answer

A) True 
 B)False

Question 14

According to the AICPA,which of the following is not a safeguard to the auditing profession?

Accepted Answer

A) Education. 
B) Professional standards. 
C) External reviews. 
D) Legislation concerning competency requirements. 
A) Education. 
B) Professional standards. 
C) External reviews. 
D) Legislation concerning competency requirements.

Question 15

The Center for Audit Quality is responsible for the oversight of the peer review process for registered audit firms.

Accepted Answer

A) True 
 B)False

Question 16

Identify at least three types of users of financial statements. Describe their primary use of the financial statements
and how the misstatement of those statements might injure the user.
Users of audited financial statements may include:
Management uses the audit report to determine whether the financial statements
are presented in accordance with GAAP, whether the firm is availing itself of
appropriate internal controls, and as a means of evaluating employee
performance. Misstatement of the financial statements would cause the client to
make erroneous decisions about financial position, internal controls and
employee rewards and punishments.

Accepted Answer

A financial institution that is asked to

Question 17

Which of the following is not a primary driver of audit quality?

Accepted Answer

A) Skills and personal qualities of audit staff. 
B) Size of the audit firm. 
C) Effective audit processes. 
D) Audit firm culture. 
A) Skills and personal qualities of audit staff. 
B) Size of the audit firm. 
C) Effective audit processes. 
D) Audit firm culture.

Question 18

Which of the following is not an action required by utilitarian theory?

Accepted Answer

A) Identify the potential problem. 
B) Identify the potential impact of actions on each affected party. 
C) Identify the rights of the affected parties. 
D) Identify the desirability of each action. 
A) Identify the potential problem. 
B) Identify the potential impact of actions on each affected party. 
C) Identify the rights of the affected parties. 
D) Identify the desirability of each action.

Question 19

Which of the following is a reason an audit firm might decide not to accept a company as a client?

Accepted Answer

A) The company is in a weak financial position. 
B) The company culture does not match the audit firm culture. 
C) The company is part of an industry that tends to have volatile stock prices. 
D) All of the above. 
A) The company is in a weak financial position. 
B) The company culture does not match the audit firm culture. 
C) The company is part of an industry that tends to have volatile stock prices. 
D) All of the above.

Question 20

Auditing exists because users need unbiased information on which to assess management performance and make economic decisions.

Accepted Answer

A) True 
 B)False

Congress authorized which of the following organizations to establish generally accepted accounting principles?

Contingent fees are prohibited for any client for which the auditor performs audit services,but are otherwise permitted.

Independence in mental attitude is required of auditors on all audit engagements.Which statement best describes the highest goal for independence?

Commissions and referral fees are not permitted for which types of services?

How is the audit report referred to when the auditor has no reservations about management's financial statements?

In the United States,auditors form conclusions about whether the financial statements are presented fairly in accordance with generally accepted auditing standards (GAAS).

What does utilitarian theory hold?

The AICPA Code of Professional Conduct prohibits an auditor from providing any non-audit services to audit clients because of the threat posed to the auditor's independence.

Which of the following is an important consideration in client acceptance and continuance decisions?

An ethical dilemma occurs in a situation in which moral duties or obligations conflict.

Which of the following is not a reason for audits of financial statements of public companies?

An ethical dilemma occurs when an ethically correct action may conflict with an individual's immediate self-interest.

According to Rights Theory,the highest-order rights include rights granted by the government,such as civil rights,legal rights,rights to own property,and license privileges.

According to the AICPA,which of the following is not a safeguard to the auditing profession?

The Center for Audit Quality is responsible for the oversight of the peer review process for registered audit firms.

Which of the following is not a primary driver of audit quality?

Which of the following is not an action required by utilitarian theory?

Which of the following is a reason an audit firm might decide not to accept a company as a client?

Auditing exists because users need unbiased information on which to assess management performance and make economic decisions.

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

Professional Auditing Standards and the Audit Opinion Formulation Process

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 1: Quality Auditing: Why It Matters

Congress authorized which of the following organizations to establish generally accepted accounting principles?

Contingent fees are prohibited for any client for which the auditor performs audit services,but are otherwise permitted.

Independence in mental attitude is required of auditors on all audit engagements.Which statement best describes the highest goal for independence?

Commissions and referral fees are not permitted for which types of services?

How is the audit report referred to when the auditor has no reservations about management's financial statements?

In the United States,auditors form conclusions about whether the financial statements are presented fairly in accordance with generally accepted auditing standards (GAAS).

What does utilitarian theory hold?

The AICPA Code of Professional Conduct prohibits an auditor from providing any non-audit services to audit clients because of the threat posed to the auditor's independence.

Which of the following is an important consideration in client acceptance and continuance decisions?

An ethical dilemma occurs in a situation in which moral duties or obligations conflict.

Which of the following is not a reason for audits of financial statements of public companies?

An ethical dilemma occurs when an ethically correct action may conflict with an individual's immediate self-interest.

According to Rights Theory,the highest-order rights include rights granted by the government,such as civil rights,legal rights,rights to own property,and license privileges.

According to the AICPA,which of the following is not a safeguard to the auditing profession?

The Center for Audit Quality is responsible for the oversight of the peer review process for registered audit firms.

Which of the following is not a primary driver of audit quality?

Which of the following is not an action required by utilitarian theory?

Which of the following is a reason an audit firm might decide not to accept a company as a client?

Auditing exists because users need unbiased information on which to assess management performance and make economic decisions.

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

Professional Auditing Standards and the Audit Opinion Formulation Process

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