Question 1

A new staff member on an audit engagement may own stock in that client until the audit report is issued.

Accepted Answer

A) True 
 B)False

Question 2

What must audit firms do to perform financial statement audits for public companies?

Accepted Answer

A) Register with the American Institute of Certified Public Accountants. 
B) Register with the Institute of Internal Auditors. 
C) Register with the U.S.General Accounting Office. 
D) Register with the Public Company Accounting Oversight Board. 
A) Register with the American Institute of Certified Public Accountants. 
B) Register with the Institute of Internal Auditors. 
C) Register with the U.S.General Accounting Office. 
D) Register with the Public Company Accounting Oversight Board.

Question 3

What must an auditor do in an audit?

Accepted Answer

A) Consider how the economic activity is portrayed in the financial statements. 
B) Force management to make operational decisions that will improve the company's financial performance. 
C) Disregard independence in order to find the underlying truth of the evidence. 
D) Establish new criteria by which financial statements may be compared. 
A) Consider how the economic activity is portrayed in the financial statements. 
B) Force management to make operational decisions that will improve the company's financial performance. 
C) Disregard independence in order to find the underlying truth of the evidence. 
D) Establish new criteria by which financial statements may be compared.

Question 4

Auditors obtain and evaluate evidence regarding assertions about economic actions and events to verify the accuracy of those assertions.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following items should an auditor communicate to an audit committee?

Accepted Answer

A) Any meaningful threats to auditor objectivity. 
B) The scope of the audit. 
C) The qualitative aspects of the entity's accounting and reporting and potential ways of improving financial reporting. 
D) All of the above. 
A) Any meaningful threats to auditor objectivity. 
B) The scope of the audit. 
C) The qualitative aspects of the entity's accounting and reporting and potential ways of improving financial reporting. 
D) All of the above.

Question 6

What is the purpose of an ethical framework?

Accepted Answer

A) To provide a defined methodology to solve the ethical problem. 
B) To provide a defined methodology to aid the user in making complex ethical decisions. 
C) To provide a defined program to solve ethical dilemmas. 
D) All of the above. 
A) To provide a defined methodology to solve the ethical problem. 
B) To provide a defined methodology to aid the user in making complex ethical decisions. 
C) To provide a defined program to solve ethical dilemmas. 
D) All of the above.

Question 7

A covered member under the AICPA's rules includes individuals on the engagement team,any individual in a position to influence the engagement team,and a partner or manager who provides more than 10 hours of nonattest services to the audit client within a fiscal year.

Accepted Answer

A) True 
 B)False

Question 8

Compliance with the AICPA Code of Professional Conduct depends primarily on the threat of disciplinary actions for violating the Code.

Accepted Answer

A) True 
 B)False

Question 9

The International Auditing and Assurance Standards Board sets international standards on auditing and has developed a framework for audit quality.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not part of the systematic process called auditing?

Accepted Answer

A) Communicating results of the audit to users. 
B) Procuring and evaluating evidence. 
C) Assisting management in designing internal controls. 
D) Comparing evidence regarding assertions to certain established criteria. 
A) Communicating results of the audit to users. 
B) Procuring and evaluating evidence. 
C) Assisting management in designing internal controls. 
D) Comparing evidence regarding assertions to certain established criteria.

Question 11

Which term describes the type of threat that occurs when top management threatens to replace the audit firm because of a disagreement over an accounting issue?

Accepted Answer

A) Management participation threat. 
B) Undue influence threat. 
C) Adverse interest threat. 
D) Financial self-interest threat. 
A) Management participation threat. 
B) Undue influence threat. 
C) Adverse interest threat. 
D) Financial self-interest threat.

Question 12

The AICPA may revoke a member's CPA license for violating its Code of Professional Conduct.

Accepted Answer

A) True 
 B)False

Question 13

A safeguard is an action or other measure that may eliminate a threat or reduce the threat to an acceptable level.

Accepted Answer

A) True 
 B)False

Question 14

Why is auditing important in a free market society?

Accepted Answer

A) The public requires auditors to function as divisions of regulatory bodies. 
B) Auditors detect all errors and fraud perpetrated by company employees. 
C) Audits provide reliable information upon which to judge economic performance. 
D) The auditor is a form of insurance policy for investors. 
A) The public requires auditors to function as divisions of regulatory bodies. 
B) Auditors detect all errors and fraud perpetrated by company employees. 
C) Audits provide reliable information upon which to judge economic performance. 
D) The auditor is a form of insurance policy for investors.

Question 15

Audit firm culture is one of the primary drivers of audit quality.

Accepted Answer

A) True 
 B)False

Question 16

The auditor is normally not permitted to divulge confidential information obtained from a client.Which of the following situations would be a violation of this standard?

Accepted Answer

A) To respond to the information request of a major shareholder. 
B) To respond to a quality review request of the state board of accountancy. 
C) To initiate a complaint with the AICPA's ethics division. 
D) To ensure adequate disclosure in accordance with GAAP. 
A) To respond to the information request of a major shareholder. 
B) To respond to a quality review request of the state board of accountancy. 
C) To initiate a complaint with the AICPA's ethics division. 
D) To ensure adequate disclosure in accordance with GAAP.

Question 17

As it relates to an audit,which of the following statements about professional skepticism is true?

Accepted Answer

A) Professional skepticism is not taken into consideration. 
B) Professional skepticism relates only to the nature of procedures performed. 
C) Professional skepticism is an attitude. 
D) Professional skepticism is determined based upon the importance to a user of the financial statements. 
A) Professional skepticism is not taken into consideration. 
B) Professional skepticism relates only to the nature of procedures performed. 
C) Professional skepticism is an attitude. 
D) Professional skepticism is determined based upon the importance to a user of the financial statements.

Question 18

Which of the following is not a primary responsibility of the PCAOB regarding public companies in the U.S.?

Accepted Answer

A) Issuing CPA licenses to auditors who perform audits of public companies. 
B) Registering audit firms that audit public companies. 
C) Periodically inspecting registered audit firms. 
D) Investigating and disciplining registered audit firms for violations of relevant laws and professional standards. 
A) Issuing CPA licenses to auditors who perform audits of public companies. 
B) Registering audit firms that audit public companies. 
C) Periodically inspecting registered audit firms. 
D) Investigating and disciplining registered audit firms for violations of relevant laws and professional standards.

Question 19

Which of the following represents a situation in which an auditor is independent of its client?

Accepted Answer

A) The audit fee paid by the client represents 10% of the auditor's annual gross revenue. 
B) The auditor takes a personal loan from the president of the company. 
C) The auditor's dependent son holds 25 shares of the client's common stock. 
D) The auditor has not received payment for the previous audit services. 
A) The audit fee paid by the client represents 10% of the auditor's annual gross revenue. 
B) The auditor takes a personal loan from the president of the company. 
C) The auditor's dependent son holds 25 shares of the client's common stock. 
D) The auditor has not received payment for the previous audit services.

Question 20

Complex transactions,information,and processing systems provide an opportunity for management to mislead users of financial statements.

Accepted Answer

A) True 
 B)False

A new staff member on an audit engagement may own stock in that client until the audit report is issued.

What must audit firms do to perform financial statement audits for public companies?

What must an auditor do in an audit?

Auditors obtain and evaluate evidence regarding assertions about economic actions and events to verify the accuracy of those assertions.

Which of the following items should an auditor communicate to an audit committee?

What is the purpose of an ethical framework?

A covered member under the AICPA's rules includes individuals on the engagement team,any individual in a position to influence the engagement team,and a partner or manager who provides more than 10 hours of nonattest services to the audit client within a fiscal year.

Compliance with the AICPA Code of Professional Conduct depends primarily on the threat of disciplinary actions for violating the Code.

The International Auditing and Assurance Standards Board sets international standards on auditing and has developed a framework for audit quality.

Which of the following is not part of the systematic process called auditing?

Which term describes the type of threat that occurs when top management threatens to replace the audit firm because of a disagreement over an accounting issue?

The AICPA may revoke a member's CPA license for violating its Code of Professional Conduct.

A safeguard is an action or other measure that may eliminate a threat or reduce the threat to an acceptable level.

Why is auditing important in a free market society?

Audit firm culture is one of the primary drivers of audit quality.

The auditor is normally not permitted to divulge confidential information obtained from a client.Which of the following situations would be a violation of this standard?

As it relates to an audit,which of the following statements about professional skepticism is true?

Which of the following is not a primary responsibility of the PCAOB regarding public companies in the U.S.?

Which of the following represents a situation in which an auditor is independent of its client?

Complex transactions,information,and processing systems provide an opportunity for management to mislead users of financial statements.

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

A new staff member on an audit engagement may own stock in that client until the audit report is issued.

What must audit firms do to perform financial statement audits for public companies?

What must an auditor do in an audit?

Auditors obtain and evaluate evidence regarding assertions about economic actions and events to verify the accuracy of those assertions.

Which of the following items should an auditor communicate to an audit committee?

What is the purpose of an ethical framework?

A covered member under the AICPA's rules includes individuals on the engagement team,any individual in a position to influence the engagement team,and a partner or manager who provides more than 10 hours of nonattest services to the audit client within a fiscal year.

Compliance with the AICPA Code of Professional Conduct depends primarily on the threat of disciplinary actions for violating the Code.

The International Auditing and Assurance Standards Board sets international standards on auditing and has developed a framework for audit quality.

Which of the following is not part of the systematic process called auditing?

Which term describes the type of threat that occurs when top management threatens to replace the audit firm because of a disagreement over an accounting issue?

The AICPA may revoke a member's CPA license for violating its Code of Professional Conduct.

A safeguard is an action or other measure that may eliminate a threat or reduce the threat to an acceptable level.

Why is auditing important in a free market society?

Audit firm culture is one of the primary drivers of audit quality.

The auditor is normally not permitted to divulge confidential information obtained from a client.Which of the following situations would be a violation of this standard?

As it relates to an audit,which of the following statements about professional skepticism is true?

Which of the following is not a primary responsibility of the PCAOB regarding public companies in the U.S.?

Which of the following represents a situation in which an auditor is independent of its client?

Complex transactions,information,and processing systems provide an opportunity for management to mislead users of financial statements.

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