Question 1

Which one of the following potential audit problems is not true in affecting goodwill impairment valuations?

Accepted Answer

A) Goodwill arising from acquisitions can be netted into one test at the operating segment level,but not netted at the company level. 
B) Market valuation may be volatile.A material temporary decline in market value may not be a good indicator of FMV. 
C) FMV might not exist,might require independent appraisals by investment bankers or estimates using cash flow and discounted present value factors. 
D) No assumptions are required about competition,economic development,product placement,and so forth. 
A) Goodwill arising from acquisitions can be netted into one test at the operating segment level,but not netted at the company level. 
B) Market valuation may be volatile.A material temporary decline in market value may not be a good indicator of FMV. 
C) FMV might not exist,might require independent appraisals by investment bankers or estimates using cash flow and discounted present value factors. 
D) No assumptions are required about competition,economic development,product placement,and so forth.

Question 2

The scope of services performed in internal auditing (CIA)includes all of the following except

Accepted Answer

A) providing assurance on financial statement related items. 
B) evaluating the effectiveness of operations and related controls . 
C) investigating concerns of fraud. 
D) all of the above are included. 
A) providing assurance on financial statement related items. 
B) evaluating the effectiveness of operations and related controls . 
C) investigating concerns of fraud. 
D) all of the above are included.

Question 3

Which of the following is true of external auditing?

Accepted Answer

A) Major focus areas are processes,including risks,controls,and effectiveness and efficiency of processes. 
B) Consulting is performed when agreed to by management. 
C) Primary scope of services performed includes audits of financial statements. 
D) Parties receiving assurance include the audit committee and upper management. 
A) Major focus areas are processes,including risks,controls,and effectiveness and efficiency of processes. 
B) Consulting is performed when agreed to by management. 
C) Primary scope of services performed includes audits of financial statements. 
D) Parties receiving assurance include the audit committee and upper management.

Question 4

Misstatements detected during the audit that were initially deemed to be immaterial must be summarized to determine their:

Accepted Answer

A) control. 
B) quantitative effect. 
C) aggregate effects. 
D) nature of misstatement. 
A) control. 
B) quantitative effect. 
C) aggregate effects. 
D) nature of misstatement.

Question 5

Auditors are constantly challenged to evaluate the quality of a client's estimates,including areas such as obsolescence of inventory,allowance for doubtful accounts,and tax provisions among others.

Accepted Answer

A) True 
 B)False

Question 6

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's:

Accepted Answer

A) external controls. 
B) interim financial statements. 
C) internal controls. 
D) segment reports. 
A) external controls. 
B) interim financial statements. 
C) internal controls. 
D) segment reports.

Question 7

The FASB has set a hierarchy of inputs to consider in assessing fair value.Which of the following valuations are generally viewed as highly subjective?

Accepted Answer

A) Level 1 
B) Level 2 
C) Level 3 
D) Level 4 
A) Level 1 
B) Level 2 
C) Level 3 
D) Level 4

Question 8

The FASB has set a hierarchy of inputs to consider in assessing fair value.Which of the following relates to Level 1?

Accepted Answer

A) Quoted prices for identical items in active,liquid,and visible markets. 
B) Unobservable inputs to be used in illiquid situations. 
C) Observable information for similar items in active or inactive markets. 
D) Unobservable inputs to be used in situations where markets don't exist. 
A) Quoted prices for identical items in active,liquid,and visible markets. 
B) Unobservable inputs to be used in illiquid situations. 
C) Observable information for similar items in active or inactive markets. 
D) Unobservable inputs to be used in situations where markets don't exist.

Question 9

In making judgments about the effect of the internal auditors' work on the external auditor's procedures in specific audit areas,which of the following is not among three issues related to the audit areas that should be considered by the external auditor?

Accepted Answer

A) Materiality of the financial statement amounts. 
B) Risk of material misstatement of the assertions related to these financial statement amounts. 
C) Review of quality of audit policies,programs,and procedures. 
D) Degree of subjectivity involved in the evaluation of the audit evidence gathered in support of the assertions. 
A) Materiality of the financial statement amounts. 
B) Risk of material misstatement of the assertions related to these financial statement amounts. 
C) Review of quality of audit policies,programs,and procedures. 
D) Degree of subjectivity involved in the evaluation of the audit evidence gathered in support of the assertions.

Question 10

Audit Standard No.5 by the PCAOB encourages the external auditor to utilize the work of which of the following?

Accepted Answer

A) experts. 
B) internal auditors. 
C) independent valuation professionals. 
D) internal officers of the company. 
A) experts. 
B) internal auditors. 
C) independent valuation professionals. 
D) internal officers of the company.

Question 11

Which of the following Statements on Auditing Standards (SAS)provides the AICPA's basic guidance on materiality judgments?

Accepted Answer

A) 107 
B) 61 
C) 89 
D) 92 
A) 107 
B) 61 
C) 89 
D) 92

Question 12

Statement on Auditing Standards No.107 provides the AICPA's basic guidance on materiality judgments.

Accepted Answer

A) True 
 B)False

Question 13

A materiality level where the auditor believes that the errors below that level would not,even when aggregated with all other misstatements,be material to the financial statements is called as posting materiality.

Accepted Answer

A) True 
 B)False

Question 14

The primary scope of services performed in external auditing (CPA)is:

Accepted Answer

A) risk analysis. 
B) control analysis. 
C) operations analysis. 
D) audit of financial statements. 
A) risk analysis. 
B) control analysis. 
C) operations analysis. 
D) audit of financial statements.

Question 15

Evaluating the Quality of Client's Internal Audit Function
An external auditor has to assess the quality of the internal audit function and determine whether the internal auditors' work is relevant to the external audit and of sufficient quantity and quality regardless of how the client staffs the internal audit function.Explain?

Accepted Answer

The external auditor considers three pri

Question 16

Which of the following best describes the nature of discontinued assets?

Accepted Answer

A) Impairment testing based on most likely sale or disposal price. 
B) Impairment testing only if plants are closed or equipment is not used. 
C) Lower of cost or market impairments,including an allowance for obsolescence. 
D) Estimates and assumptions made in preparation of the estimate of income tax expense for the year. 
A) Impairment testing based on most likely sale or disposal price. 
B) Impairment testing only if plants are closed or equipment is not used. 
C) Lower of cost or market impairments,including an allowance for obsolescence. 
D) Estimates and assumptions made in preparation of the estimate of income tax expense for the year.

Question 17

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's internal controls.

Accepted Answer

A) True 
 B)False

Question 18

According to the ASC 350 guidance,intangible assets that are not amortized will be tested for impairment at least annually by comparing the fair values of those assets with their recorded amounts.

Accepted Answer

A) True 
 B)False

Question 19

According to a report issued by Ernst & Young Australia,common sustainability-related terms include which of the following:

Accepted Answer

A) non-financial reporting. 
B) corporate social responsibility reporting. 
C) Triple bottom line reporting . 
D) all of the above. 
A) non-financial reporting. 
B) corporate social responsibility reporting. 
C) Triple bottom line reporting . 
D) all of the above.

Question 20

The partial or complete outsourcing of internal audit activities is made to public accounting firms or to other specialized firms that perform which of the following types of services?

Accepted Answer

A) primarily risk,control,and audit activities. 
B) attestation services as demanded by market place. 
C) operations analysis and risk analysis. 
D) analytical and substantial procedures. 
A) primarily risk,control,and audit activities. 
B) attestation services as demanded by market place. 
C) operations analysis and risk analysis. 
D) analytical and substantial procedures.

Which one of the following potential audit problems is not true in affecting goodwill impairment valuations?

The scope of services performed in internal auditing (CIA)includes all of the following except

Which of the following is true of external auditing?

Misstatements detected during the audit that were initially deemed to be immaterial must be summarized to determine their:

Auditors are constantly challenged to evaluate the quality of a client's estimates,including areas such as obsolescence of inventory,allowance for doubtful accounts,and tax provisions among others.

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's:

The FASB has set a hierarchy of inputs to consider in assessing fair value.Which of the following valuations are generally viewed as highly subjective?

The FASB has set a hierarchy of inputs to consider in assessing fair value.Which of the following relates to Level 1?

In making judgments about the effect of the internal auditors' work on the external auditor's procedures in specific audit areas,which of the following is not among three issues related to the audit areas that should be considered by the external auditor?

Audit Standard No.5 by the PCAOB encourages the external auditor to utilize the work of which of the following?

Which of the following Statements on Auditing Standards (SAS)provides the AICPA's basic guidance on materiality judgments?

Statement on Auditing Standards No.107 provides the AICPA's basic guidance on materiality judgments.

A materiality level where the auditor believes that the errors below that level would not,even when aggregated with all other misstatements,be material to the financial statements is called as posting materiality.

The primary scope of services performed in external auditing (CPA)is:

Which of the following best describes the nature of discontinued assets?

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's internal controls.

According to the ASC 350 guidance,intangible assets that are not amortized will be tested for impairment at least annually by comparing the fair values of those assets with their recorded amounts.

According to a report issued by Ernst & Young Australia,common sustainability-related terms include which of the following:

The partial or complete outsourcing of internal audit activities is made to public accounting firms or to other specialized firms that perform which of the following types of services?

Auditing: Integral to the Economy

Corporate Governance and Audits

Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards

Audit Risk,business Risk,and Audit Planning

Internal Control Over Financial Reporting

Performing an Integrated Audit

A Framework for Audit Evidence

Tools Used in Gathering Audit Evidence

Auditing for Fraud

Auditing Revenue and Related Accounts

Audit of Acquisition and Payment Cycle and Inventory

Audit of Cash and Other Liquid Assets

Audit of Long-Lived Assets and Related Expense Accounts

Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Ensuring Audit Quality in Completing the Audit

Auditors Reports

Professional Liability

Filters

Exam 18: Advanced Topics Concerning Complex Audit Judgments

Which one of the following potential audit problems is not true in affecting goodwill impairment valuations?

The scope of services performed in internal auditing (CIA)includes all of the following except

Which of the following is true of external auditing?

Misstatements detected during the audit that were initially deemed to be immaterial must be summarized to determine their:

Auditors are constantly challenged to evaluate the quality of a client's estimates,including areas such as obsolescence of inventory,allowance for doubtful accounts,and tax provisions among others.

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's:

The FASB has set a hierarchy of inputs to consider in assessing fair value.Which of the following valuations are generally viewed as highly subjective?

The FASB has set a hierarchy of inputs to consider in assessing fair value.Which of the following relates to Level 1?

In making judgments about the effect of the internal auditors' work on the external auditor's procedures in specific audit areas,which of the following is not among three issues related to the audit areas that should be considered by the external auditor?

Audit Standard No.5 by the PCAOB encourages the external auditor to utilize the work of which of the following?

Which of the following Statements on Auditing Standards (SAS)provides the AICPA's basic guidance on materiality judgments?

Statement on Auditing Standards No.107 provides the AICPA's basic guidance on materiality judgments.

A materiality level where the auditor believes that the errors below that level would not,even when aggregated with all other misstatements,be material to the financial statements is called as posting materiality.

The primary scope of services performed in external auditing (CPA)is:

Which of the following best describes the nature of discontinued assets?

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's internal controls.

According to the ASC 350 guidance,intangible assets that are not amortized will be tested for impairment at least annually by comparing the fair values of those assets with their recorded amounts.

According to a report issued by Ernst & Young Australia,common sustainability-related terms include which of the following:

The partial or complete outsourcing of internal audit activities is made to public accounting firms or to other specialized firms that perform which of the following types of services?

Auditing: Integral to the Economy

Corporate Governance and Audits

Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards

Audit Risk,business Risk,and Audit Planning

Internal Control Over Financial Reporting

Performing an Integrated Audit

A Framework for Audit Evidence

Tools Used in Gathering Audit Evidence

Auditing for Fraud

Auditing Revenue and Related Accounts

Audit of Acquisition and Payment Cycle and Inventory

Audit of Cash and Other Liquid Assets

Audit of Long-Lived Assets and Related Expense Accounts

Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Ensuring Audit Quality in Completing the Audit

Auditors Reports

Professional Liability

Filters