Question 1

Which type of entity generally finds a review of historical financial statements to be the most useful?

Accepted Answer

A) Large public corporations 
B) Small public corporations 
C) Large private corporations 
D) Small private corporations

Question 2

What is a compliance audit?

Accepted Answer

A) an audit to determine whether the entity has conformed with regulations, rules or processes 
B) an assessment of the economy, efficiency and effectiveness of an organization's operations 
C) an evaluation and improvement of risk management, internal control procedures and elements of the governance process 
D) an assessment of the company's financial statements

Question 3

Since users of financial statements make financial decisions that have real consequences, it is very important that users can depend on the information contained in the financial statements.What term captures this problem?

Accepted Answer

A) reliability 
B) competing incentives 
C) complexity 
D) remoteness

Question 4

A review of historical financial statements as compared to an audit of historical financial statements ________.

Accepted Answer

A) is more extensive in terms of the work product required 
B) is typically less expensive 
C) provides greater assurance 
D) provides an opinion

Question 5

_______ are users of financial statements who are particularly interested in determining whether the company is sufficiently credit worthy.

Accepted Answer

The answer of _______ are users of financial statements who...

Question 6

Which of the following is the discovery of material weakness?

Accepted Answer

A) conclusion that the company did not maintain effective ICFR over the period under audit. 
B) risk that an auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. 
C) identification of accounts and related assertions most at risk of material misstatement. 
D) high, but not absolute, level of assurance in a judgment about matters that are subjective.

Question 7

According to Financial Accounting Standards Board (FASB), information that is omitted or misstated could influence decisions that users make on the basis of the financial information of a specific reporting entity; in such a case, information is _______.

Accepted Answer

The answer of According to Financial Accounting Standards Board (FASB),...

Question 8

In an unqualified audit report on the financial statements of a public company, the concluding statement of the scope paragraph mentions reasonable basis for the audit firm's opinion.

Accepted Answer

A) True 
 B)False

Question 9

Assurance services are defined as ________.

Accepted Answer

A) independent professional services that improve the quality of information, or its context, for decision makers 
B) individual provisional services to improve internal controls for financial statement users 
C) individual prospective financial statement quality 
D) independent information improvement

Question 10

The Securities Act of 1933 enhances annual financial disclosures for public companies and placed more emphasis on corporate responsibility.

Accepted Answer

A) True 
 B)False

Question 11

Most financial accounting and disclosure choices being made by the company are complicated and often require significant technical knowledge and experience in order to understand.What term captures this problem?

Accepted Answer

A) Complexity 
B) Remoteness 
C) Competing incentives 
D) Reliability

Question 12

The most common assurance service is the ________.

Accepted Answer

A) audit of a company's historical financial statements 
B) compilation of financial statements 
C) review of a company's financial controls 
D) review of a company's historical financial statements

Question 13

In the title of an audit report on the effectiveness of ICFR for a public company, the term _______ emphasizes that the auditors are external to the company and therefore can provide an objective opinion.

Accepted Answer

The answer of In the title of an audit report...

Question 14

The term practitioner would be least likely to be used when referring to the performance of ________.

Accepted Answer

A) audit services 
B) attestation services 
C) assurance services 
D) bookkeeping services

Question 15

In an audit report on the effectiveness of ICFR for a public company, the scope paragraph states the different responsibilities of management and auditors.

Accepted Answer

A) True 
 B)False

Question 16

Which are the most specific services provided by the auditor?

Accepted Answer

A) Compilation services 
B) Audit services 
C) Attestation services 
D) Assurance services

Question 17

Below is a sample of the auditor's opinion section of a standard audit report for Gawronski's Hockey Manufacturing Company, a private company.There are two errors in this report.Describe the errors.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gawronski's Hockey Manufacturing Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in accordance with auditing standards generally accepted in the United States of America.
Keith Christy, Partner
Adrian, Michigan
February 15, 2023

Accepted Answer

The answer of Below is a sample of the auditor's...

Question 18

Public companies, or issuers, in the U.S.are ________.

Accepted Answer

A) required by the federal government to have quarterly financial statement audits 
B) required by the federal government to have annual financial statement audits 
C) required by the federal government to have semi-annual financial statement audits 
D) not required by the federal government to have financial statement audits

Question 19

In an audit report on the effectiveness of ICFR for a public company, to what does the basis of opinion paragraph make a reference?

Accepted Answer

A) Registration with the PCAOB and independence requirements of the SEC and other federal securities laws 
B) The financial statement audit report and the type of opinion that was given on the financial statements. 
C) The COSO Internal Control-Integrated Framework as the criteria used as the basis for determining if ICFR are effective. 
D) A definition of ICFR that is taken directly from PCAOB AS 2201.

Question 20

What is the primary goal of the CPA in performing the attest function?

Accepted Answer

The answer of What is the primary goal of the...

Exam 1: Introduction and Overview of Audit and Assurance

Which type of entity generally finds a review of historical financial statements to be the most useful?

What is a compliance audit?

Since users of financial statements make financial decisions that have real consequences, it is very important that users can depend on the information contained in the financial statements.What term captures this problem?

A review of historical financial statements as compared to an audit of historical financial statements ________.

_______ are users of financial statements who are particularly interested in determining whether the company is sufficiently credit worthy.

Which of the following is the discovery of material weakness?

According to Financial Accounting Standards Board (FASB), information that is omitted or misstated could influence decisions that users make on the basis of the financial information of a specific reporting entity; in such a case, information is _______.

In an unqualified audit report on the financial statements of a public company, the concluding statement of the scope paragraph mentions reasonable basis for the audit firm's opinion.

Assurance services are defined as ________.

The Securities Act of 1933 enhances annual financial disclosures for public companies and placed more emphasis on corporate responsibility.

Most financial accounting and disclosure choices being made by the company are complicated and often require significant technical knowledge and experience in order to understand.What term captures this problem?

The most common assurance service is the ________.

In the title of an audit report on the effectiveness of ICFR for a public company, the term _______ emphasizes that the auditors are external to the company and therefore can provide an objective opinion.

The term practitioner would be least likely to be used when referring to the performance of ________.

In an audit report on the effectiveness of ICFR for a public company, the scope paragraph states the different responsibilities of management and auditors.

Which are the most specific services provided by the auditor?

Public companies, or issuers, in the U.S.are ________.

In an audit report on the effectiveness of ICFR for a public company, to what does the basis of opinion paragraph make a reference?

What is the primary goal of the CPA in performing the attest function?