Question 1

An agreed upon procedures engagement is one in which the auditor performs specific procedures to attest to management's assertions for an outside third party.

Accepted Answer

A) True 
 B)False

Question 2

The need for independent audits of financial statements can be attributed to all of the following conditions except:

Accepted Answer

A)  remoteness. 
B)  complexity. 
C)  consequence. 
D)  validity. 
E)  conflict of interest.

Question 3

The IRS is a division of the U.S. Treasury Department.

Accepted Answer

A) True 
 B)False

Question 4

The primary focus of the audit is on information presented in set of financial statements.

Accepted Answer

A) True 
 B)False

Question 5

The primary example of an audit service is the:

Accepted Answer

A)  operational audit. 
B)  financial statement audit. 
C)  compliance audit. 
D)  internal audit. 
E)  external audit.

Question 6

There are four conditions that give rise to the need for independent audits of financial statements. One of these conditions is complexity. In this context, complexity relates to all of the following except complexity:

Accepted Answer

A)  of the accounting process. 
B)  in evaluating the quality of financial statements. 
C)  of financial statement preparation. 
D)  of the subject matter, or GAAP. 
E)  of the decision process.

Question 7

Indicate for each of the following items the element of quality control to which it relates.
1.Policies should be established for making the decision whether to accept or retain a client in order to minimize the risk of associating with a client whose management lacks integrity.
2.Policies should be established to assure that personnel are independent of clients when performing attest services.
3.Policies and procedures must be established to provide an ongoing consideration and evaluation of the effectiveness of professional development activities.
4.Policies should be established to reasonably assure that work is assigned to personnel who have the technical training and proficiency required for the assignment.
5.Policies and procedures should be established for planning, performing, supervising, reviewing, documenting and communicating the results of each engagement.

Accepted Answer

The answer of Indicate for each of the following items...

Question 8

Which one of the following is not among the conditions that give rise to a demand by external users for independent audits of financial statements?

Accepted Answer

A)  remoteness of users 
B)  complexity of subject matter 
C)  the securities acts, administered by the SEC 
D)  potential conflict of interest between users and preparers of the statements 
E)  consequence for making decisions

Question 9

The booklet titled Governmental Auditing Standards is known as the "green book" after the color of its cover.

Accepted Answer

A) True 
 B)False

Question 10

The four components of the profession's multilevel regulatory framework include (1) principle setting, (2) firm regulation, (3) inspection and peer review, and (4) government regulation.

Accepted Answer

A) True 
 B)False

Question 11

When providing audit services, the CPA is expected to be:

Accepted Answer

A)  independent of the client. 
B)  an advocate for the client. 
C)  an advocate for the general public. 
D)  indifferent to the effect of the financial statements and the audit report. 
E)  able to make managerial decisions for the client.

Question 12

The AICPA established its Practice Monitoring Program in the early 1980's.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not one of the four common levels of assurance?

Accepted Answer

A)  reasonable assurance 
B)  negative assurance 
C)  agreed-upon procedures 
D)  compilation without assurance 
E)  relative assurance

Question 14

Which one of the following statements is not true of the AICPA?

Accepted Answer

A)  It is public accounting's national professional organization. 
B)  Membership is mandatory for all CPA firms who practice in more than one state. 
C)  It operates through a number of divisions. 
D)  Its publications include the Journal of Accountancy. 
E)  It provides a broad range of services to members.

Question 15

The GAO reports directly to the:

Accepted Answer

A)  general public via the news media. 
B)  SEC. 
C)  president of the country. 
D)  IRS. 
E)  U. S. Congress.

Question 16

An audit that involves obtaining and evaluating evidence about the efficiency and effectiveness of an entity's operating activities in relation to specified objectives is a(n):

Accepted Answer

A)  internal audit. 
B)  external audit. 
C)  operational audit. 
D)  compliance audit. 
E)  financial statement audit.

Question 17

The audit report on internal control is a variation of which type of audit?

Accepted Answer

A)  operational audit 
B)  financial statement audit 
C)  compliance audit 
D)  internal audit 
E)  external audit

Question 18

The concept of independence is a key aspect of assurance services.

Accepted Answer

A) True 
 B)False

Question 19

The three types of audits are listed below. Indicate the category to which each statement belongs by placing the following letters in the spaces provided:FSA:Financial Statement Audit,
CA:Compliance Audit, or
OA:Operational Audit.
1.The results of such an audit are distributed to a wide spectrum of users such as
creditors, stockholders, regulatory agencies, and the general public.
2.This type of audit is often called a performance audit.
3.This audit may be based on criteria established by creditors.
4.The scope of such an audit may encompass all the activities of a department.
5.This audit relates to fair presentation of statements in accordance with GAAP.

Accepted Answer

The answer of The three types of audits are listed...

Question 20

Which of the following are independent private sector standard-setting bodies?

Accepted Answer

A)  SEC and IRS 
B)  AICPA and IIA 
C)  NASBA and AAA 
D)  FASB and GASB 
E)  GAO and FAA

Exam 1: Auditing and the Public Accounting

An agreed upon procedures engagement is one in which the auditor performs specific procedures to attest to management's assertions for an outside third party.

The need for independent audits of financial statements can be attributed to all of the following conditions except:

The IRS is a division of the U.S. Treasury Department.

The primary focus of the audit is on information presented in set of financial statements.

The primary example of an audit service is the:

There are four conditions that give rise to the need for independent audits of financial statements. One of these conditions is complexity. In this context, complexity relates to all of the following except complexity:

Which one of the following is not among the conditions that give rise to a demand by external users for independent audits of financial statements?

The booklet titled Governmental Auditing Standards is known as the "green book" after the color of its cover.

The four components of the profession's multilevel regulatory framework include (1) principle setting, (2) firm regulation, (3) inspection and peer review, and (4) government regulation.

When providing audit services, the CPA is expected to be:

The AICPA established its Practice Monitoring Program in the early 1980's.

Which of the following is not one of the four common levels of assurance?

Which one of the following statements is not true of the AICPA?

The GAO reports directly to the:

An audit that involves obtaining and evaluating evidence about the efficiency and effectiveness of an entity's operating activities in relation to specified objectives is a(n) :

The audit report on internal control is a variation of which type of audit?

The concept of independence is a key aspect of assurance services.

Which of the following are independent private sector standard-setting bodies?