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Auditing and Assurance Services Study Set 2
Exam 6: Audit Responsibilities and Objectives
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Question 161
True/False
It is possible that an audit performed in accordance with generally accepted auditing standards may fail to detect a material misstatement in the financial statements.
Question 162
Multiple Choice
The responsibility for adopting sound accounting policies and maintaining adequate internal control rests with the
Question 163
Multiple Choice
When dealing with laws and regulations that do not have a direct effect on the financial statements, the auditor
Question 164
True/False
The transaction-related audit objective that deals with whether recorded transactions have actually occurred is the completeness objective.
Question 165
True/False
Although auditors need to consider the interrelationships between cycles, they typically treat cycles independently to the extent practical to manage complex audits effectively.
Question 166
True/False
The Sarbanes-Oxley Act provides for criminal penalties.
Question 167
Multiple Choice
Which of the following would most likely be deemed a direct effect illegal act?
Question 168
True/False
One of the paragraphs of the auditor's report includes a paragraph addressing the auditor's responsibility for not detecting material misstatements in the financial statements, as this is management's responsibility, not the auditors.
Question 169
Essay
Discuss the differences between errors, frauds, and illegal acts. Give an example of each.
Question 170
True/False
The preparation of the financial statements by management contain complex estimates; therefore, the auditor has to rely upon evidence which is convincing, not just persuasive.
Question 171
Essay
Auditors should be alert for potential judgment tendencies, traps, and biases that may impact their decision-making process. Identify and define four of these judgment tendencies. Then, for each judgment tendency, suggest a way to avoid or mitigate the tendency.
Question 172
Multiple Choice
If the auditor were responsible for making certain that all of management's assertions in the financial statements were absolutely correct,
Question 173
Multiple Choice
Which of the following is not a step in the professional judgment process?
Question 174
True/False
In order to mitigate confirmation, the auditor should make the opposing case and consider alternative explanations, potentially disconfirming or conflicting information.
Question 175
Multiple Choice
Auditing standards make ________ distinction(s) between the auditor's responsibilities for searching for errors and fraud.
Question 176
True/False
The auditor's first course of action when an illegal act is uncovered should be to immediately notify the appropriate authorities, including but not limited to, law enforcement and the Securities and Exchange Commission.