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auditing 1
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Fragen in diesem Quiz (111)
1The definition of internal audit includes all of the following except
- Aadditional value and improved operations.
- Bdetermination of efficient and effective performance.
- Cprovision of assurance and consulting activity.
- Dindependence and objectivity.
2The reasons for outsourcing an internal audit include
- Amore expertise and improved control over audit costss
- Bimproved control over audit costs and improved alignment with company goals.
- Cmore expertise only.
- Dall of the above
3The primary difference between operational auditing and financial auditing is that in operational auditing, the auditor
- Ais seeking to help management use resources in the most effective manner possible.
- Bcan use analytical skills and tools that are not necessary in financial auditing.
- Cstarts the process with the financial statements of an activity being audited and works backward to the basic processes involved in producing them.
- Dis concerned only with the audited activity's adherence to company policy and procedures.
4Independence permits internal auditors to render impartial and unbiased judgments. The best way for internal audit departments to achieve independence is through
- Asupervision within the organization.
- Borganizational status and individual objectivity.
- Corganizational knowledge and skills.
- Dindividual knowledge and skills.
5The proper organizational role of internal auditing is to
- Aassist external auditors in reducing external audit fees.
- Bserve as an independent, objective assurance and consulting activity that adds value to the organization.
- Cserve as an investigative arm of senior management and the board of directors.
- Dperform studies to assist in attaining more efficient operations.
6During the audit of the quality control area, an auditor identified that a specific product has a 3 percent failure rate when tested. The specification calls for a failure rate of less than 1.8 percent. Product failure might lead to customer injury and in turn lawsuits against the company. The auditor has communicated this to management. Which of the following is not an acceptable response from management with regard to this risk?
- AManagement has decided to increase the quality control activity to reduce the manufacture of unacceptable product to an acceptably low level.
- BManagement has decided not to continue manufacturing this product.
- CManagement has decided that the test data are unreliable and has decided not to respond to the audit findings.
- DManagement is aware of the risk and has decided that it is acceptable.
7Having an audit charter is important for internal audit departments. Which of the following items is generally not a reason to have an audit charter?
- AIt provides a commitment from management to support the internal audit department's activities.
- BIt defines the skills and competencies required by the internal audit department.
- CIt defines the department's authority and responsibility.
- DIt defines the reporting requirements for internal audit departments.
8Your organization has selected you to develop an internal audit activity. Your approach will most likely be to hire
- Ainternal auditors who collectively have the knowledge and skills needed to perform the responsibilities of the internal audit activities.
- Bdegreed accountants because most internal audit work is accounting related.
- Cinexperienced personnel and train them the way the organization wants them trained.
- Dinternal auditors each of whom possess the skills required to handle all engagements.
9The purpose of the internal audit's evaluation of the effectiveness of existing risk management processes is to determine that
- Athe organization's objectives and goals will be achieved in an accurate and timely manner and with minimal use of resources.
- Bthe organization's objectives and goals will be achieved efficiently and economically.
- Cmanagement directs processes to provide reasonable assurance of achieving objectives and goals.
- Dmanagement has planned and designed the process to provide reasonable assurance of achieving objectives and goals.
10Senior management has ordered a compliance audit of the organization's employee benefits package. Which of the following do both the chief audit executive and senior management consider a primary engagement objective?
- ABenefits payments, when appropriate, are accurate and timely.
- BParticipation levels support continuation of individual programs.
- CIndividual programs are operating in accordance with contractual requirements and government regulations.
- DThe level of the organizational contributions is adequate to meet the program's demands.
11The Standards for the Professional Practice of Internal Audit of the Institute of Internal Auditors (IIA) is classified in three major categories. Which of the following is not one of these categories?
- AGovernance standards.
- BImplementation standards.
- CPerformance standards.
- DAttribute standards.
12Which of the following is a requirement of the Standards for the Professional Practice of Internal Audit if the Institute of Internal Auditors (IIA) that is not a requirement of an external auditor performing a financial statement audit?
- APerforming a follow-up on audit findings.
- BReporting to the audit committee.
- CInternal control evaluation.
- DDue care.
13When preparing an audit report, an internal auditor must convince management to take action concerning the report's findings. When reporting on an audit finding, an auditor must include some key elements about that finding in the report. These key elements are
- Alocation, criteria, cause, effect, and recommendation.
- Bcondition, criteria, cause, effect, and recommendation.
- Ccondition, criteria, cause, effect, and requirement.
- Dcondition, source, cause, effect, and recommendation.
14Program audits include determining
- Athe degree to which an entity is acquiring, protecting, and using its resources effectively.
- Bthe causes of an organization's inefficiencies or uneconomical practices.
- Cthe entity's compliance with laws and regulations concerning matters of efficiency.
- Dthe effectiveness of an organization's programs, activities, or functions.
15The Standards for the Professional Practice of Internal Auditing of the Institute of Internal Auditors (IIA) does not include the broad category of
- Aquality control.
- Bperformance of the engagement.
- Cnature of work.
- Dproficiency and due care.
16Which of the following internal audits is generally not a type of government audit?
- AReview of the results of programs.
- BReview of the means of safeguarding assets.
- CReview of the economy and efficiency in the use of resources.
- DReview of compliance with policies, plans, procedures, laws, and regulations.
17The U.S. Government Accountability Office (GAO) standards do not specifically require a written report in financial statement audits for
- Ainternal control structure and the control risk assessment.
- Bcompliance with applicable laws and regulations.
- Call instances of illegal acts that could result in criminal prosecution.
- Drecommendations for actions to improve operations.
18The federal law that established uniform requirements for audits of federal assistance provided to state and local governments is called
- Athe Single Audit Act of 1984.
- Bthe Sarbanes-Oxley Act or 2002.
- Cthe Audit Reduction Act of 1985.
- Dthe Uniform Requirements Act of 1992.
19The definition of administrative control does not include reference to
- Aplan of organization.
- Badherence to managerial policies.
- Caccounting errors.
- Doperational efficiency.
20When dealing with standards, measurements, and comparisons, input measurements are most important for audits of
- Afinancial statements.
- Bprogram results.
- Cefficiency.
- Deconomy.
21Which of the following is not required to become a certified internal auditor (CIA)?
- AMeet an experience requirement.
- BHave a full-time position as an internal auditor.
- CPass a two-day examination.
- DHold a college degree.
22When considering the competence of internal auditors, external auditors should obtain evidence about the
- Athe size of the internal audit department.
- Blines of communication within the entity of the internal auditors.
- Corganizational status of the internal auditors.
- Deducational and experience qualifications of the internal auditors.
23When independent CPAs in public practice take engagements to audit government units or financial assistance recipients, they must follow
- AInternal auditing standards.
- BGAGAS only.
- CGAAS and GAGAS.
- DGAAS only.
24Which of the following statements is true?
- AExternal auditors must share responsibility for the work of internal auditors if it is used for evidence for the financial statement audit.
- BExternal auditors must investigate the competence and objectivity of internal auditors.
- CExternal auditors must review all work performed by internal auditors.
- DExternal auditors must consider the internal audit function as part of obtaining an understanding of a company's internal control structure.
25Which of the following is a difference between performing an audit and performing a fraud examination?
- AAuditors are concerned only with financial statement errors; fraud examiners are concerned only with the theft of assets by employees.
- BAuditors are generally not concerned with small immaterial misstatements; fraud examiners generally do not believe that any fraud is immaterial.
- CAuditors use analytical procedures, such as trend analysis, to identify risks of misstatements; fraud examiners are not interested in analytical procedures because they must identify specific items that prove the occurrence of fraud.
- DAuditors are not concerned with the nature of a financial misstatement; fraud examiners are concerned with the nature of the misstatement.
26Fraud examiners have four main objectives in performing an investigation. Which of the following is not one of those objectives?
- ADetermine whether a fraud exists.
- BDetermine how the fraud occurred.
- CDetermine who was involved in the fraud.
- DDetermine the effect on financial statement users.
27In performing a financial statement audit in accordance with government auditing standards, an auditor is required to report on the entity's compliance with laws and regulations. This report should
- Aindicate that the auditor does not possess legal skills and cannot make legal judgments.
- Bprovide an opinion on overall compliance with laws and regulations.
- Cdescribe the laws and regulations with which the entity must comply.
- Dstate that compliance with laws and regulations is the responsibility of the entity's management.
28Which of the following statements is a standard applicable to financial statement audits in accordance with government auditing standards?
- ADetermine the extent to which the entity's programs achieve the desired level of results.
- BBriefly describe in the auditor's report the method of statistical sampling used in performing tests of controls and substantive tests.
- CReport on the scope of the auditor's testing of internal controls.
- DAssess whether the entity has reportable measures of economy and efficiency that are valid and reliable.
29The U.S. Government Accountability Office is an agency of
- Athe Federal Accounting Standards Board.
- Bthe U.S. Supreme Court.
- Cthe Executive Office of Management and Budget.
- Dthe U.S. Congress.
30The demand for compliance auditing in generally accepted government auditing standards (GAGAS) terms is generated by
- Apublic reports on government managers' following laws and regulations.
- Bgovernmental managers' obligations to follow laws and regulations.
- Cfinancial statement audits performed in accordance with generally accepted auditing standards.
- Dacts discreditable to the profession.
31After performing work in a compliance attestation engagement and finding that a governmental agency's managers failed to install and perform even the most elementary controls to ensure compliance with laws and regulations and, in fact, committed numerous violations, an auditor most likely would
- Awrite an adverse report on actual compliance.
- Bwrite a disclaimer of opinion related to knowledge of noncompliance.
- Cwrite a report modified to disclose particular noncompliance events (specific violations of laws and regulations).
- Dwrite an unqualified report on actual compliance.
32A GAO audit report entitled Aviation Safety: Safer Skies Initiative Has Taken Initial Steps to Reduce Accident Rates by 2007 is most likely a report based on work the auditors performed during a
- Afinancial statement audit.
- Bperformance audit of air control regulation effectiveness.
- Cperformance audit of program goal achievement.
- Dcompliance audit of air safety regulations.
33The Single Audit Act of 1984 requires an annual audit of all governments, agencies, and nonprofit organizations that
- Areceive $300,000 or more federal funds.
- Bspend $500,000 or more federal funds.
- Cspend $300,000 or more federal funds.
- Dreceive $500,000 or more federal funds.
34When auditors report on a financial audit engagement in accordance with generally accepted government auditing standards (GAGAS), the basic report(s) include a
- Areport on compliance regarding laws and regulations and report(s) on achievement of program goal(s).
- Breport on internal control and report(s) on efficiency and effectiveness of operations.
- Creport (opinion) on financial statements, report on internal control, and report on compliance audit regarding laws and regulations.
- Ddisclaimer of opinion on financial statements, report on internal control, and report on compliance audit regarding laws and regulations.
35Generally accepted government auditing standards (GAGAS) regarding performance reporting standards requires the reports to tell about which of the following?
- AAbuse of public money and property and internal control design and strength of operation.
- BAbuse of public money and property and management's noteworthy positive accomplishments.
- CPresentation of financial statements in accordance with GAAP and internal control design and strength of operation.
- DPresentation of financial statements in accordance with GAAP and abuse of public money and property.
36In assessing the objectivity of internal auditors, an independent auditor should
- Adetermine the organizational level to which the internal auditors report.
- Btest a sample of the transactions and balances that the internal auditors examined.
- Cexamine documentary evidence of the work performed by the internal auditors.
- Devaluate the quality control program in effect for the internal auditors.
37The work of internal auditors may affect the independent auditor's
- Aprocedures performed in obtaining an understanding of the internal control structure and in assessing the risk of material misstatement and substantive tests performed in gathering direct evidence.
- Bprocedures performed in assessing the risk of material misstatement and substantive tests performed in gathering direct evidence only.
- Cprocedures performed in obtaining an understanding of the internal control structure and substantive tests performed in gathering direct evidence only.
- Dprocedures performed in obtaining an understanding of the internal control structure and in assessing the risk of material misstatement only.
38When performing a fraud examination, the fraud examiner takes great care to preserve and identify any documents that may indicate fraud, which is called
- Aforensic auditing.
- Bmarking an evidential exhibit.
- Cestablishing evidential procedure.
- Dpreserving the chain of custody of the evidence.
39Which of the following would be considered in determining whether an internal audit department is independent?
- AThe organizational level of the chief audit officer and the objectivity of the audit staff.
- BA requirement for the auditors to report to the audit committee and the composition of the audit committee.
- CThe organizational status of the audit committee and the individual independence of internal auditors in the department.
- DThe nature of the audit charter and the objectivity of the audit staff.
40Which of the following would be considered an independence issue for an internal auditor?
- AThe controller had authority to change the audit schedule before being sent to management and the audit committee.
- BThe CAE reports directly to the audit committee.
- CThe auditors participated in the employee stock plan and, therefore, owned stock in the company.
- DThe company decreased every department's budget, including internal audit, by 5%.
41Which of the following situations provides the greatest threat to an internal auditor's objectivity?
- AA warehouse employee assists an auditor in verifying the physical inventory of small motors.
- BAn auditor recommends controls and performance measures for inclusion in a new contract with an outside service organization for the processing of payroll and employee benefits.
- CA former purchasing assistant performs a review of bidding procedures in the purchasing department four months after being transferred to the internal auditing department.
- DAn auditor reviews the procedures for a new electronic data interchange (EDI) connection to a major customer before it is implemented.
42An internal auditor's report should contain five elements for each finding. Which of the following are the correct elements?
- ACondition, relevance, evidence, effect, recommendation.
- BCondition, evidence, cause, effect, recommendation.
- CCondition, relevance, cause, effect, recommendation.
- DCondition, criteria, cause, effect, recommendation.
43A university received a significant grant from the state in which it resides. Which of the following would be of greatest interest to a governmental auditor auditing that grant at the university?
- AThe person applying for the grant was the person that was utilizing the grant money.
- BGrant money was spent in accordance with the purpose of the grant.
- CThe grant is properly recorded on the university's financial statements.
- DCash received by the university was deposited in the appropriate account.
44In an audit of a municipality the auditor is most important audit objective is
- Apurchases made by the municipality have sufficient encumbrances.
- Bthe municipality as sufficient documentation to support all purchases.
- Cthe municipality's internal controls are operating effectively.
- Dthe municipality is in compliance with laws, regulations, and the municipality's policy and procedures.
45Which of the following is mostly concerned with the benefits derived from the expenditure of funds?
- AFinancial statement auditing.
- BManagement auditing.
- CPerformance auditing.
- DOperational auditing.
46A typical objective for internal auditors in the company's sustainability program is for the auditor to
- Areport on the company's relative success in attaining sustainability objectives.
- Bassist management in establishing measurements for achieving company objectives.
- Cestablish funding requirements for sustainability programs.
- Ddetermine whether the financial statements fairly present the company's expenditures on regulatory compliance.
47A governmental auditor assigned to audit the financial statements of the state highway department would not be considered independent if the auditor
- Areported the audit findings to the transportation committee of the state legislature.
- Bperformed audits of the state budget that included funding to the highway department.
- Clived in the state and utilized the highway system on a daily basis.
- Dspouse was the CFO of the highway department.
48Management has instated a new grievance process. When an employee has a grievance a manager, in another department is assigned as an independent mediator to evaluate the employee's complaint. That manager must submit a written report to the Vice President of Human Resources, who must act on the report and discuss the resolution with the employee, the employee's manager, and any other relevant personnel.
Management acknowledges that this process will mean that an employee will be paid for several hours of work during the grievance process and several managers will spend time in the process. However, this process will likely reduce employee turnover.
This process has been in place for 18 months. Management wants to know what the costs are for the grievance process and if the new process is achieving the stated objective of reducing employee turnover. What type of audit would internal perform?- APerformance audit.
- BCompliance audit.
- CGovernance audit.
- DOperational audit.
49The purpose of the internal audit's evaluation of the effectiveness of existing risk management processes is to determine that
- Athe organization's objectives and goals will be achieved in an accurate and timely manner and with minimal use of resources.
- Bthe organization's objectives and goals are established within risk limits established by the internal audit organization.
- Cmanagement's policies and procedures will achieve objectives and goals.
- Dmanagement has planned and designed operations to provide reasonable assurance of achieving objectives and goals.
50Predication is
- Athe amount of restitution that is made to the company when an individual is convicted of a fraud.
- Ba reason to believe that a fraud has occurred.
- Cevidence used in a court of law in proving fraudulent behavior.
- Dthe determination of the method used to enact a fraud.
51In a fraud investigation, the first objective is
- Ato determine if a fraud has been committed.
- Bestablish who the perpetrators are.
- Cinspect documentation for tampering.
- Didentify possible motives to commit a fraud.
52Which of the following would not be an objective of a fraud investigation?
- ADetermine the amount of restitution that should be received from the perpetrators.
- BIdentify internal control weaknesses that allowed the fraud to occur.
- CDetermine the scope of the fraud.
- DDetermine from the evidence if a fraud has been committed.
53Auditors of governmental units would not be presumed to be independent if they are
- Aelected or appointed and reporting to a legislative body of government.
- Bauditing the branch of government to which they are assigned.
- Cindependent under AICPA Code of Professional Conduct rules.
- Dfree from sources of personal impairment.
54The services provided by internal auditors do not include
- Aappraisals of the economy and efficiency of operations.
- Breview of effectiveness in achieving program results in comparison to pre-established objectives and goals.
- Creview of control systems that ensure compliance with company policies, laws, and regulations.
- Daudits of financial statements for security registration statements.
55Operational audits do not include determining
- Awhether the department's goals are aligned with the organization's goals.
- Bthe causes of inefficiencies or uneconomical practices.
- Creview of control systems to ensure compliance with company policies.
- Dwhether the entity is acquiring, practicing, and using resources economically and efficiently.
56Program audits do not include determining
- Awhether the financial statements of an audited entity fairly present the financial position in accordance with GAAP.
- Bwhether the agency has complied with laws and regulations applicable to the program.
- Cthe effectiveness of organizations, programs, activities, or functions.
- Dthe extent to which the desired results or benefits established by the legislature are being achieved.
57The IIA Performance Standards do not include the standard for
- Aengagement planning.
- Bcompliance with policies, plans, procedures, laws and regulations.
- Cnature of work.
- Dmanaging the internal audit activity.
58The GAO Government Auditing Standards requirements for written reports in financial statement audits do not include
- Aa report on the auditee's compliance with applicable laws and regulations.
- Ba report on the auditee's internal control structure and the control risk assessment.
- Ca report of any significant accomplishments and management improvements.
- Daudit report on financial statements.
59In a single audit of federal financial assistance programs, which of the following does the auditor not need to determine and report for each organization?
- AThat the laws and regulations have been complied with.
- BThat an adequate internal control system is in place.
- CThat the financial statements are presented fairly in accordance with GAAP.
- DAn expanded scope audit of economy, efficiency, and program results.
60Which of the following auditors is responsible for designing and planning an audit to detect material illegal acts and frauds?
- AExternal auditors.
- BInternal auditors.
- CGovernmental auditors.
- DAll of the above
61Generally, fraud examiners are called when a fraud is already known or suspected. The term that means a reason to believe a fraud has occurred is
- AAdmonition.
- BPredication.
- CSuspicion.
- DPrediction.
62Fraud examiners must be concerned with the integrity of the evidence that they find. Preserving the evidence is called
- Aadmissibility of testimony.
- Bevidence conservation.
- Cchain of custody.
- Dexpert identification.
63The AICPA Assurance Services Executive Committee identified five megatrends that can affect public accounting firms'' business. Which of the following is NOT one of the megatrends they identified?
- AMerging of corporations creating fewer audit opportunities
- BGlobalization
- CThe shift from the industrial age to the knowledge age
- DInformation Technology
64Assurance services are defined as independent professional services that
- Adevelop efficient and effective accounting systems to ensure compliance with accounting standards and policy.
- Battest to the adequacy of controls over business operations.
- Cimprove the quality of information, or its context, for decision makers.
- Destablish criteria for effective measurement of business activity.
65Many individuals are apprehensive about using the Internet to purchase items. This apprehension mainly arises from users' concerns about
- Athe lack of CPA involvement in Internet company financial information.
- Ba lack of security for information transmitted over the Internet.
- Cthe time delays in Internet purchases.
- Dthe reliability of computer technology.
66The phrase "Trust services" refers to
- Aall AICPA designated assurance services.
- BWebTrust and XBRL Services.
- CXBRL and SysTrust Services.
- DWebTrust and SysTrust Services.
67Which of the following is NOT a principle of Trust Service engagements?
- AConfidentiality of information
- BProficiency in preparing transactions
- CAvailability of the system, products, or services
- DSecurity from unauthorized use
68What is the appropriate name for an assurance service provided by a CPA regarding a client's commercial Internet site with reference to the principles of privacy, security, processing integrity, availability, and confidentiality?
- AWebSecure
- BXBRL
- CSysTrust
- DWebTrust
69Extensible Business Reporting Language (XBRL) provides a computer readable identifying tag for each individual item of data. The advantages of XBRL include all of the following except
- Apermits automatic checking of information.
- Bimproves the full disclosure of financial information.
- Creduces the chance of error.
- Dincreases the speed of handling of financial data.
70Enhanced Business Reporting (EBR) focuses on improving business reporting by developing a voluntary framework for presentation and disclosure of value drivers and non-financial measures of performance. The advantages of EBR include all of the following except
- Abetter footnote disclosure in the companies' SEC filings.
- Bbetter allocation of capital by investors.
- Creduced financing costs for companies.
- Dmore efficient and effective regulatory process.
71Attestation engagements include
- Aexaminations, reviews, compilations, agreed-upon procedures and assurance services.
- Bexaminations, reviews, and agreed-upon procedures.
- Cexaminations and assurance services.
- Donly examinations.
72The accountant's standard report for a compilation service would not include a statement that
- Afinancial statements have not been audited or reviewed and the accountant does not express an opinion or any other form of assurance.
- Bcompilation service consists primarily of inquiries of company personnel and analytical procedures applied to financial data.
- Cfinancial statement information is the representation of the owners of the business.
- Da compilation service has been performed in accordance with standards established by the AICPA.
73Shelly's Bank has loaned money to Pete's Auto Supply. The loan is collateralized by inventory. The loan also requires a CPA to observe the count of the inventory and trace sampled items to the vendor invoices in order to determine the value of inventory is not misstated. This service would be
- Aa compilation engagement.
- Ba review engagement.
- Can attestation engagement.
- Dan assurance service engagement.
74The reporting standards for an attestation are different from that of an audit because they require
- Athe report requires a disclosure of the procedures performed during the attestation.
- Bthe report requires a statement that the presentation is not in accordance with GAAP.
- Cthe report to identify the subject matter of the assertion being reported on.
- Dthe report to include an opinion.
75Attestation engagements may be more difficult than financial statement audits when
- Awhen the report may be submitted to individuals with insufficient knowledge of the nature of an attestation engagement.
- Bwhen management may not understand the underlying assumptions of the attestation.
- Cinternal controls are difficult to assess.
- Dthe establishment of suitable measurement criteria is difficult.
76In an agreed-upon procedures engagement, an accountant must
- Aall of these are true.
- Binclude negative assurance explicitly in the report.
- Cfollow the attestation standard related to evidential matter.
- Dfollow the attestation standard related to internal control.
77A responsible party for information to subject to an attestation engagement would not include
- Aa client employee named in a contract or regulation as being responsible for the information.
- Bthe client's Vice President of Marketing.
- Cthe independent accountant.
- Dthe client's controller.
78Which of the following procedures would not be performed in a review of financial statements of a nonpublic company?
- AStudy the financial statements for indications that they conform to generally accepted accounting principles.
- BObtain an attorney's letter regarding litigation and unasserted claims.
- CPerform analytical procedures to identify relationships and individual items that appear to be unusual.
- DInquire about the accounting system and bookkeeping procedures.
79ABC Company prepares financial statements showing the last two years, years X and Y (Year X is the year prior to year Y). The auditor performed an audit of year X and a review of year Y. The auditor may
- Anotify the client that prior year audited financial statements cannot be presented when the current years statements have not been audited.
- Breissue the year X audit report with an explanatory paragraph disclosing that only a review was performed on year Y.
- Cprovide only the report concerning the year Y review.
- Dreport on the year Y review and reissue the year X audit report.
80In an agreed-upon procedures engagement, an accountant
- Afollows all of the Fundamental Principles of GAAS.
- Brestricts the report to specified users.
- Cincludes negative assurance in the report.
- Dgives a qualified audit report.
81Which of the following procedures should an accountant perform during an engagement to review the financial statements of a nonpublic entity?
- AExamine cash disbursements in the subsequent period for unrecorded liabilities.
- BSend bank confirmation letters to the entity's financial institutions.
- CObtain a client representation letter from members of management.
- DCommunicate reportable conditions discovered during the assessment of control risk.
82When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP, the accountant should indicate in the compilation report that the financial statements
- Aare special-purpose financial statements that are not comparable to those of prior periods.
- Bare not compiled in accordance with Statements on Standards for Accounting and Review Services.
- Care prepared in conformity with a comprehensive basis of accounting other than GAAP.
- Dmight influence users' conclusions about the business, if the disclosures were included.
83Which of the following procedures ordinarily should be applied when an independent accountant conducts a review of interim financial information of a publicly held entity?
- APerform cut-off tests for cash receipts and disbursements.
- BInspect the open purchase order file.
- CRead the minutes of the board of directors' meetings.
- DVerify changes in key account balances.
84An auditor's special report on financial statements prepared in conformity with the cash basis of accounting should include a separate explanatory paragraph before the opinion paragraph that
- Aexplains how the results of operations differ from financial statements prepared in conformity with generally accepted accounting principles.
- Brefers to the note to the financial statements that describes the special purpose framework.
- Cstates whether the financial statements are fairly presented in conformity with a special purpose framework.
- Djustifies the reasons for departing from generally accepted principles.
85Which of the following best describes an engagement to report on an entity's internal control over financial reporting for a nonpublic company?
- AA consulting engagement to provide constructive advice to the entity on its internal control structure
- BA prospective engagement to project, for a period of time not to exceed one year, and report on the expected benefits of the entity's internal control structure
- CAn audit engagement to render an opinion on the entity's internal control structure
- DAn attestation engagement to examine and report on management's written assertions about the effectiveness of its internal control structure
86Delta Life Insurance Co. prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission. Wall, CPA, is Delta's auditor. If Wall discovers that the statements are not suitably titled, Wall should
- Aexplain in the notes to the financial statements the terminology used.
- Bissue a special statutory basis report that clearly disclaims any opinion.
- Capply to the state insurance commission for an advisory opinion.
- Ddisclose any reservations in an explanatory paragraph and qualify the opinion.
87When providing limited assurance that the reviewed financial statements of a nonpublic entity require no material modifications to be in accordance with generally accepted accounting principles, the accountant should
- Adevelop audit plans to determine whether the entity's financial statements are fairly presented.
- Bunderstand the accounting principles of the industry in which the entity operates.
- Cconfirm with the entity's lawyer that material loss contingencies are disclosed.
- Dassess the risk that a material misstatement could occur in a financial statement assertion.
88Which of the following procedures is ordinarily performed by an accountant in a compilation engagement of a nonpublic entity?
- AApplying analytical procedures designed to corroborate management's assertions that are embodied in the financial statement components
- BMaking inquiries of management concerning actions taken at meetings of the stockholders and the board of directors
- CObtaining written representations from management indicating that the compiled financial statements will not be used to obtain credit
- DReading the financial statements to consider whether they are free of obvious mistakes in the application of accounting principles
89In reporting on a nonpublic entity's internal control over financial reporting, an accountant should include a paragraph that describes the
- Ainherent limitations of internal control.
- Bdocumentary evidence regarding the control environment factors.
- Cpotential benefits from the accountant's suggested improvements.
- Dchanges in the entity's internal control since the prior report.
90Compiled financial statements of a nonpublic entity should be accompanied by a report stating that
- Aa compilation consists primarily of inquiries of entity personnel and analytical procedures applied to financial data.
- Bthe accountant does not express an opinion or any other form of assurance on the financial statements.
- Cthe accountant assessed the accounting principles used and significant estimates made by management.
- Dthe scope of the accountant's procedures has not been restricted in testing the financial information that is the representation of management.
91Hamell Corporation is making a presentation to a prospective investor. The presentation includes a projection showing that the company's sales will be between $25,000,000 and $27,000,000 within the next three years. Hamell believes the information will be better received if its CPA provides an attestation report on the projection. In order to provide such a report the CPA must do all of the following EXCEPT
- Aidentify key factors affecting the information.
- Bconfirm expected sales with customers.
- Cevaluate the assumptions used in preparing the projection.
- Dobtain knowledge about the client's business.
92Hamell Corporation is making a presentation to a perspective investor. The presentation includes a projection showing that the company's sales will be between $25,000,000 and $27,000,000 within the next three years. Hamell believes the information will be better received if its CPA provides an attestation report on the projection. The CPA should insure that proper disclosure is made to indicate that
- Aprojections are limited in their information content due to uncontrollable changes in the business environment.
- Bthe range does not indicate a "best" and "worst" case scenario.
- Cthe range of the projection is appropriate given the circumstances.
- Dthe $27,000,000 estimate is a best case scenario.
93Which of the following is NOT a condition that must be met before an accountant can conduct an engagement concerning a nonpublic entity's internal control over financial reporting?
- AManagement accepts responsibility for the effectiveness of its internal control.
- BManagement presents a written assertion about the effectiveness of its internal control.
- CManagement's evaluation of control can be supported by sufficient evidence.
- DManagement has appropriately documented the internal controls.
94Which of the following steps is NOT required in performing a compliance attestation engagement?
- AConsider subsequent events
- BConfirm restrictions with applicable third-parties
- CAssess inherent risk
- DAssess planning materiality
95An accountant's report includes the phrase "We are not aware". This phrase indicates
- Aan attestation was not performed.
- Ba disclaimer of opinion is presented.
- Cthe auditor is providing negative assurance.
- Dmanagement had not established sufficient criteria for an opinion to be issued.
96The procedures used in a review engagement are
- Aphysical examination, inquiry, and obtaining a management representation letter.
- Banalytical procedures, inquiry, and obtaining a management representation letter.
- Canalytical procedures, reperformance, and obtaining a management representation letter.
- Dphysical examination, reperformance, and obtaining a management representation letter.
97In a compilation engagement, the accountant
- Adoes not express an opinion.
- Bprovides a list of procedures performed and results found.
- Cprovides assurance that no material misstatement came to the auditors attention.
- Dprovides reasonable assurance that no material misstatements exist.
98In a compilation engagement,
- Aall appropriate disclosures must be presented.
- Bmanagers or owners may choose to omit all the footnote disclosures.
- Can auditor provides only negative assurance.
- Dfinancial statements must be presented in prescribed forms.
99In order to perform a review of interim financial information, the auditor must
- Aestablished sufficient criteria to form an opinion on the fair presentation of the financial information.
- Bsent confirmation to third-parties concerning significant related-party transactions.
- Ctested the entity's internal controls to determine that financial information is reliable.
- Dhave audited or be in the process of auditing the entity's latest financial statements.
100When interim financial information is presented as supplementary information accompanying audited financial statements, the auditor should make reference to the information
- Ain all cases.
- Bwhen it has not been labeled as "unaudited".
- Cwhen it is material to the financial statement users.
- Dwhen the information has been reviewed rather than audited.
101Other Comprehensive Basis of Accounting (OCBOA) includes all of the following EXCEPT
- Astatements prepared on a cash basis.
- Bstatements that conform to accounting principles that are generally accepted.
- Cstatements prepared on a tax basis.
- Dstatements that conform to a regulatory agency.
102Which of the following account titles would not be appropriate for a company that prepared its financial statements using the tax basis of accounting?
- AStatement of Change in Partners' Capital Accounts
- BStatement of Revenue and Expenses
- CStatement of Assets, Liabilities, and Owner's Equity
- DBalance Sheet
103When a company uses a service organization to prepare its payroll, the company's auditors
- Ashould include the audit report of the service company's auditors with their auditors' report.
- Bmust audit the internal controls at the service organization.
- Cneed to understand the internal controls over the transaction regardless of the location of the control.
- Dhave no obligation concerning the internal controls at the service organization.
104Auditors can gain sufficient understanding of the internal controls at a service organization by
- Asending a confirmation concerning internal controls to the service organization's auditors.
- Breviewing a report on internal controls provided by the service organization's auditors.
- Cinquiry with management of the service organization.
- Dreviewing the contract with the service organization.
105Reports on an entity's internal control over financial reporting
- Ais limited to inquiry and analytical procedures for reports for non-SEC companies.
- Bis required by the PCAOB for large public companies and may be performed by a CPA for nonpublic companies.
- Cis optional for all companies whether they report to the SEC or not.
- Dis required for all companies whether they report to the SEC or not.
106During a review engagement, which of the following is NOT a required inquiry of management?
- AThe changes made to internal controls during the period under review
- BStatus of uncorrected misstatements identified in previous engagements
- CSignificant transactions occurring near the end of the reporting period
- DThe accounting principles and practices used
107During a review the auditor is required to obtain written representations from management. Which of the following is NOT one of the required elements of the representation?
- AManagement has disclosed information about subsequent events
- BManagement has made all adjustments identified during the review
- CManagement's belief that it has answered all inquiries fully and truthfully
- DManagement's responsibility for the fair presentation of the financial statements
108AR 90 requires adequate documentation for a review engagement. Which items are required to be documented?
- AAnalytical procedures: Yes; Management representations: Yes; Understanding of internal controls: Yes
- BAnalytical procedures: Yes; Management representations: Yes; Understanding of internal controls: No
- CAnalytical procedures: Yes; Management representations: No; Understanding of internal controls: No
- DAnalytical procedures: No; Management representations: Yes; Understanding of internal controls: No
109At a minimum, in order to comply with PCAOB AS 5, an auditor of a public company that has material transactions processed by a service organization would have to request from the service organization
- Aa Service Organization Control (SOC) 3 report.
- Ba type two service auditors' report.
- Ca type one service auditors' report.
- Da description of its internal controls.
110An auditor that is requested to provide a report on application of requirements of an appropriate financial reporting framework may not
- Aissue an opinion on the accounting treatment of a hypothetical transaction.
- Bstate that differences in facts, circumstances or assumptions might change the conclusion.
- Climit the report to the sole use of specified parties.
- Ddiscuss the requirements with the client's current auditors.
111A report on sustainability, as defined by the AICPA, might include all of the following except
- Ainternal control over financial reporting.
- Benvironmental responsibility.
- Csocial responsibility.
- Deconomic viability.
Informationen
- Beschreibung
- final 1
- Autor
- Christian Cobo
- Sprache
- English
- Aufrufe
- 476
- Schlagwörter
- Bewertung
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