Business Assurance Test 2

Question 1 of 21

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A square in a flow chart indicates

Select one of the following:

  • terminator

  • decision

  • manual loop

  • process

Question 2 of 21

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Which of the following is not a Generally Accepted Privacy Principle (GAPP)?

Select one of the following:

  • Retention and disposal

  • Quality

  • Processing integrity

  • Collection

Question 3 of 21

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The objective of AU-C 500 is to obtain written representations from management that they believe they have fulfilled their responsibilities in regards to the financial statements.

Select one of the following:

  • True
  • False

Question 4 of 21

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Which type of opinion means that there is sufficient appropriate evidence, but there is a material misstatement and it is pervasive through the financial statements?

Select one of the following:

  • unqualified

  • adverse

  • disclaimer of opinion

  • qualified

Question 5 of 21

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Which of the following are components of the control environment? (more than 1)

Select one or more of the following:

  • risk assessments

  • commitment to integrity and ethical values

  • notice

  • monitoring activities

  • financial reporting competencies

  • management's philosophy

Question 6 of 21

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What does a parallelogram represent in a flow chart?

Select one of the following:

  • decision

  • document

  • internal process

  • data

Question 7 of 21

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Susceptibility to loss, nature of the account, accounting complexities, and planning materiality are all qualitative factors in determining if an account is significant.

Select one of the following:

  • True
  • False

Question 8 of 21

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If the company being audited is a publicly listed corporation, the auditor must put an opinion as to the effectiveness of internal controls.

Select one of the following:

  • True
  • False

Question 9 of 21

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The objective of the audit of GAAP-based financial statements is to

Select one of the following:

  • Express an opinion on the accuracy with which the statements present financial position,
    results of operations, and cash flows in accordance with generally accepted accounting principles.

  • Express an opinion on the fairness with which the statements present financial position,
    results of operations, and cash flows in accordance with generally accepted accounting principles.

  • Make suggestions as to the form or content of the financial statements or to draft them in
    whole or in part

  • Ensure adoption of sound accounting policies and the establishment and maintenance of
    internal control

Question 10 of 21

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Which of the following statements about audit evidence is true?

Select one of the following:

  • A client’s accounting records can be sufficient audit evidence to support the financial
    statements

  • The sufficiency and appropriateness of audit evidence is a matter of professional
    judgment.

  • To be appropriate, audit evidence should be either persuasive or relevant but need not be
    both.

  • The difficulty and expense of obtaining audit evidence about an account balance is a
    valid basis for omitting the test.

Question 11 of 21

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How many Generally Accepted Privacy Principles are there?

Select one of the following:

  • 5

  • 7

  • 10

  • 4

Question 12 of 21

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A company has made a material change in its method of inventory measurement from an
unacceptable one to one in accordance with the applicable financial reporting framework.
The auditor’s report on the financial statements of the year of the change should include

Select one of the following:

  • Justification for the change and the effect of the change on reported net income.

  • A reference to the entity’s disclosure of the correction.

  • A note explaining the change.

  • No reference to consistency.

Question 13 of 21

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It is the duty of management to maintain internal controls, prepare the financial statements, and to provide all the information the auditor needs.

Select one of the following:

  • True
  • False

Question 14 of 21

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The auditor should issue written communication stating that no significant deficiencies were identified.

Select one of the following:

  • True
  • False

Question 15 of 21

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Who developed the Systrust service

Select one of the following:

  • Canadian Institute of Chartered Accountants

  • PCAOB and AICPA

  • AICPA

  • PCAOB

  • AICPA and Canadian Institute of Chartered Accountants

Question 16 of 21

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When considering the use of management’s written representations as audit evidence
about the completeness assertion, an auditor should understand that such representations

Select one of the following:

  • Constitute sufficient appropriate evidence to support the assertion when considered in
    combination with sufficiently low assessed risks of material misstatement.

  • Complement, but do not replace, substantive procedures designed to support the
    assertion.

  • Replace low assessed risks of material misstatement as evidence to support the
    assertion.

  • Are not part of the evidence considered to support the assertion.

Question 17 of 21

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A limitation on the scope of an audit sufficient to preclude an unmodified opinion will
usually result when management

Select one of the following:

  • Does not make the minutes of the board of directors’ meetings available to the auditor.

  • Asks the auditor to report on the balance sheet and not on the other basic financial statements.

  • Presents financial statements that are prepared in accordance with the cash receipts and disbursements basis of accounting

  • States that the financial statements are not intended to be presented in accordance with generally accepted accounting principles

Question 18 of 21

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A continuing auditor should update the report on prior financial statements by issuing a
report modified for the

Select one of the following:

  • Resolution of an uncertainty related to and discovered in the current period.

  • Determination in the current period that a substantial doubt exists about the entity’s ability to continue as a going concern for a reasonable time.

  • Removal in the current period of doubt about the entity’s ability to continue as a going concern.

  • Purchase and consolidation of a new company by the client.

Question 19 of 21

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Which of the following statements about internal control is true?

Select one of the following:

  • The establishment and maintenance of internal control are important responsibilities of the internal auditor

  • A limitation of internal control is that management makes judgments about the extent of controls it implements

  • Exceptionally effective internal control is enough for the auditor to eliminate substantive procedures on a significant account balance

  • Properly maintained internal control reasonably ensures that collusion among employees cannot occur

Question 20 of 21

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A CPA has previously communicated a significant control deficiency in connection with an audit of prior financial statements of a non-issuer. As of the current audit date, the deficiency has not been corrected. What communication should be made by the CPA?

Select one of the following:

  • A new communication is required only if the auditor has relied on the controls

  • A new communication is required only if it involves an area in which the auditor has not relied on the controls

  • The condition should be reported

  • None, because management has been previously put on notice and now has sole responsibility

Question 21 of 21

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An auditor should communicate misstatements to those charged with governance

Select one of the following:

  • even if they are clearly trivial

  • if they were not recorded before the end of the auditor's field work

  • if they are uncorrected

  • if they are immaterial and corrected but frequently recurring

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Business Assurance Test 2

Vicki Myers
Quiz by , created about 1 year ago

Study questions for Business Assurance Services test 2 at Bowling Green State University.

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Vicki Myers
Created by Vicki Myers about 1 year ago
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