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Audit Midterm pages 1-3

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1 Audit Quiz on Audit Midterm pages 1-3, created by Rebecca Escobar on 24/02/2016.
Rebecca Escobar
Quiz by Rebecca Escobar, updated more than 1 year ago
Rebecca Escobar
Created by Rebecca Escobar about 8 years ago
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Resource summary

Question 1

Question
The Sarbanes-Oxley Act applies to which of the following companies?
Answer
  • All companies
  • Privately held companies
  • Public companies
  • All public companies and privately held companies with assets greater than $500 million

Question 2

Question
In "auditing" financial accounting data, the primary concern is with:
Answer
  • determining whether recorded information properly reflects the economic events that occurred during the accounting period.
  • determining if fraud has occurred.
  • determining if taxable income has been calculated correctly.
  • analyzing the financial information to be sure that it complies with government requirements.

Question 3

Question
Which of the following statements best describes the primary purpose of Statements on Auditing Standards?
Answer
  • They are guides intended to set forth auditing procedures that are applicable to a variety of situations.
  • They are procedural outlines that are intended to narrow the areas of inconsistency and divergence of auditor opinion
  • They are authoritative statements, enforced through the Code of Professional Conduct, and are intended to limit the degree of auditor judgment.
  • They are interpretations that are intended to clarify the meaning of "generally accepted auditing standards.

Question 4

Question
The AICPA has authority to establish standards and rules in all but which of the following areas?
Answer
  • Auditing standards applicable to financial statements of private companies
  • Compilation and review standards
  • Professional conduct
  • Auditing standards applicable to financial statements of private and public companies

Question 5

Question
The Statements on Auditing Standards issued by the Auditing Standards Board:
Answer
  • True
  • False

Question 6

Question
PCAOB Auditing Standard No. 2 requires the audit of internal control over financial reporting to be integrated with:
Answer
  • the audit of the financial statements.
  • the quarterly review of financial information.
  • the review of annual financial statements.
  • None of the above

Question 7

Question
Which of the following can be significantly affected by an audit?
Answer
  • Business risk.
  • Information risk
  • The risk-free interest rate
  • Inherent risk

Question 8

Question
An audit of financial statements is most often performed to determine whether the
Answer
  • entity is following specific procedures or rules set down by some higher authority
  • organization is operating efficiently and effectively.
  • management team is fulfilling its fiduciary responsibilities to shareholders
  • none of these choices.

Question 9

Question
Evidence may take which of the following forms?
Answer
  • Oral responses to the auditor from employees of the company under audit.
  • Written communications from company employees or outsiders.
  • Observations made by an auditor.
  • Evidence may take any of the above forms.

Question 10

Question
The statements most commonly included in An audit of financial statements are the
Answer
  • retained earnings, the income statement, and the statement of cash flows
  • income statement, the statement of cash flows, and the statement of net working capital.
  • statement of cash flows, the balance sheet, and the retained earnings statement.
  • balance sheet, the income statement, and the statement of cash flows

Question 11

Question
Which one of the following is not a Field Work Standard?
Answer
  • Adequate planning and supervision.
  • Due professional care.
  • Understand the entity and its environment including internal control.
  • Sufficient appropriate audit evidence.

Question 12

Question
Williams & Co., a member of the Private Companies Practice Section, is to have a “peer review.” The peer review can be performed by:
Answer
  • a CPA firm selected by Williams & Co.
  • a review team selected by the state society.
  • internal auditors.
  • either a or b.

Question 13

Question
Statements on Auditing Standards provide auditors of privately held companies with ______ guidance regarding the conduct of financial statement audits.
Answer
  • fairly extensive
  • some limited
  • practically no
  • specific and detailed

Question 14

Question
An auditor may not issue a qualified opinion when:
Answer
  • a scope limitation prevents the auditor from completing an important audit procedure.
  • the auditor’s report refers to the work of a specialist.
  • the auditor lacks independence with respect to the audited entity.
  • an accounting principle at variance with GAAP is used

Question 15

Question
The client has presented all required financial statements with the exception of the statement of cash flows. The auditor has completed the audit and is satisfied that all other statements are presented fairly. The auditor:
Answer
  • may issue either an unqualified or a qualified opinion
  • must issue an adverse opinion with “except for” in the opinion paragraph.
  • may issue an unqualified opinion.
  • must issue a qualified opinion with “except for” in the opinion paragraph

Question 16

Question
Whenever an auditor issues an unqualified opinion, the implication is that auditor
Answer
  • Is satisfied that the statements are presented fairly in accordance with GAAP except for a specific aspect of them.
  • Is satisfied that the statements are presented fairly in accordance with GAAP
  • Does not believe the statement are presented fairly in accordance with GAAP
  • Does not know if the statement are presented fairly in accordance with GAAP

Question 17

Question
An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n):
Answer
  • Compliance audit
  • Audit

Question 18

Question
The General Standards stress the importance of:
Answer
  • evidence accumulation.
  • personal qualities the auditor should possess
  • communicating the auditor’s findings to the
  • general supervision of the audit.

Question 19

Question
The audit program usually states all four of the choices below, but it always
Answer
  • audit procedures.
  • sample sizes.
  • particular items to select.
  • timing of the tests
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