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17 Cards in this Set
- Front
- Back
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Which of the following would be considered an assurance engagement?
a - giving an opinion on a prize promoter's claims about the amount of sweepstakes prizes awarded in the past b - giving an opinion on the conformity of the financial statements of a university with GAAP c - giving an opinion on the fair presentation of a newspaper's circulation data d - giving asusrance about the average drive length achieved by glofers with a client's golf balls e - all of the above 1.23 |
e - all of the above
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It is always a good idea for auditors to begin an audit with the profesional skepticism characterized by the assumption that
a - a potential conflict of interest always exists between the auditor and the managment of the enterprise under audit b - in audits of financial statements, the auditor acts exclusively in the capacity of an auditor c - the professonal status of the independent auditor imposes commensurate professional obligations d - financial statements and financial data are verifiable 1.24 |
a - a potential conflict of interest always exists between the auditor and management of teh enterprise under audit
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In an attestation engagement, a CPA practitioner is engaged to
a - compile a company's financial forecast based on management's assumptions without expressing any form of assurance b - prepare a written report containing a conculsion about the reliability of a managment assertion c - prepare a tax return using information the CPA has not audited or reviewed d - give expert testimony in court on particular facts in a corporate income tax controversy 1.25 |
b - prepare a written report containing a conclusion about the reliability of a management assertion
an audit is a specific type of an attestation engagement |
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A determination of cost savings obtained by outsourcing caffeteria services is most likely to be an objective of
a - environmental auditing b - financial auditing c - compliance auditing d - operational auditing 1.26 |
d - operational auditing
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The primary difference between operational auditing and financial audting is that in operational auditing
a - the operational auditor is not concerned with whether the audited activityis generating information in compliance with financial accounting standards b - the operational auditor is seeking to help managment use resources in the most efficient manner possible c - the operational auditor starts with the financial statements of an activity being audited and works backward to the basic processes involved in producing them d - the operational auditr can use analytical skills and tools that are not necessary in financial auditing 1.27 |
b - the operational auditor is seeking to help managment use resources in the most effective manner possible
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According to the AICPA, the purpose of an audit iof financial statements is to
a - enhance the degree of confidence that intended users can place in the financial statements b - express an opinion on the fairness with which they present financial position, results of operations, and cash flows in conformity iwth accounting standards promulgated by the FASB c - express an opinon on the fairness with which they present financial position, result of operations, and cash flows in conformity with accouting standards promulgated by the US SEC d - obtain systematic and objective evidence about financial assertions and report othe results to intended users 1.28 |
a - enhance the degree of confidence that intended users can place in the financial statements
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Bankers who are processing loan applications from companies seeking large loans will probably ask for financial statements audited by an independent CPA because
a - financial statements are too complex to analyze themselves b - they are too far away from company headquarters to perform accounting and auditing themselves c - the consequences of making a bad loan are undesirable d - they generally see a potential conflict of interest between company managers who want to get loan and the bank's need for reliable financial statements 1.29 |
d - they generally see a potential conflict of interest between company managers who want to get loans and the bank's need for reliable financial statements
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The Sarbanes-Oxley Act of 2002 prohibits public accounting firms from providing which of the following services to an audit client?
a - bookkeeping services b - internal audit services c - valuation services d - all of the above 1.30 |
d - all of the above
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Independent auditors of financial statements perform audits that reduce
a - business risk faced by investors b - information risk faced by investors c - complexity of financial statements d - timeliness of financial statements 1.31 |
b - information risk faced by investors
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The primary objective of compliance auditing is to
a - give an opinion on financial statements b - develop a basis for a report on internal control c - perform a study on effective and efficient use of resources d - determine whether auditee personnel are following laws, rules, regulations, and policies 1.32 |
d - determine whether auditee personnel are following laws, rules, regulations, and policies
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What requirements are USUALLY necessary to become liscensed as a certified public accountant?
a - sucessful completion of the Uniform CPA Examination b - experience in the accounting field c - education d - all of the above 1.33 |
d - all of the above
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The organization primarily resonsible for ensuring that public officials are using public funds efficiently, economically, and effectively is the
a - Governmental Internal Audit Agency (GIAA) b - Central Internal Auditors (CIA) c - Securites and Exchange Commission (SEC) d - Goverment Accountability Office (GAO) 1.34 |
d - Government Accountability Office (GAO)
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Performance audits usually include (2 answers)
a - financial audits b - economy and efficiency audits c - compliance audits d - program audits 1.35 |
b - economy and efficiency audits
AND d - program audits |
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The objective in an auditor's review of credit ratings of a client's customers is to obtain evidence related to management's assertions about
a - completeness b - existence c - valuation and allocation d - rights and obligations e - occurrence 1.36 |
c - valuation and allocation
specifically the valuation part, the higher the credit rating the more likely the customer is to pay |
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Jones, CPA, is planning the audit of Rhonda's Company. Rhonda verbally asserts to Jones that all expenses for the year have been recorded in the accounts. Rhonda's representation in this regard
a - is sufficient evidence for Jones to conclude that the completeness assertion is supported for expenses b - can enable Jones to minimize the work on the gathering of evidence to support Rhonda's completeness assertion c - should be disregarded because it is not in writing d - is not considered sufficient basis for Jones to conclude that all expenses have been recorded 1.37 |
d - is not considered a sufficienet basis for Jones to conculde that all expenses have been recorded
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The risk to investors that a company's financial statements may be materially misleading is called:
a - client acceptance risk b - information risk c - moral hazard d - business risk 1.38 |
b - information risk
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When auditing merchandise inventory at year-end, the auditor performs audit procedures to ensure that all goods purchased before year-end are recieved before the physical inventory count. This audit procedure provides assurance about which managment assertion?
a - cutoff b - existence c - valuation and allocation d - rights and obligations e - occurrence 1.39 |
a - cutoff
make sure reported in the proper fiscal period |
