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ACC114: Assurance Principles, Professional Ethics, and Governance

Quiz #1 - Part 2

AUDITING OVERVIEW, PROFESSIONAL STANDARDS & AUDITOR'S RESPONSIBILITY

16. Fraudulent financial reporting is often called


a. Management fraud c. Misappropriation of assets |
b. Defalcation d. Employee fraud Ch3 #20

17. Which of the following is an error as distinguished from fraud?


a. Embezzlement of company’s fund |
b. Window dressing
c. Clerical mistakes in the processing of transactions
d. Lapping Ch3 #17

18. The management responsibility to detect and prevent fraud end error is accomplished by
a. Implementing adequate quality control |
b. Having an annual audit of financial statements
c. Implementing adequate accounting and internal control system
d. Issuing a representation letter to the auditor Ch3 #7

19. The auditor’s best defense when material misstatements in the financial statements are not uncovered in the
audit is that
a. The audit was conducted in accordance with generally accepted accounting principles. |
b. Client is guilty of contributory negligence
c. The audit was conducted in accordance with PSA.
d. The financial statements are client’s responsibility Ch3 #9

20. An intentional act by one or more individuals among management, employees, or third parties which results in
misrepresentation of financial statements refers to

a. Error c. Fraud | |
b. Noncompliance d. Illegal acts Ch3 #3

21. A deficiency in the firm's system of quality control is an indication that:


a. the audit engagement was not performed in accordance with the professional standards |
b. the audit reports issued were not appropriate
c. both a and b
d. neither a nor b Ch2 #61

22. Quality control policies and procedures should provide the firm reasonable assurance that the policies and
procedures relating to the other elements of quality control are being effectively applied. This statement
defines the quality control element of
a. planning |
b. independence, integrity and objectivity
c. assignment
d. monitoring Ch2 #59

23. In making a decision to accept or retain a client, the firm should consider
a. its competence |
b. its ability to comply with ethical requirements
c. the integrity of the client's management
d. all three should be considered Ch2 #57

24. The work performed by the assistants should be reviewes by personnel of at least equal competence to
consider all of the following except:
a. Whether the conclusions expressed are consistent with the results of the work performed |
b. Whether the work was adequately performed and documented
c. Whether the objectives of the audit have been achieved
d. Whether the engagement personnel maintained independence Ch2 #54

25. The primary factor that should be considered in determining the extent of supervision needed by an
assistant is the assistant's
a. Willingness to exercise due care c. Professional certification |
b. Competence d. Independence Ch2 #55

26. In compliance with the element of human resources, the firm should address issues relating to
a. engagement performance |
b. assignment of engagement teams
c. consultation
d. differences of opinion Ch2 #50

27. Maintaining or providing access to adequate reference libraries and other authoritative resources is a
procedure that is most likely performed to comply with the policy of
a. monitoring c. consultation |
b. skills and competence d. assignment Ch2 #47

28. Which of the following quality control procedures relates to engagement performance?
a. Hiring c. Professional development |
b. Direction d. Advancement Ch2 #48

29. Which of the following quality control objectives would be least important to the auditor?
a. Engagement performance c. Determination of audit fee |
b. Human resources d. Independence Ch2 #41

30. A quality control policy that requires personnel oin the firm to adhere to independence, integrity, objectivity,
confidentiality and professional behavior, relates to
a. Ethical Requirements c. Assignment |
b. Human resources d. Consultation Ch2 #42

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