Professional Documents
Culture Documents
1. Although the quantity, type, and content of audit documentation will vary with the circumstances, audit d
documentation generally will include the
a. copies of those client records examined by the auditor during the course of the engagement
b. evaluation of the efficiency and competence of the audit staff assistants by the partner responsible for the audit
c. auditor's comments concerning the efficiency and competence of client management personnel
d. auditing procedures followed and the testing performed in obtaining audit evidence
2. The annual audit of Midwestern Manufacturing revealed that sales were accidentally being recorded as revenue c
when the good were ordered, instead of when they were shipped. Assuming the moment in question is material and
the client is unwilling to correct the error, the CPA should issue: not b,
b/c it is
a. an unqualified opinion or adverse opinion pervasive
b. a qualified "except for" opinion or disclaimer of opinion + material
c. a qualified "except for" opinion or adverse opinion
d. an unqualified opinion with an explanatory paragraph
3. Audit evidence can come in different forms with different degrees or persuasiveness. Which of the following is the d
least persuasive type of evidence?
a. vendor invoice
b. bank statement obtained from the client
c. computations made by the auditor
d. pre-numbered sales invoices
4. The auditor's report contains the following: "we did not audit the financial statements of EZ, Inc., a wholly owned a
subsidiary, which statements reflect total assets and revenues constituting 27% and 29% respectively, of the
consolidated totals. Those statements were audited by other auidtors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for EZ, Inc., is based solely on the report of the other auditors."
These sentences
a. objective judgement
b. independent integrity
c. professional skepticism
d. impartial conservatism
6. The date of the CPA's opinion on the financial statements of the client should be the date of the c
a. a client-owned record of conclusions reached by the auditors who performed the engagement
b. evidence supporting financial statements
c. support for the auditor's representations as to compliance with auditing standards
d. a record to be used as a basis for the following year's engagement
8. An entity changed from straight line method to the declining balance method of depreciation for all newly c
acquired assets. This change has no material effect on the current year's financial statements but is reasonably
certain to have a substantial effect in later years.
If the change is disclosed in the notes to the financial statements, the auditor should issue a report with a(n)
a. qualified opinion
b. unqualified opinion with explanatory paragraph
c. unqualified opinion
d. unqualified opinion with explanatory paragraph regarding consistency
9. If a principal auditor decides to refer in his or her report to the audit of another auditor, he or she is required to c
disclose the
a. unqualified opinion
b. unqualified opinion with explanatory paragraph
c. qualified opinion
d. adverse opinion
15. The responsibilities principle underlying AICPA auditing standards includes a requirement that c
a. the auditor is unable to determine the amounts associated with an employee fraud scheme
b. management does not provide reasonable justification for a change in accounting principles
c. the client refuses the auditor permission to confirm certain accounts receivable or apply alternative procedures to verify
their balances
d. the chief executive officer is unwilling to sign the management representation letter
17. What assurance does the auditor provide that ERRORS and FRAUD that are material to the financial statements will be b
detected?
a. limited, negative
b. reasonable, reasonable
c. limited, limited
d. reasonable, limited
18. what is the general character of the responsibilities characterized by the Performance principles? c
a. the competence, independence, and professional care of persons performing the audit
b. criteria for the content of the auditor's report on financial statements and related footnote disclosures.
c. the criteria of audit planning and evidence gathering
d. the need to maintain an independence in mental attitude in all matters pertaining to the audit
19. When the financial statements are fairly stated but the auditor concludes there is substantial doubt whether the client can d
continue in existence, the auditor should issue a(n)
a. adverse opinion
b. qualified opinion only
c. unqualified opinion
d. unqualified opinion with explanatory paragraph
20. which of the following are elements of a CPA firm's quality control that should be considered in establishing its quality D
control policies and procedures?
a. Human resource
b. Monitoring
c. Engagement Performance
d. all of the above
21. which of the following best describes the reason why an independent auditor reports on financial statements? b
a. a misappropriation of assets may exist, and it is more likely to be detected by independent auditors
b. different interests may exist b/w the company preparing the statements and the persons using the statements
c. a misstatement of account balances may exist and is generally corrected as the result of the independent auditor's work
d. poorly designed internal controls may be in existence
22. which of the following best describes what is meant by U.S. auditing standards? B
a. information obtained indirectly from outside sources is the most reliable audit evidence
b. to be reliable, audit evidence should be convincing rather than merely persuasive
c. reliability of audit evidence refers to the amount of corroborative evidence obtained
d. effective internal control provides more assurance about the reliability of audit evidence
26. which of the following statements concerning audit evidence is true? b
a. to be appropriate, audit evidence should be either persuasive or relevant, but need not be reliable
b. the measure of the quantity and quality of audit evidence lies in the auditor's judgement
c. the difficulty and expense of obtaining audit evidence concerning an account balance is valid basis for omitting the test
d. a client's accounting records can be sufficient audit evidence to support the financial statements
27. Which of the following statements describes why a properly designed and executed audit may not detect a material a
misstatement in the financial statements resulting from fraud?
a. audit procedures that are effective for detecting unintentional misstatements may be ineffective for an intentional
misstatement that is concealed through collusion
b. an audit is designed to provide reasonable assurance of detecting material errors but there is no similar responsibility
concerning fraud
c. the factors considered in assessing control risk indicated an increased risk of intentional misstatements, but only a low
risk of unintentional misstatements
d. the auditor did not consider factors influencing audit risk for account balances that have effects pervasive to the financial
statements taken as a whole
28. which of the following types of documentary evidence should the auditor consider to be the most reliable? b
a. sales invoice issued by the client and supported by a delivery receipt from an outside trucker
b. confirmation of an account payable balance mailed by and returned directly to the auditor
c. a check, issued by the company and bearing the payee's endorsement, that is included with the bank statements mailed
directly to the auditor
d. an audit schedule prepared by the client's controller and reviewed by the client's treasurer.