Chapter 2 - Test Bank
January 13, 2017 | Author: juan | Category: N/A
Short Description
Auditing Test Bank...
Description
Chapter 02 - Professional Standards Standards
Chapter 02 Professional Standards True / False Questions
1. To express an opinion on financial statements, the auditor obtains reasonable assurance about whether the financial statements as a who le are free from material misstatement, whether due to fraud or error. True False
2. The auditors report on a corporations financial statements usuall! is addressed to the president of the compan!. True False
". The auditors are primaril! responsible for preparin# the financial statements and expressin# an opinion on whether the! follow #enerall! accepted auditin# standards. True False
$. Partners in CP% firms usuall! ha&e the responsibilit! for si#nin# the audit report. True False
'. %n audit is more li(el! to detect d etect tax e&asion than &iolations of antitrust laws. True False
). The attestation standards do not supersede supersede #enerall! accepted auditin# standards. True False
*. % peer re&iew is #enerall! performed b! emplo!ees of the %+CP%. %+CP%. True False
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Chapter 02 - Professional Standards Standards
. +f the auditors disco&er ille#al acts b! a client, the! ordinaril! must immediatel! resi#n from the en#a#ement. True False
. %n audit should be desi#ned to obtain reasonable assurance of detectin# non-compliance with all laws. True False
10. The pronouncements of the +nternational %udit %uditin# in# and %ssurance Standards oard do not o&erride the national auditin# standards of its members, e&en when financial statements are issued b! a multinational compan!. True False
Multiple Choice Questions
11. %udits of financial statements are desi#ned to obtain reasonable assurance of detectin# misstatement due to/
%. ption % . ption C. ption C . ption
12. Financial statements are prepared followin# aan3 %. %pplicable financial reportin# framewor(. . %ppropriate sub4ect matter. C. 5enerall! accepted auditin# standards. . Set of 6ualit! control standards.
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Chapter 02 - Professional Standards Standards
. +f the auditors disco&er ille#al acts b! a client, the! ordinaril! must immediatel! resi#n from the en#a#ement. True False
. %n audit should be desi#ned to obtain reasonable assurance of detectin# non-compliance with all laws. True False
10. The pronouncements of the +nternational %udit %uditin# in# and %ssurance Standards oard do not o&erride the national auditin# standards of its members, e&en when financial statements are issued b! a multinational compan!. True False
Multiple Choice Questions
11. %udits of financial statements are desi#ned to obtain reasonable assurance of detectin# misstatement due to/
%. ption % . ption C. ption C . ption
12. Financial statements are prepared followin# aan3 %. %pplicable financial reportin# framewor(. . %ppropriate sub4ect matter. C. 5enerall! accepted auditin# standards. . Set of 6ualit! control standards.
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Chapter 02 - Professional Standards Standards
1". %n attestation en#a#ement/ %. 7as as its primar! source of standards the assurance standards. . +ncludes a report on sub4ect matter, or on an assertion about sub4ect matter. C. +ncludes search and &erification procedures for a ll ma4or accounts. . +s ordinaril! an examination, re&iew or compilation en#a#ement.
1$. %n audit pro&ides reasonable assurance of detectin# which of the followin# t!pes of of material ille#al acts8
%. ption % . ption C. ption C . ption
1'. 9hich of the followin# is not a a t!pe of auditors opinion8 %. %d&erse. . rdinar!. C. :ualified. . ;nmodified.
1). 9hich of the followin# is one of the elements of o f %+CP% %+CP% 6ualit! control8 %. %ssurance of proper le&els of association. . ue professional care. C. ana#ement must pro&ide the auditor with all information rele&ant to the preparation and fair presentation of the financial statements. . >ana#ement and the auditors ha&e responsibilit! for the preparation of financial statements in accordance with the applicable financial reportin# framewor(. C. 9here appropriate, the auditor ma! obtain information from those char#ed with #o&ernance. . The auditors should be pro&ided unrestricted access to those within the entit! from whom the auditor determines it necessar! to obtain audit e&idence.
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Chapter 02 - Professional Standards
2$. ! definition, proper professional s(epticism on an au dit re6uires
%. ption % . ption C. ption C . ption
2'. 9hen a Statement Auditing Standards uses the word @should@ relatin# to a re6uirement, it means that the auditor/ %. >ust fulfill the responsibilities under all circumstances. . >ust compl! with re6uirements unless the auditor demonstrates and documents that alternati&e actions are sufficient to achie&e the ob4ecti&es of the standards. C. Should consider whether to follow the ad&ice based on the exercise of professional 4ud#ment in the circumstances. . >a! choose to chan#e responsibilities relatin# to &arious professional standards that remain under consideration.
2). %n unconditional responsibilit! to follow an %+CP% professional standard exists when the professional standard uses the terms3
%. ption % . ption C. ption C . ption
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Chapter 02 - Professional Standards
2*. 9hich of the followin# best describes a portion of the auditors responsibilit! re#ardin# noncompliance with laws b! clients8 %. The auditors ha&e a responsibilit! to disco&er all material noncompliance. . +f audit procedures re&eal noncompliance, the auditors should ta(e appropriate actions. C. +f the auditors suspect noncompliance, the! should conduct a le#al audit of the compan!. . The auditors responsibilit! for the detection of all noncompliance is the same as their responsibilit! re#ardin# material misstatements due to errors and fraud.
2. The auditors who find that the client has committed an ille#al act would be most li(el! to withdraw from the en#a#ement when the/ %. >ana#ement fails to ta(e appropriate correcti&e action. . +lle#al act has material financial statement implications. C. +lle#al act has recei&ed widespread publicit!. . %uditors cannot reasonabl! estimate the effect of the ille#al act on the financial statements.
2. 9hich of the followin# is not included as a part of the description of the auditors responsibilit! in a nonpublic compan! unmodified report8 %. The audit was performed in accordance with #enerall! accepted accountin# principles. . %n audit in&ol&es performin# procedures to obtain audit e&idence about the amounts and disclosures in the financial statements. C. The procedures selected depend on the auditors 4ud#ment. . %n audit includes e&aluatin# the appropriateness of accountin# policies used.
"0. Primar! responsibilit! for the financial statements lies with/
%. ption % . ption C. ption C . ption
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Chapter 02 - Professional Standards
"1. 9hich of the followin# is explicitl! included as a part of the description of mana#ements responsibilit! in an unmodified audit report8 %. >ana#ement is responsible for ma(in# a 4ud#ment on which misstatements are material &s. immaterial. . >ana#ement is responsible for pro&idin# auditors with all rele&ant e&idence. C. >ana#ement is responsible for the desi#n, implementation, and maintenance of internal control. . >ana#ement is responsible for listin# all ille#al acts with a direct effect on financial statement amounts and disclosures.
"2. The auditors report for a nonpublic compan! should indicate/ %. That the audit was made in accordance with auditin# standards #enerall! accepted in the ;nited States of %merica. . %n! wea(ness in internal control obser&ed b! the auditors. C. That accountin# principles ha&e been consistentl! applied. . That no ille#al acts ha&e been identified.
"". The %uditin# Standards oards #uidance on matters such as the purpose of an audit, the premise of an audit, and auditor personal responsibilities is included in/ %. The 10 5enerall! %ccepted %uditin# Standards. . The Code of Professional Conduct. C. %ccountin# Series ?eleases. . Principles ;nderl!in# an %udit Conducted in %ccordance with 5%%S.
"$. % re6uirement that wor(in# papers be re&iewed b! the super&isor, and an! deficiencies be discussed with the preparer is an example of a 6ualit! control procedure in the area of/ %. %cceptance and continuance of client relationships and specific en#a#ements. . ultinational ?eportin# Commission. C. +nternational %uditin# and %ssurance Standards oard. . %+CP% %uditin# Standards oard.
"*. To present fairl! in conformit! with #enerall! accepted accountin# principles the financial statements must/ %. e consistentl! applied. . +nform users of all matters that could materiall! affect a decision. C. ?eflect transactions and e&ents within a ran#e of reasonable limits. . e considered preferable to the users of those financial statements.
". 9hich of the followin# is not included in the auditors standard unmodified audit report8 %. The procedures selected b! the auditor depend on the auditors 4ud#ment. . %n audit includes e&aluatin# the appropriateness of accountin# policies used. C. %n audit includes e&aluatin# the o&erall presentation of the financial statements. . %ccountin# principles ha&e been consistentl! applied.
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Chapter 02 - Professional Standards
". %n audit performed in accordance with #enerall! accepted auditin# standards #enerall! should/ %. e expected to pro&ide absolute assurance that noncompliance with all laws will be detected where internal control is effecti&e. . e relied upon to disclose &iolations of truth in lendin# laws. C. ana#ement fails to ta(e appropriate correcti&e action. . +lle#al act has material financial statement implications. C. +lle#al act has recei&ed widespread publicit!. . %uditors cannot reasonabl! estimate the effect of the ille#al act on the financial statements.
Difficulty: Medium
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Chapter 02 - Professional Standards
2. 9hich of the followin# is not included as a part of the description of the auditors responsibilit! in a nonpublic compan! unmodified report8 A$ The audit was performed in accordance with #enerall! accepted accountin# principles. . %n audit in&ol&es performin# procedures to obtain audit e&idence about the amounts and disclosures in the financial statements. C. The procedures selected depend on the auditors 4ud#ment. . %n audit includes e&aluatin# the appropriateness of accountin# policies used.
Difficulty: Medium
"0. Primar! responsibilit! for the financial statements lies with/
%. ption % . ption C$ ption C . ption
Difficulty: Medium
"1. 9hich of the followin# is explicitl! included as a part of the description of mana#ements responsibilit! in an unmodified audit report8 %. >ana#ement is responsible for ma(in# a 4ud#ment on which misstatements are material &s. immaterial. . >ana#ement is responsible for pro&idin# auditors with all rele&ant e&idence. C$ >ana#ement is responsible for the desi#n, implementation, and maintenance of internal control. . >ana#ement is responsible for listin# all ille#al acts with a direct effect on financial statement amounts and disclosures.
Difficulty: Medium
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Chapter 02 - Professional Standards
"2. The auditors report for a nonpublic compan! should indicate/ A$ That the audit was made in accordance with auditin# standards #enerall! accepted in the ;nited States of %merica. . %n! wea(ness in internal control obser&ed b! the auditors. C. That accountin# principles ha&e been consistentl! applied. . That no ille#al acts ha&e been identified.
Difficulty: Medium
"". The %uditin# Standards oards #uidance on matters such as the purpose of an audit, the premise of an audit, and auditor personal responsibilities is included in/ %. The 10 5enerall! %ccepted %uditin# Standards. . The Code of Professional Conduct. C. %ccountin# Series ?eleases. &$ Principles ;nderl!in# an %udit Conducted in %ccordance with 5%%S.
Difficulty: Medium
"$. % re6uirement that wor(in# papers be re&iewed b! the super&isor, and an! deficiencies be discussed with the preparer is an example of a 6ualit! control procedure in the area of/ %. %cceptance and continuance of client relationships and specific en#a#ements. %$ ultinational ?eportin# Commission. C$ +nternational %uditin# and %ssurance Standards oard. . %+CP% %uditin# Standards oard.
Difficulty: Medium
"*. To present fairl! in conformit! with #enerall! accepted accountin# principles the financial statements must/ %. e consistentl! applied. . +nform users of all matters that could materiall! affect a decision. C$ ?eflect transactions and e&ents within a ran#e of reasonable limits. . e considered preferable to the users of those financial statements.
Difficulty: Medium
". 9hich of the followin# is not included in the auditors standard unmodified audit report8 %. The procedures selected b! the auditor depend on the auditors 4ud#ment. . %n audit includes e&aluatin# the appropriateness of accountin# policies used. C. %n audit includes e&aluatin# the o&erall presentation of the financial statements. &$ %ccountin# principles ha&e been consistentl! applied.
Difficulty: Medium
". %n audit performed in accordance with #enerall! accepted auditin# standards #enerall! should/ %. e expected to pro&ide absolute assurance that noncompliance with all laws will be detected where internal control is effecti&e. . e relied upon to disclose &iolations of truth in lendin# laws. C. easures of the 6ualit! of the auditors performance. C. Procedures to be used to #ather e&idence to support financial statements. . %udit ob4ecti&es #enerall! determined on audit en#a#ements.
Difficulty: Medium
$'. +f noncompliance with a law is disco&ered durin# the audit of a publicl! held compan!, the auditors should first/ %. Aotif! the re#ulator! authorities. . etermine who was responsible for the noncompliance. C. +ntensif! the examination to identif! noncompliance with an! laws. &$ ?eport the act to hi#h le&el personnel within the clients or#aniBation and to the audit committee.
Difficulty: Hard
$). 9hich of the followin# is the name used to describe financial reportin# framewor(s other than 5%%P which include/ cash basis, tax basis, re#ulator! basis, or contractual b asis8 %. %pplicable. . PC%. C. Special reports. &$ Special purpose.
Difficulty: Easy
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Chapter 02 - Professional Standards
$*. 9hich of the followin# statements best describes the primar! purpose of Statements on %uditin# Standards8 %. The! are #uides intended to set forth auditin# procedures which are applicable to a &ariet! of situations. . The! are procedural outlines which are intended to narrow the areas of inconsistenc! and di&er#ence of auditor opinion. C$ The! are authoritati&e statements, enforced throu#h the Code of Professional Conduct. . The! are interpretations which ma! be useful #uidance to auditors.
Difficulty: Medium
$. The primar! responsibilit! for the ade6uac! of disclosure in the financial statements of a publicl! held compan! rests with the/ %. Partner assi#ned to the audit en#a#ement. %$ >ana#ement of the compan!. C. %uditor in char#e of the fieldwor(. . Securities and
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