Auditing Chap 1

Card Set Information

Author:
Seifer
ID:
146141
Filename:
Auditing Chap 1
Updated:
2012-04-06 21:55:57
Tags:
Auditing Assurance Louwers 4th edition
Folders:

Description:
Auditing Chapter 1 MC
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user Seifer on FreezingBlue Flashcards. What would you like to do?


  1. 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 teh conformity of the financial statements of a university with generally accepted accounting principles
    c. Giving an opinion on the fair presentation of a newspaper's circulation data.
    d. Giving assurance about the average drive length achieved by golfers with a client's gold balls
    e. All of the above.
  2. It is always a good idea for auditors to begin an audit with the professional skepticism characterized by the assumption that

    a. A potential conflict of interest always exists between the auditor and the management of the enterprise under audit
    b. In audits of financial statements, the auditor acts exclusively in the capacity of an auditor.
    c. The professional status of the independent auditor imposes commensurate professional obligations
    d. Financial statements and financial data are verifiable
  3. 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. Preapre a written report containing a conclusion about the reliability of a management 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
  4. A determination of cost savings obtained by outsourcing cafeteria services is most likely to be an objective of

    a. Environmental auditing
    b. Financing auditing
    c. Compliance auditing
    d. Operational auditing
  5. The primary difference between operational auditing and financial auditing is that in operational auditing

    a. The operational auditor is not concerned with whether the audited activity is generating information in compliance with financial accounting standards
    b. The operational auditor is seeking to help management use resources in the most effective manner possible
    c. The operational auditor starts with the financial statements of an activity being audited and works backward to the basic processses involved in producing them
    d. The operational auditor can use analytical skills and tools that are not necessary in financial auditing
  6. According to AICPA, the purpose of an audit of financial statements is to

    a. Enhance the degree of confidence that intended users can place in teh financial statements
    b. Express an opinion on the fairness with which they present financial position, results of operations, and cash flows in conformity with accounting standards promulgated by the FASB
    c. Express an opinion on the fairness with which they present financial position, result of operations, and cash flows in conformtity with accounting standards promulgated by the U.S. SEC
    d. Obtain systematic and objective evidence about financial assertions and report the results to interested users
  7. 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 very undesirable
    d. They generally see a potential conflict of interest between company managers who want to get loans and the bank's needs for reliable financial statements
  8. 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
  9. 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. Timliness of financial statements
  10. 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 of effective and efficient use of resources
    d. Determine whether auditee personnel are following laws, rules, regulations, and policies
  11. The organization primarily responsible for ensuring that public officials are using public funds efficiently, economically, and effectively is the

    a. Governmental Internal Audit Agency (GIAA)
    b. Centeral Internal Auditors (CIA)
    c. Securities and Exchange Commission (SEC)
    d. Government Accountability Office (GAO)
  12. Performance audits usually include (two answers)

    a. Financial audits
    b. Economy of efficiency audits
    c. Compliance audits
    d. Program audits
  13. The objective in an auditor's review of credit ratings of a client's customers is to obtain evidence related to management's assertion about

    a. Completeness
    b. Existence
    c. Valuation and allocation
    d. Rights and Obligations
    e. Occurrence
  14. Jones, CPA, is planning the audit of Rhonda's Company. Rhonda verbally asserts to Jones that alle 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 a sufficient basis for Jones to conclude that all expenses have been recorded
  15. 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
  16. When auditing merchandise inventory at year-end, the auditor performs audit procedures to ensure that all goods purchased before year-end are received before the physical inventory count. This audit procedure provides assurance about which management assetion?

    a. Cutoff
    b. Existence
    c. Valutation and allocation
    d. Rights and Obligations.
    e. Occurence
  17. When auditing merchandise inventory at year-end, the auditor performs audit procedures to obtain evidence that no goods held on consignment are included in the client's ending inventory balance. This audit provides assurance about which management assetion?

    a. Completeness
    b. Existence
    c. Valuation and allocation
    d. Rights and Obligations
    e. Occurrence
  18. When an auditor reviews additions to the equipment (fixed asset) account to make sure that repair and maintenance expenses are not understated, she wants to obtain evidence as to management's assertion regarding

    a. Completeness
    b. Existence
    c. Valuation and allocation
    d. Rights and Obligations
    e. Occurrence
  19. The Sarbanes-Oxley Act of 2002 generally prohibits public accounting firms from

    a. Acting in a managerial decision-making role for an audit client
    b. Auditing the firm's own work on an audit client
    c. Providing tax consulting to an audit client without audit committee approval
    d. All of the above
  20. Substantial equivalency refers to

    a. An auditor's tendency not to believe management's assertions without sufficeint corroboration
    b. Providing consulting work for another firm's audit client in exchange for the other firm's providing consulting services to one of your clients
    c. The waiving of certification exam parts for an individual holding an equivalent certification from another professional organization
    d. Permitting a CPA to practice in another state without having to obtain a license in that state
  21. Which of the following best describes the relationship between auditing and attestation engagements?

    a. Auditing is a subset of attestation engagements that focuses on teh certification of financial statements
    b. Attestation is a subset of auditing that provides lower assurance than that provided by an audit engagement
    c. Auditing is a subset of attestation engagements that focuses on providing clients with advice and decision support
    d. Attestation is a subset of auditing that improves the quality of information, or its context, for decision makers

What would you like to do?

Home > Flashcards > Print Preview