ACCT 444
Week 1 Quiz
(TCO 3) Prior to the passage of the
Sarbanes-Oxley Act, which of the following was responsible for establishing
auditing standards? (Points: 3)
Public Company Accounting Oversight
Board
Securities and Exchange Commission
National Association of Accounting
Auditing Standards Board
Chapter 2
(TCO 1) Which one of the following is
not one of the three general standards? (Points: 3)
Proper planning and supervision
Due professional care
Adequate training and proficiency
Independence of mental attitude
Chapter 2
(TCO 1) An independent auditor must
have which of the following? (Points: 3)
A pre-existing and well-informed point
of view with respect to the audit
Technical training that is adequate to
meet the requirements of a professional
Experience in taxation that is
sufficient to comply with generally accepted auditing standards
A background in many different
disciplines
(TCO 1) Any service that requires a
CPA firm to issue a report about the reliability of an assertion that is made
by another party is a(n) _____ (Points: 3)
assurance service.
attestation service.
tax service.
accounting and bookkeeping service.
Chapter 1
(TCO 1) Which of the following
statements is incorrect regarding the SEC’s partner rotation rules? (Points: 3)
The lead and concurring partners are
subject to a 5-year time out period.
All audit partners must rotate off the
audit engagement after 5 years.
Other audit partners are subject to a
2-year time out period.
Small firms may be exempted from the
partner rotation requirement.
(TCO 3) Burrow & Co., CPAs, have
provided annual audit and tax compliance services to Mare Corp. for several
years. Mare has been unable to pay Burrow in full for services Burrow rendered
19 months ago. Burrow is ready to begin fieldwork for the current year’s audit.
Under the ethical standards of the profession, which of the following arrangements
will permit Burrow to begin the fieldwork on Mare’s audit? (Points: 3)
Mare engages another firm to perform
the fieldwork, and Burrow is limited to reviewing the workpapers and issuing
the audit report.
Mare sets up a 2-year payment plan
with Burrow to settle the unpaid fee balance.
Mare gives Burrow an 18-month note
payable for the full amount of the past due fees before Burrow begins the
audit.
Mare commits to pay the past due fee
in full before the audit report is issued.
Chapter 2
(TCO 3) Independence in auditing means
(Points: 3)
remaining aloof from a client.
taking an unbaised and objective
viewpoint.
not being financially dependent on a
client.
being an advocate for a client.
Chapter 4
(TCO 3) The financial interests of
which of the following parties would not be included as a direct financial
interest of the CPA? (Points: 3)
Dependent child
Relative supported by the CPA
Spouse
Sibling living in the same city as the
CPA
Chapter 4
(TCO 1) The phrase U.S. generally
accepted accounting principles is an accounting term that (Points: 3)
encompasses the conventions, rules,
and procedures necessary to define U.S. accepted accounting practice at a
particular time.
provides a measure of conventions,
rules, and procedures governed by the AICPA.
is included in the audit report to
indicate that the audit has been conducted in accordance with generally
accepted auditing standards (GAAS).
includes broad guidelines of general
application but not detailed practices and procedures.
Chapter 1
(TCO 1) Which of the following
statements best describes the ethical standard of the profession pertaining to
advertising and solicitation? (Points: 3)
A CPA may advertise in any manner that
is not false, misleading, or deceptive.
There are no prohibitions regarding
the manner in which CPAs may solicit new business.
All forms of advertising and
solicitation are prohibited.
A CPA may only solicit new clients
through mass mailings.
(TCO 3) The Sarbanes-Oxley Act applies
to which of the following companies? (Points : 3)
Privately held companies
All companies
All public companies and privately
held companies with assets greater than $500 million
Public companies
Chapter 1
Question 4. 4. (TCO 1) An operational
audit has as one of its objectives to (Points : 3)
make recommendations for improving
performance.
determine whether the financial
statements fairly present the entity’s operations.
evaluate the feasibility of attaining
the entity’s operational objectives.
report on the entity’s relative
success in attaining profit maximization.
Chapter 1
Question 5. 5. (TCO 1) Which of the
following services do not need to be preapproved by the audit committee of an
issuer? (Points : 3)
Nonaudit services related to internal
control over financial reporting
Tax services
Nonaudit services that are less than 5
% of total revenues from the audit client
Services provided by the auditor on a
recurring basis
Question 8. 8. (TCO 3) Several months
after an unqualified audit report was issued, the auditor discovered the financial
statements were materially misstated. The client’s CEO agrees that there are
misstatements, but refuses to correct them. She claims that confidentiality
prevents the CPA from informing anyone. (Points : 3)
The CEO is incorrect, but because the
audit report has been issued, it is too late.
The CEO is correct and the auditor
must maintain confidentiality.
The CEO is correct, but to be
ethically correct the auditor should violate the confidentiality rule and
disclose the error.
The CEO is incorrect, and the auditor
has an obligation to issue a revised audit report, even if the CEO will not
correct the financial statements.
Chapter 4
Question 9. 9. (TCO 1) Which of the
following terms identifies a requirement for audit evidence? (Points : 3)
Adequate
Disconfirming
Reasonable
Appropriate
Chapter 1
Question 10. 10. (TCO 1) The auditor
of an issuer may provide which of the following tax services? (Points : 3)
Tax services for immediate family
members of corporate officers
Tax planning services
Tax services for officers of the
issuer
Services related to confidential tax
transactions
(TCO 1) Jackson & Company, CPAs,
plan to audit the financial statements of Perigee Technologies, an issuer as
defined under the Sarbanes-Oxley Act of 2002. Which of the following situations
would impair Jackson’s independence? (Points : 3)
Discovering that Lowe, the chief
financial officer of Perigee, started his accounting career 10 years earlier as
a staff accountant for Jackson & Company and continues to maintain ties
with current partners at the firm
Provision of personal tax services to
Johnson, the accounts payable manager of Perigee
Audit of Perigee’s internal control is
performed contemporaneously with the annual financial statement audit
Preparation of Perigee’s routine
annual tax return, where Jackson’s fee will be calculated as a percentage of
the tax refund obtained
ACCT 444
Week 2 Quiz
Week 2 :
Auditor Legal Liability, Fraud, & Audit Objectives – Quiz
Question 1. 1. (TCO 4) To succeed in
an action against the auditor, the client must be able to show that (Points :
3)
the auditor was fraudulent.
the auditor was grossly negligent.
there was a written contract.
there is a close causal connection
between the auditor’s behavior and the damages suffered by the client.
Chapter 5, 6 & 7
(TCO 4) In connection with the audit
of financial statements, an independent auditor could be responsible for
failure to detect a material fraud if (Points : 3)
statistical sampling techniques were
not used on the audit engagement.
the auditor planned the audit in a
negligent manner.
accountants performing important parts
of the work failed to discover a close relationship between the treasurer and
the cashier.
the fraud was perpetrated by one
employee who circumvented the existing internal controls.
Question 2. 2. (TCO 4) The principal
issue to be resolved in cases involving alleged negligence is usually (Points :
3)
the amount of the damages suffered by
plaintiff.
whether to impose punitive damages on
the defendant.
the level of care exercised by the
CPA.
whether defendant was involved in
fraud.
Chapter 5, 6 & 7
(TCO 4) The principal issue to be
resolved in cases involving alleged negligence is usually (Points : 3)
the amount of the damages suffered by
plaintiff.
whether to impose punitive damages on
the defendant.
the level of care exercised by the
CPA.
whether defendant was involved in
fraud.
Question 3. 3. (TCO 4) While
performing services for their clients, professionals have a duty to provide a
level of care that is (Points : 3)
free from judgment errors.
superior.
greater than average.
reasonable.
Chapter 5
(TCO 4) A third-party beneficiary is
one that (Points : 3)
has failed to establish legal standing
before the court.
does not have privity of contract and
is unknown to the contracting parties.
does not have privity of contract, but
is known to the contracting parties and intended to benefit under the contract.
may establish legal standing before
the court after a contract has been consummated.
Chapter 5
Question 4. 4. (TCO 4) Tort actions
against CPAs are more common than breach of contract actions because (Points :
3)
there are more torts than contracts.
the burden of proof is on the auditor
rather than on the person suing.
the person suing need prove only
negligence.
the amounts recoverable are normally
larger.
Chapter 5
Question 5. 5. (TCO 4) The
responsibility for adopting sound accounting policies and maintaining adequate
internal control rests with the (Points : 3)
board of directors.
company management.
financial statement auditor.
company’s internal audit department.
Chapter 6
Question 6. 6. (TCO 3) Which of the
following is not one of the reasons that auditors provide only reasonable
assurance on the financial statements? (Points : 3)
The auditor commonly examines a
sample, rather than the entire population of transactions.
Accounting presentations contain
complex estimates, which involve uncertainty.
Fraudulently prepared financial
statements are often difficult to detect.
Auditors believe that reasonable
assurance is sufficient in the vast majority of cases.
Chapter 6
(TCO 3) Which of the following
statements is most correct regarding errors and fraud? (Points : 3)
An error is unintentional, whereas
fraud is intentional.
Frauds occur more often than errors in
financial statements.
Errors are always fraud and frauds are
always errors.
Auditors have more responsibility for
finding fraud than errors.
Question 7. 7. (TCO 3) Which of the
following is not one of the factors of the fraud triangle? (Points : 3)
Incentives/pressures
Attitudes/rationalization
Opportunities
Psychological make-up
Chapter 5 or 11
(TCO 3) In the fraud triangle,
fraudulent financial reporting and misappropriation of assets (Points : 3)
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