Академический Документы
Профессиональный Документы
Культура Документы
Multiple-Choice Questions
1.
Which of the following is not one of the three main reasons why the auditor
should properly plan engagements?
a. To enable proper on-the-job training of employees.
b. To enable the auditor to obtain sufficient appropriate evidence.
c. To avoid misunderstandings with the client.
d. To help keep audit costs reasonable.
2.
Yes
No
Yes
No
3.
A measure of how willing the auditor is to accept that the financial statements
may be materially misstated after the audit is completed and an unqualified
opinion has been issued is the:
a. inherent risk.
b. acceptable audit risk.
c. statistical risk.
d. financial risk.
4.
A measure of the auditors assessment of the likelihood that there are material
misstatements in an account before considering the effectiveness of the
clients internal control is called:
a. control risk.
b. acceptable audit risk.
c. statistical risk.
d. inherent risk.
5.
a.
b.
c.
d.
6.
A lower assessment of
audit risk
Yes
No
Yes
No
The auditor is likely to accumulate more evidence when the audit is for a
company:
Which
has
amounts of debt
large
a.
b.
c.
d.
Yes
No
Yes
No
Yes
No
No
Yes
7.
8.
Initial audit planning involves four matters. Which of the following is not one of
these?
a. Develop an overall audit strategy.
b. Request that bank balances be confirmed.
c. Schedule engagement staff and audit specialists.
d. Identify the clients reason for the audit.
9.
Most auditors assess inherent risk as high for related parties and related-party
transactions because:
a. of the unique classification of related-party transactions required on the
balance sheet.
b. of the lack of independence between the parties.
c. of the unique classification of related-party transactions required on the
income statement.
d. it is required by generally accepted accounting principles.
10.
11.
A successor auditor may perform which of the following for a new audit client?
a.
b.
c.
d.
Speak to local
attorneys, banks and
other businesses
regarding the
companys reputation
Yes
No
Yes
No
12.
13.
14.
(SOX
)
The
The
The
The
clients
clients
clients
clients
management.
chief executive officer.
chief financial officer.
audit committee.
15.
16.
17.
d.
18.
One means of informing the client that the auditor is not responsible for the
discovery of all acts of fraud is the:
a. engagement letter.
b. representation letter.
c. responsibility letter.
d. client letter.
19.
Which of the following normally signs the engagement letter for an audit of a
public company?
a. Corporate treasurer.
b. Chief financial officer.
c. Chairman of the board of directors.
d. Audit committee.
20.
Which of the following normally signs the engagement letter for an audit of a
private company?
a. Management.
b. Board of directors representative.
c. Audit committee representative.
d. Corporate treasurer.
21.
22.
The least effective method of identifying related parties for a public company
would be a(n):
a. inquiry of management.
b. review of SEC filings.
c. distribution of the engagement letter to all stockholders.
d. examination of stockholders listings to identify principal stockholders.
23.
24.
25.
Which of the following is most likely to occur at the beginning of an initial audit
engagement?
a. Prepare a rough draft of the financial statements and of the auditors
report.
b. Study and evaluate the system of internal administrative control.
c. Determine the clients reason for an audit.
d. Consult with and review the work of the predecessor auditor prior to
discussing the
engagement with the client management.
26.
An
a.
b.
c.
d.
27.
The first standard of field work, which states that the work is to be adequately
planned and that assistants, if any, are to be properly supervised, recognizes
that:
a. early appointment of the auditor is advantageous to the auditor and the
client.
b. acceptance of an audit engagement after the close of the clients fiscal
year is generally not
permissible.
c. appointment of the auditor subsequent to the physical count of inventories
requires a
disclaimer of opinion.
d. performance of substantial parts of the examination is necessary at interim
dates.
28.
The corporate minutes are the official record of the meetings of the board of
directors and stockholders.
The minutes typically include authorizations
related to:
a.
b.
c.
d.
Management compensation
Yes
No
No
Yes
29.
An engagement letter sent to an audit client usually would not include a(n):
a. reference to the auditors responsibility for the detection of errors or
irregularities.
b. estimation of the time to be spent on the audit work by audit staff and
management.
c. statement that management advisory services would be made available
upon request.
d. reference to managements responsibility for the financial statements.
30.
a.
b.
c.
d.
32.
33.
34.
35.
d.
ensure the predecessor collects all unpaid fees prior to a change in auditor.
36.
37.
38.
Which of the following ratios is best used to assess a companys ability to meet
its long-term debt obligations?
a. Quick ratio.
b. Return on common equity.
c. Debt to equity.
d. Current ratio.
39.
40.
41.
42.
Which of the following would not usually be included in the minutes of the
board of directors?
a. The duties and powers of the corporate officers.
b. Declaration of dividends.
c. Authorization of long-term loans.
d. Approval of executive bonuses.
43.
44.
45.
46.
The first standard of fieldwork requires, in part, that audit work be properly
planned. Proper planning as intended by the first standard of fieldwork would
occur when the auditor:
a. physically observes the movement of securities already counted to guard
against the substitution of such securities for others that are not actually on
hand.
48.
a.
b.
c.
d.
49.
An auditor who accepts an audit engagement and does not possess the industry
expertise of the business entity should:
a. engage financial experts familiar with the nature of the business entity.
b. obtain a knowledge of matters that relate to the nature of the entitys
business.
c. refer a substantial portion of the audit to another CPA who will act as the
principal auditor.
d. first inform management that an unqualified opinion cannot be issued.
50.
51.
52.
a.
b.
c.
d.
53.
The financial
statements are the
responsibility of the
companys
management
Yes
No
Yes
No
56.
Yes
No
No
Yes
55.
A reference to GAAS
a.
b.
c.
d
54.
A reference to
GAAP
Yes
No
Yes
No
c.
d
Yes
No
No
Yes