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Question(s) / Instruction(s):

16. (SOX)
medium     If the Public Company Accounting Oversight Board (PCAOB) identifies a violation during its inspection of a registered accounting firm, which of the following may occur?
     a.     The PCAOB could enforce some disciplinary action against the accounting firm.
     b.     The PCAOB could report the matter to the Securities and Exchange Commission.
     c.     The PCAOB could report the matter to the appropriate state accountancy board
     d.     The PCAOB could take any or all of the above steps if it identifies a violation.
     
17.
medium     Which of the following statements best describes the primary purpose of Statements on Auditing Standards?
     a.     They are guides intended to set forth auditing procedures which are applicable to a variety of situations.
     b.     They are procedural outlines which are intended to narrow the areas of inconsistency and divergence of auditor opinion.
     c.     They are authoritative statements, enforced through the Code of Professional Conduct, and are intended to limit the degree of auditor judgment.
     d.     They are interpretations which are intended to clarify the meaning of “generally accepted auditing standards.”
     
18.     Statements on Standards for Accounting and Review Services are issued by
medium     a.     the Accounting and Review Services Committee.
     b.     the Professional Ethics Executive Committee.
     c.     the Securities and Exchange Commission.
     d.     the Financial Accounting Standards Board.
     
19.
medium
     The third general standard states that due care is to be exercised in the performance of the examination. This standard should be interpreted to mean that a CPA who undertakes an engagement assumes a duty to perform
     a.     with reasonable diligence and without fault or error.
     b.     as a professional who will assume responsibility for losses consequent upon error of judgment.
     c.     to the satisfaction of the client and third parties who may rely upon it.
     d.     as a professional possessing the degree of skill commonly possessed by others in the field.
     
20.
medium     The auditor’s judgment concerning the overall fairness of presentation of financial position, results of operations, and changes in cash flow is applied within the framework of
     a.     quality control.
     b.     generally accepted auditing standards which include the concept of materiality.
     c.     the auditor’s evaluation of the audited company’s internal control.
     d.     generally accepted accounting principles.
     
21.
medium     A basic objective of a CPA firm is to provide professional services to conform to professional standards. Reasonable assurance of achieving this basic objective is provided through
     a.     continuing professional education.
     b.     compliance with generally accepted reporting standards.
     c.     a system of quality control.
     d.     a system of peer review.
     
22.
medium     Within the context of quality control, the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide firm personnel with
     a.     technical training that assures proficiency as an auditor.
     b.     professional education that is required in order to perform with due professional care.
     c.     knowledge required to fulfill assigned responsibilities and to progress within the firm.
     d.     knowledge required in order to perform a peer review.
     

23.
medium     Williams & Co., a member of the Private Companies Practice Section, is to have a “peer review.” The peer review can be performed by
     a.     a CPA firm selected by Williams & Co.
     b.     a review team selected by the American Institute of Certified Public Accountants.
     c.     a review team selected by the state society.
     d.     any of the above.
     
24.
medium
     Hansen Corporation’s stock is listed on a national stock exchange and registered with the Securities and Exchange Commission. Hansen’s management hires a CPA to perform an independent audit of Hansen’s financial statements. The primary objective of this audit is to provide assurance to the
     a.     investors in Hansen Corporation’s stock.
     b.     stock exchange.
     c.     Securities and Exchange Commission.
     d.     management of Hansen Corporation.
     
25.
medium
     International Standards on Auditing, issued by the International Auditing Practice Committee, are most similar to U.S.
a.     generally accepted accounting principles.
b.     rules of the AICPA Code of Professional Conduct.
c.     generally accepted auditing standards.
d.     interpretations of statements on auditing standards issued by the ASB.

26. (SOX)
challenging     If an auditor of a public company cannot find guidance issued by the PCAOB on a particular audit matter, the auditor should generally seek guidance from which of the following sources?
     a.     Statements on Auditing Standards.
     b.     Statements on Standards for Accounting and Review Services.
     c.     Regulations issued by the Securities and Exchange Commission.
     d.     The AICPA Code of Professional Conduct.
     
27.     Which of the following is not an essential component of quality control?
challenging
     a.     Policies and procedures to ensure that firm personnel are actively engaged in marketing strategies.
     b.     Policies and procedures to ensure that the work performed by firm personnel meet applicable professional standards.
     c.     Policies to ensure that personnel maintain their independence in fact and in appearance.
     d.     Policies that ensure that monitoring activities are effectively applied.
     
28.     The SEC requirements of greatest interest to CPAs are set forth in the SEC’s
challenging     a.     Regulation S-X and Accounting Series Releases.
     b.     S-1 through S-16 forms.
     c.     director’s newsletter.
     d.     forms 8-K, 10-K, and 10-Q.
     
29.
challenging     The AICPA has authority to establish standards and rules in all, but which of the following areas?
     a.     Auditing standards applicable to financial statements of private companies.
     b.     Compilation and review standards.
     c.     Professional conduct.
     d.     Legal responsibilities to 3rd parties who rely on financial statements.
     

30.
challenging     Which one of the following statements is not true with respect to an audit report issued for a private company’s financial statements?
     a.     The auditor’s report must state whether the client has provided adequate disclosure on the financial statements and in the accompanying notes.
     b.     The auditor’s report must disclose if GAAP was not consistently followed from the prior period to the current period.
     c.     The auditor’s report must state whether the financial statements were prepared with GAAP.
     d.     The auditor’s report must express an opinion on the financial statements taken as a whole, or explain why there is no opinion provided.
     
31.
challenging     Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) should be looked upon by practitioners as
     a.     ideals to work towards, but which are not achievable.
     b.     maximum standards which denote excellent work.
     c.     minimum standards of performance which must be achieved on each audit engagement.
     d.     benchmarks to be used on all audits, reviews, and compilations.
     
32.
challenging     Which one of the following is not a requirement for belonging to the Private Companies Practice Section of the American Institute of Certified Public Accountants?
     a.     Adherence to quality control standards.
     b.     Mandatory peer review.
     c.     Partner rotation on audits after a period of ten consecutive years.
     d.     Continuing education.
     
33.     Statements on Auditing Standards issued by the AICPA’s Auditing Standards Board are
challenging
     a.     part of the generally accepted auditing standards under the AICPA Code of Professional Conduct.
     b.     interpretations of generally accepted auditing standards under the AICPA Code of Professional Conduct, and departures from such statements must be justified.
     c.     interpretations of generally accepted auditing standards under the AICPA Code of Professional Conduct, and such statements must be followed in every engagement.
     d.     generally accepted auditing procedures that are not covered by the AICPA Code of Professional Conduct.

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