ACCT 162 Exam 1 Study Questions Complete. Guaranteed Grade A+

Document Content and Description Below

According to PCAOB Auditing Standard No. 5 (AS 5), the auditor should identify significant accounts and disclosures and their relevant assertions. Which of the following financial statement assert... ions is not explicitly identified in AS 5? Accuracy According to Rule 203, Accounting Principles, requires the auditor to adhere to official pronouncements except when adherence to a pronouncement would be misleading. According to Sarbanes-Oxley, the audit committee must pre-approve all audit and non-audit services. This can be done Case-by-case basis: Yes; Through established policies: Yes; Delegating the responsibility: No According to the ethical standards of the profession, which of the following acts is generally prohibited? Retaining client records after an engagement is terminated prior to completion and the client has demanded their return According to the ethical standards of the profession, which of the following acts is generally prohibited? Accepting a commission for recommending a product to an audit client According to the profession's ethical standards, an auditor would be considered independent in which of the following instances? The auditor's checking account that is fully insured by a federal agency is held at a client financial institution. The accounting, auditing, and investigating agency of the U.S. Congress, headed by the U.S. Comptroller General is known as the U.S. General Accountability Office (GAO). The AICPA Council has designated the following bodies to pronounce accounting principles under Rule 203, except the Auditing Procedures Board. All of the following are examples of procedures a firm can use to monitor its system of quality control except devoting sufficient resources to developing a system of quality control. All of the following statements are true regarding generally accepted auditing standards (GAAS) except departures from auditing standards that impose presumptively mandatory requirements on auditors are not permitted under any circumstances. As it relates to audit evidence, appropriateness refers to the quality of evidence gathered. Assurance is... -improving the quality of information -for decision makers Assurance services involve all of the following, except providing absolute rather than reasonable assurance. An attestation engagement is one in which a CPA is engaged to... issue, or does issue, a report on subject matter or an assertion about the subject matter that is the responsibility of another party. Attestation is... -a practitioner is engaged -to issue a report on subject matter or an assertion -that is the responsibility of another party An audit client hires a member of the audit engagement team to be its new controller. Sarbanes-Oxley rules require that the client find a new audit firm. Audit evidence is usually considered sufficient when there is enough quantity to afford a reasonable basis for an opinion on financial statements. The audit failures of both Enron and WorldCom were examples in which the leadership responsibilities for quality work within the accounting firm were overshadowed by fears that losing a key client would negatively impact individual auditors' performance evaluations. Auditing is... -systematic process of obtaining and evaluating evidence regarding assertions made by management The audit objective that all balances include all items that should be recorded in that account is related most closely to which one of the ASB balance assertions? Completeness The audit objective that all balances include items owned by the client is related most closely to which one of the ASB balance assertions? Rights and obligations The audit objective that all the transactions and accounts presented in the financial statements represent real assets, liabilities, revenues, and expenses is related most closely to which of the PCAOB assertions? Existence or occurrence The audit objective that all transactions and accounts that should be presented in the financial statements are in fact included is related to which of the PCAOB assertions? Completeness The audit objective that all transactions are recorded in the proper account is related most closely to which one of the ASB transaction assertions? Classification The audit objective that all transactions are recorded in the proper period is related most closely to which of the Audit Standards Board (ASB) transaction assertions? Cutoff The audit objective that footnotes in the financial statements should be clear and expressed such that the information is easily conveyed to the readers of the financial statements is related most closely with which of the ASB presentation and disclosure assertions? Understandability An audit of the financial statements of Camden Corporation is being conducted by external auditors. The external auditors are expected to give an opinion on the fair presentation of Camden's financial statements in conformity with the applicable financial reporting framework (e.g., GAAP, IFRS). An auditor has substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time because of negative cash flows and working capital deficiencies. Under these circumstances, the auditor would be most concerned about the possible effects on the entity's financial statements An auditor selected items for test counts from the client's warehouse during the physical inventory observation. The auditor then traced these test counts into the detailed inventory listing that ultimately agreed to the financial statements. This procedure most likely provided evidence concerning management's assertion of completeness. An auditor selected items from the client's detailed inventory listing (that agreed to the financial statements). During the physical inventory observation, the auditor then found each item selected and counted the number of units on hand. Assuming that the amount on hand was the same as the amount in the client's detailed inventory listing, this procedure most likely would provide evidence concerning management's assertion of existence The auditor's judgment concerning the overall fairness of the presentation of financial position, results of operations, and cash flows is applied within the framework of the applicable financial reporting framework (i.e., GAAP in the United States). The auditors' responsibility to express an opinion on the financial statements is explicitly represented in the introductory paragraph of the auditors' standard report. Auditors try to achieve independence in appearance in order to maintain public confidence in the profession. An auditor traces the serial numbers on equipment to a nonissuer's sub-ledger. Which of the following management assertions is supported by this test? Completeness Audit Quality Control -SQCS 8 - specifies six elements --Leadership 'tone' at the top --Compliance to relevant ethical requirements --Acceptance and continuance of engagements --Human resources --Engagement performance --Monitoring Based on Sarbanes-Oxley, who is ultimately responsible for the independence of the external auditor? The audit committee Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of professional skepticism. A client has omitted a significant disclosure from the financial statements. The auditor has asked the client to include the information, but the client refuses and claims the information is confidential. The position of the CPA should be that the information cannot be considered confidential if it is necessary to the completeness of the financial statements. The concept of _________ recognizes that a GAAS audit may fail to detect all material misstatements. reasonable assurance [Show More]

Last updated: 1 year ago

Preview 1 out of 62 pages