ACC 406 Exam 1 MC Practice || with Errorless Answers.
a. Which of the following best describes the relationship between assurance services and attest
services? correct answers Both attest and assurance services require independence.
b. Which of the following has primary responsibility for the fairness of the representations made
in financial statements? correct answers Client's management.
c. The most important benefit of having an annual audit by a public accounting firm is to: correct
answers Provide assurance to investors and other outsiders that the financial statements are
reliable.
d. The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB).
Which of the following is not one of the responsibilities of that board? correct answers Review
financial reports filed with the SEC.
e. Which of these organizations has the responsibility to perform inspections of auditors of public
companies? correct answers Public Company Accounting Oversight Board.
f. Governmental auditing, in addition to including audits of financial statements, often includes
audits of efficiency, effectiveness, and: correct answers Compliance
g. In general, internal auditors' independence will be greatest when they report directly to the:
correct answers Audit committee of the board of directors.
h. Which of the following did not precipitate the passage of the Sarbanes-Oxley Act of 2002 to
regulate public accounting firms: correct answers Ethical scandals at the AICPA.
i. Which of the following organizations establishes accounting standards for U.S. government
agencies? correct answers The Federal Accounting Standards Advisory Board.
,j. Which of the following is correct about forensic audits? correct answers Forensic audits are
usually performed in situations in which fraud has been found or is suspected.
k. What best describes the purpose of the auditors' consideration of internal control in a financial
statement audit for a nonpublic company? correct answers To determine the nature, timing, and
extent of audit testing.
l. Which of the following is an example of a compliance audit? correct answers An audit of a
company's policies and procedures for adhering to environmental laws and regulations.
The risk that a company will not be able to meet its commitments is referred to as: correct
answers business risk.
The CPA exam: correct answers has four sections
Which of the following is not an example of an assurance service? correct answers Preparation
of a tax return.
Which of the following is a type of attest engagement? correct answers Agreed-upon procedures.
The audit of an income tax return by an auditor of the Internal Revenue Service is considered a
(an): correct answers compliance audit.
Some of the following criteria are essential to satisfactory performance in several professions.
Which one is unique to audit work by CPAs? correct answers Independence
An effect of the Sarbanes-Oxley Act of 2002 was to: correct answers reduce the accounting
profession's level of self-regulation.
, Which of the following is an area in which the Public Company Accounting Oversight Board is
not empowered to establish or adopt standards? correct answers Accounting
Independent auditors of the year 1900 differed from the auditors of today in that auditors in 1900
were more concerned with: correct answers the accuracy of the balance sheet.
Senior auditors typically perform all of the following tasks, except: correct answers sign the
audit report.
An audit designed to detect violations of laws and regulations would be referred to as: correct
answers a compliance audit.
To improve the quality of financial statements filed with it, the SEC has adopted. correct answers
Regulation S-X.
Independent audits of today place more emphasis on sampling than did the audits of the 19th
century. correct answers True
The American Institute of Certified Public Accountants creates the CPA Exam, while individual
states issue CPA certificates and permits CPAs to practice. correct answers True
The GAO is limited by statute to performing only compliance audits. correct answers False
The SEC does not pass on the merits of the securities that are registered with the agency. correct
answers True
The American Institute of Certified Public Accountants has the primary authority to establish
accounting standards. correct answers False
a. Which of the following best describes the relationship between assurance services and attest
services? correct answers Both attest and assurance services require independence.
b. Which of the following has primary responsibility for the fairness of the representations made
in financial statements? correct answers Client's management.
c. The most important benefit of having an annual audit by a public accounting firm is to: correct
answers Provide assurance to investors and other outsiders that the financial statements are
reliable.
d. The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB).
Which of the following is not one of the responsibilities of that board? correct answers Review
financial reports filed with the SEC.
e. Which of these organizations has the responsibility to perform inspections of auditors of public
companies? correct answers Public Company Accounting Oversight Board.
f. Governmental auditing, in addition to including audits of financial statements, often includes
audits of efficiency, effectiveness, and: correct answers Compliance
g. In general, internal auditors' independence will be greatest when they report directly to the:
correct answers Audit committee of the board of directors.
h. Which of the following did not precipitate the passage of the Sarbanes-Oxley Act of 2002 to
regulate public accounting firms: correct answers Ethical scandals at the AICPA.
i. Which of the following organizations establishes accounting standards for U.S. government
agencies? correct answers The Federal Accounting Standards Advisory Board.
,j. Which of the following is correct about forensic audits? correct answers Forensic audits are
usually performed in situations in which fraud has been found or is suspected.
k. What best describes the purpose of the auditors' consideration of internal control in a financial
statement audit for a nonpublic company? correct answers To determine the nature, timing, and
extent of audit testing.
l. Which of the following is an example of a compliance audit? correct answers An audit of a
company's policies and procedures for adhering to environmental laws and regulations.
The risk that a company will not be able to meet its commitments is referred to as: correct
answers business risk.
The CPA exam: correct answers has four sections
Which of the following is not an example of an assurance service? correct answers Preparation
of a tax return.
Which of the following is a type of attest engagement? correct answers Agreed-upon procedures.
The audit of an income tax return by an auditor of the Internal Revenue Service is considered a
(an): correct answers compliance audit.
Some of the following criteria are essential to satisfactory performance in several professions.
Which one is unique to audit work by CPAs? correct answers Independence
An effect of the Sarbanes-Oxley Act of 2002 was to: correct answers reduce the accounting
profession's level of self-regulation.
, Which of the following is an area in which the Public Company Accounting Oversight Board is
not empowered to establish or adopt standards? correct answers Accounting
Independent auditors of the year 1900 differed from the auditors of today in that auditors in 1900
were more concerned with: correct answers the accuracy of the balance sheet.
Senior auditors typically perform all of the following tasks, except: correct answers sign the
audit report.
An audit designed to detect violations of laws and regulations would be referred to as: correct
answers a compliance audit.
To improve the quality of financial statements filed with it, the SEC has adopted. correct answers
Regulation S-X.
Independent audits of today place more emphasis on sampling than did the audits of the 19th
century. correct answers True
The American Institute of Certified Public Accountants creates the CPA Exam, while individual
states issue CPA certificates and permits CPAs to practice. correct answers True
The GAO is limited by statute to performing only compliance audits. correct answers False
The SEC does not pass on the merits of the securities that are registered with the agency. correct
answers True
The American Institute of Certified Public Accountants has the primary authority to establish
accounting standards. correct answers False
