Auditing Final Exam 2024 With Complete Solution

a high but not absolute level of assurance is called answer: - reasonable assurance an audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a answer: - compliance audit an examination of part of an organization's procedures and methods for the purpose of evaluating efficency and effectiveness is what type of audit answer: - operational audit auditors do not provide which of the following answer: - absolute assurance on the financial statements including assuming responsibility for them recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called answer: - accounting the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and some established criteria is defined as answer: - auditing the possibility that a business may not be able to repay a bank loan because of an economic downturn is referred to as answer: - business risk the trait that distinguishes auditors from accountants is the answer: - auditor's expertise in the accumulation and the interpretation of audit evidence the use of the certified public accountant title is regulated by answer: - state law through the licensing departments of each state three common types of attestation services are answer: - audits of historical financial statements, reviews of historical financial statements, and audits of internal control over financial reporting which of the following audits can be regarded as generally being a compliance audit answer: - IRS agents' examination of taxpayer returns which of the following is considered audit evidence answer: - oral statements made by management, written communications, auditor observations Y Y Y which of the following services provides the lowest level of assurance on a financial statement answer: - review which one of the following is more difficult to evaluate objectively answer: - efficiency and effectiveness of operations which type of auditor audits the financial information prepared by various federal government agencies before it is submitted to congress answer: - GAO auditor historically, auditing standards have been organized into theree categories, including answer: - standards of field work how often is the AICPA peer review program performed of an AICPA member CPA firm administered by a state CPA Society under the overall direction of the AICPA peer review board answer: - every 3 years in order to properly plan and perform an audit, an important fact for both the auditor and the client to understand is that answer: - management is responsible for the preparation of the financial statements in which type of service does the cpa assemble the financial statements but provide no assurance to third parties answer: - compilation statements on standards for accounting and review services SSARS are issued by the answer: - accounting and review services committee the aicpa principles and the auditing standards should be viewed by practitioners as answer: - minimum standards of performance that must be achieved on each audit engagement the legal right to perform audits is granted to a cpa firm by regulation of answer: - each state the method used by a cpa firm to ensure that the firm meets its professional responsibilities to clients and others is answer: - quality control the organization that is responsible for providing oversight for auditors of public companies is called the answer: - public company accounting oversight board the purpose of establishing quality control policies and procedures to accept or continue a client relationship is to answer: - minimize the likelihood of associating with a client whose management may lack integrity when assessing the risk of material misstatements in the financial statements answer: - the auditor must understand the client's business and industry which of the following is a correct statement regarding the SEC answer: - the SEC has the power to establish rules for any CPA associated with audited financial statements submitted to the commission which staff level in a cpa firm manages the overall relationship with the client and manages the audit in general answer: - the audit manager who is responsible for establishing auditing standards for privately held companies answer: - auditing standards board _____ is an attitude that includes a questioning mind, being alter to conditions that might indicate possible mistatements due to fraud or error, and a critical assessment of audit evidence answer: - professional skepticism a misstatement in the financial statements can be considered material if knowledge of the misstatement will affect a decision of answer: - a reasonable user of the financial statements a qualified opinion can be issued for which of the following? I when a limitation on the scope of the audit has occured II when the auditor lacks independence III when generally accepted accounting principles have not been used answer: - I and III A restriction on the scope of the auditor's examination requires answer: - a qualifying paragraph preceding the opinion paragraph after the balance sheet date but prior to issuance of the auditor's report the auditor learns that the client's facility in a foreign country has been expropriated. management refused to disclose this information in a financial statement footnote or present pro-forma data as to the effect of the event. the auditor should answer: - provide the information in the report and modify the opinion all of the following are causes for the addition of an emphasis of a matter paragraph under both aicpa and pcaob standards except for answer: - reports involving other auditors an adverse opinion is issued when the auditor believes answer: - the overall financial statements are so materially misstated that they do not present fairly the financial position or results of operations and cash flows in conformity iwth GAAP