Auditing Mid-term ACC-491
True - ANS-The American Institute of Certified Public Accountants creates the CPA Exam, while
individual states issue CPA certificates and permits CPAs to practice
True - ANS-The SEC does not pass on the merits of the securities that are registered with the
agency
False - ANS-Despite the high cost, most small companies have their financial statements
audited by a CPA firm, so they can obtain a loan
False - ANS-The Sarbanes-Oxley Act requires that auditors of certain publicly traded companies
in the United States perform an integrated audit that includes providing assurance on both the
financial statements and on compliance with laws and regulations
True - ANS-Auditing is frequently only a small part of the practice of local CPA firms
Agreed-upon procedures report - ANS-A summary of findings rather than assurance is most
likely to be included in a(n):
Business risk - ANS-The risk associated with survivability and profitability is referred to as
Financial Accounting Standards Board - ANS-Accountants are regulated by a variety of
organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Develop accounting standards for public and nonpublic companies?
Government Accounting Standards Board - ANS-Accountants are regulated by a variety of
organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Formed to improve standards of financial accounting for state and local government entities?
Federal Accounting Standards Advisory Board - ANS-Accountants are regulated by a variety of
organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Develop accounting standards for the U.S. Government?
, Public Company Accounting Oversight Board - ANS-Accountants are regulated by a variety of
organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Issue auditing standards for public companies?
American Institute of Certified Public Accountants - ANS-Accountants are regulated by a variety
of organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Prepares the CPA exam?
State Boards of Accountancy - ANS-Accountants are regulated by a variety of organizations.
Match the following statements with the most directly related organizations. Organizations may
be used once or not at all.
Issue CPA certificates?
False - ANS-For a public company audit, the auditors are primarily responsible for preparing the
financial statements and expressing an opinion on whether they follow generally accepted
auditing standards.
True - ANS-Partners in CPA firms usually have the responsibility for signing the firm's name on
the audit report.
False - ANS-A peer review is generally performed by employees of the AICPA.
False - ANS-If the auditors discover illegal acts by a client, they must immediately report the act
to law enforcement.
True - ANS-The pronouncements of the International Auditing and Assurance Standards Board
do not override the national auditing standards of its members, even when financial statements
are issued by a multinational company.
Option B - ANS-An audit provides reasonable assurance of detecting which of the following
types of material illegal acts?
Direct Effect Without a Direct Effect
A. Yes Yes
B. Yes No
C. No Yes
D. No No
True - ANS-The American Institute of Certified Public Accountants creates the CPA Exam, while
individual states issue CPA certificates and permits CPAs to practice
True - ANS-The SEC does not pass on the merits of the securities that are registered with the
agency
False - ANS-Despite the high cost, most small companies have their financial statements
audited by a CPA firm, so they can obtain a loan
False - ANS-The Sarbanes-Oxley Act requires that auditors of certain publicly traded companies
in the United States perform an integrated audit that includes providing assurance on both the
financial statements and on compliance with laws and regulations
True - ANS-Auditing is frequently only a small part of the practice of local CPA firms
Agreed-upon procedures report - ANS-A summary of findings rather than assurance is most
likely to be included in a(n):
Business risk - ANS-The risk associated with survivability and profitability is referred to as
Financial Accounting Standards Board - ANS-Accountants are regulated by a variety of
organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Develop accounting standards for public and nonpublic companies?
Government Accounting Standards Board - ANS-Accountants are regulated by a variety of
organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Formed to improve standards of financial accounting for state and local government entities?
Federal Accounting Standards Advisory Board - ANS-Accountants are regulated by a variety of
organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Develop accounting standards for the U.S. Government?
, Public Company Accounting Oversight Board - ANS-Accountants are regulated by a variety of
organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Issue auditing standards for public companies?
American Institute of Certified Public Accountants - ANS-Accountants are regulated by a variety
of organizations. Match the following statements with the most directly related organizations.
Organizations may be used once or not at all.
Prepares the CPA exam?
State Boards of Accountancy - ANS-Accountants are regulated by a variety of organizations.
Match the following statements with the most directly related organizations. Organizations may
be used once or not at all.
Issue CPA certificates?
False - ANS-For a public company audit, the auditors are primarily responsible for preparing the
financial statements and expressing an opinion on whether they follow generally accepted
auditing standards.
True - ANS-Partners in CPA firms usually have the responsibility for signing the firm's name on
the audit report.
False - ANS-A peer review is generally performed by employees of the AICPA.
False - ANS-If the auditors discover illegal acts by a client, they must immediately report the act
to law enforcement.
True - ANS-The pronouncements of the International Auditing and Assurance Standards Board
do not override the national auditing standards of its members, even when financial statements
are issued by a multinational company.
Option B - ANS-An audit provides reasonable assurance of detecting which of the following
types of material illegal acts?
Direct Effect Without a Direct Effect
A. Yes Yes
B. Yes No
C. No Yes
D. No No
