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15.1.1 The objective of the audit of GAAP-based financial statements is to
A. Make suggestions as to the form or content of the financial statements or to draft them in
whole or in part
B. Express an opinion on the fairness with which the statements present financial position,
results of operations, and cash flows in accordance with GAAP
C. Ensure adoption of sound accounting policies and the establishment and maintenance of
internal control
D. Express an opinion on the accuracy with which the statements present financial position,
results of operations, and cash flows in accordance with GAAP Correct Ans-B
15.1.2 Which of the following statements best describes the distinction between the auditor's
responsibilities and management's responsibilities?
A. Management has responsibility for maintaining and adopting sound accounting principles,
and the auditor has responsibility for internal control
B. Management has responsibility for the basic data underlying financial statements, and the
auditor has responsibility for drafting the financial statements
C. The auditor's responsibility is confined to the audited portion of the financial statements,
and managements's responsibility is confined to the unaudited portions
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D. The auditor's responsibility is confined to expressing an opinion, but the financial
statements remain the responsibility of management Correct Ans-D
15.1.3 The evaluation of fairness in determining the appropriate opinion to express should
include consideration of the qualitative aspects of the entity's accounting practices, including
whether
A. Indicators of possible bias exist in management's judgments
B. The accounting principles used are the most conservative available
C. Management and those charged with governance agree with all the standards used in the
reporting process
D. The auditor and management agree with all the standards used in the reporting process
Correct Ans-A
15.1.4 Which of the following best describes why an independent auditor is asked to express
an opinion on the fair presentation of financial statements?
A. It is difficult to prepare financial statements that fairly present a company's financial
position, results of operations and cash flows without the expertise of an independent
auditor
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B. It is management's responsibility to seek available independent aid in the appraisal of the
financial information shown in its financial statements
C. The opinion of an independent party is needed because a company may not be objective
with respect to its own financial statements
D. It is customary courtesy that all shareholders of a company receive an independent report
on management's stewardship in managing the affairs of the business Correct Ans-C
15.1.5 If a company's external auditor expresses an unmodified opinion as a result of the
audit of the company's financial statement's, readers of the audit report can assume that
A. The external auditor found no fraud
B. The company is financially sound and the financial statements are accurate
C. Internal control is effective
D. Material issues about the application of accounting principles were resolved to the
satisfaction of the auditor Correct Ans-D
15.1.6 A major purpose of the auditor's report on financial statements is to
A. Assure investors of the complete accuracy of the financial statements
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15.1.1 The objective of the audit of GAAP-based financial statements is to
A. Make suggestions as to the form or content of the financial statements or to draft them in
whole or in part
B. Express an opinion on the fairness with which the statements present financial position,
results of operations, and cash flows in accordance with GAAP
C. Ensure adoption of sound accounting policies and the establishment and maintenance of
internal control
D. Express an opinion on the accuracy with which the statements present financial position,
results of operations, and cash flows in accordance with GAAP Correct Ans-B
15.1.2 Which of the following statements best describes the distinction between the auditor's
responsibilities and management's responsibilities?
A. Management has responsibility for maintaining and adopting sound accounting principles,
and the auditor has responsibility for internal control
B. Management has responsibility for the basic data underlying financial statements, and the
auditor has responsibility for drafting the financial statements
C. The auditor's responsibility is confined to the audited portion of the financial statements,
and managements's responsibility is confined to the unaudited portions
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D. The auditor's responsibility is confined to expressing an opinion, but the financial
statements remain the responsibility of management Correct Ans-D
15.1.3 The evaluation of fairness in determining the appropriate opinion to express should
include consideration of the qualitative aspects of the entity's accounting practices, including
whether
A. Indicators of possible bias exist in management's judgments
B. The accounting principles used are the most conservative available
C. Management and those charged with governance agree with all the standards used in the
reporting process
D. The auditor and management agree with all the standards used in the reporting process
Correct Ans-A
15.1.4 Which of the following best describes why an independent auditor is asked to express
an opinion on the fair presentation of financial statements?
A. It is difficult to prepare financial statements that fairly present a company's financial
position, results of operations and cash flows without the expertise of an independent
auditor
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B. It is management's responsibility to seek available independent aid in the appraisal of the
financial information shown in its financial statements
C. The opinion of an independent party is needed because a company may not be objective
with respect to its own financial statements
D. It is customary courtesy that all shareholders of a company receive an independent report
on management's stewardship in managing the affairs of the business Correct Ans-C
15.1.5 If a company's external auditor expresses an unmodified opinion as a result of the
audit of the company's financial statement's, readers of the audit report can assume that
A. The external auditor found no fraud
B. The company is financially sound and the financial statements are accurate
C. Internal control is effective
D. Material issues about the application of accounting principles were resolved to the
satisfaction of the auditor Correct Ans-D
15.1.6 A major purpose of the auditor's report on financial statements is to
A. Assure investors of the complete accuracy of the financial statements
