ACCT303 Questions with Complete
Solutions
Which of the following is an area in which the Public Company Accounting Oversight Board is
not empowered to establish or adopt standards? Accounting.
Independent auditors of the year 1900 differed from the auditors of today in that auditors in 1900
were more concerned with: the accuracy of the balance sheet.
Senior auditors typically perform all of the following tasks, except: sign the audit report.
An audit designed to detect violations of laws and regulations would be referred to as: a
compliance audit.
To improve the quality of financial statements filed with it, the SEC has adopted.
Regulation S-X.
An audit report for a nonpublic company includes three sections: planning, internal control, and
reporting.
,T/F False
An audit report for a issuer refers to PCAOB standards rather than generally accepted auditing
standards.
T/F True
Compliance with generally accepted auditing standards is considered by the AICPA as ideal audit
performance rather than an attainable level for most audits.
T/F False
The pronouncements of the AICPA do not specify the percentage of purchase invoices to be
examined or other quantitative measures, but leave to the auditor's judgment the determination of
what constitutes sufficient appropriate audit evidence.
T/F True
Audits of financial statements by a CPA include obtaining evidence from sources outside the
client company as well as from internal sources.
T/F True
,Since all audits result in unmodified (unqualified) opinions, it is just an issue of what information
the auditors disclose in the financial statement notes.
T/F False
Professional standards permit a CPA firm to own shares of stock in corporations that they audit if
such stock holdings are not material.
T/F False
The Public Company Accounting Oversight Board performs inspections of CPA firms that audit
SEC registrants.
T/F True
The Public Company Accounting Oversight Board establishes auditing standards for the audits of
all companies.
T/F False
Quality control policies and procedures are necessary for large CPA firms, but not for small CPA
firms.
T/F False
, A peer review may be expected to analyze, to varying degrees, working papers for each attest
engagement performed by the CPA firm.
T/F False
Fraud is a term that is used to refer to intentional misstatements of financial statements.
T/F True
The auditors have a responsibility to design their audit to obtain reasonable assurance of
detecting material misstatements in the financial statements due to fraud or errors.
T/F True
An audit can be relied on to provide reasonable assurance of detecting noncompliance with laws
that have a material and direct effect on financial statement amounts and related disclosures.
T/F True
GAAP represents a financial reporting framework.
T/F True
Solutions
Which of the following is an area in which the Public Company Accounting Oversight Board is
not empowered to establish or adopt standards? Accounting.
Independent auditors of the year 1900 differed from the auditors of today in that auditors in 1900
were more concerned with: the accuracy of the balance sheet.
Senior auditors typically perform all of the following tasks, except: sign the audit report.
An audit designed to detect violations of laws and regulations would be referred to as: a
compliance audit.
To improve the quality of financial statements filed with it, the SEC has adopted.
Regulation S-X.
An audit report for a nonpublic company includes three sections: planning, internal control, and
reporting.
,T/F False
An audit report for a issuer refers to PCAOB standards rather than generally accepted auditing
standards.
T/F True
Compliance with generally accepted auditing standards is considered by the AICPA as ideal audit
performance rather than an attainable level for most audits.
T/F False
The pronouncements of the AICPA do not specify the percentage of purchase invoices to be
examined or other quantitative measures, but leave to the auditor's judgment the determination of
what constitutes sufficient appropriate audit evidence.
T/F True
Audits of financial statements by a CPA include obtaining evidence from sources outside the
client company as well as from internal sources.
T/F True
,Since all audits result in unmodified (unqualified) opinions, it is just an issue of what information
the auditors disclose in the financial statement notes.
T/F False
Professional standards permit a CPA firm to own shares of stock in corporations that they audit if
such stock holdings are not material.
T/F False
The Public Company Accounting Oversight Board performs inspections of CPA firms that audit
SEC registrants.
T/F True
The Public Company Accounting Oversight Board establishes auditing standards for the audits of
all companies.
T/F False
Quality control policies and procedures are necessary for large CPA firms, but not for small CPA
firms.
T/F False
, A peer review may be expected to analyze, to varying degrees, working papers for each attest
engagement performed by the CPA firm.
T/F False
Fraud is a term that is used to refer to intentional misstatements of financial statements.
T/F True
The auditors have a responsibility to design their audit to obtain reasonable assurance of
detecting material misstatements in the financial statements due to fraud or errors.
T/F True
An audit can be relied on to provide reasonable assurance of detecting noncompliance with laws
that have a material and direct effect on financial statement amounts and related disclosures.
T/F True
GAAP represents a financial reporting framework.
T/F True
