ACCT 3222-3, Wiley, LSU, Exam 1
Questions And Answers
Audit bServices b- bcorrect banswers✔✔services bby ban bindependent bCPA bthat bprovide
bfinancial bstatement busers bwith b(1) ban bopinion bon bwhether bthe bfinancial bstatements
bare bpresented bfairly, bin ball bmaterial brespects, bin baccordance bwith ban bapplicable
bfinancial breporting bframework band b(2) ban bopinion bon bthe beffectiveness bof bICFR,
bwhich benhance bthe bdegree bof bconfidence bthat bintended busers bcan bplace bin bthe
bfinancial bstatements
Attestation bServices b- bcorrect banswers✔✔Services bperformed bwhen ban
bindependent bpractitioner, bor bCPA, bis bengaged bto bissue ba breport bon bsubject
bmatter bthat bis bthe bresponsibility bof banother bparty
Relationship bof bassurance, battestation, band bauditing bservices bfrom bmost bto bleast
bimproved bof bquality b(i.e., bassurance) b- bcorrect banswers✔✔Audit b- bhighest
bquality/reasonable bassurance b(i.e., bhistorical bfinancial bstatements)
Attestation b- bmid bquality/limited bassurance b(i.e., breview bof bhistorical bfinancial
bstatements, bexamination bof binternal bcontrols, breview bof bfinancial bforecast)
Assurance b- blowest bquality b(i.e., bcompilation bof bhistorical bfinancial bstatements,
bwebsite bsecurity, bIT boperations, bnon-financial binformation)
Assurance bServices b- bcorrect banswers✔✔independent bprofessional bservices bthat
bimprove bthe bquality bof binformation, bor bits bcontext, bfor bdecision bmakers
Applicable bfinancial breporting bframework brefers bto b- bcorrect banswers✔✔the bset bof
bstandards bused bin bpreparing bthe bhistorical bfinancial bstatements b(i.e., bGAAP, bIFRS,
bor bfederal bincome btax bbasis bof baccounting)
Independent bimplies bthat bthe bservice bis bperformed bby b- bcorrect
banswers✔✔someone bwho bwas bnot binvolved bwith bthe bcreation bof bthe binformation
band bwho bis bobjective bin bthe bevaluation bof bthe binformation
Quality brefers bto b- bcorrect banswers✔✔the brelevance band brealiability bof bthe
binformation
Information brefers bto b- bcorrect banswers✔✔subject bmatter bthat bcan bbe bfinancial bor
bnonfinancial, bhistorical bor bprospective, bstandalone bdata bor bentire bsystems bof bdata,
binternal bor bexternal bto ba bcompany
,CPAs bare bthe bonly b_________ baccounting bprofessionals bin bthe bUS band bthe
b________ bare bissued bat bthe b____________ blevel b- bcorrect banswers✔✔Licensed
baccounting bprofessionals bin bthe bUS.
Licenses bare bissued bat bthe bstate blevel, bnot bfederal
A bstate bboard bof baccountancy bwill bonly bissue b- bcorrect banswers✔✔a blicence bto
bpractice bafter ball bthree bEs bhave bbeen bearned
CPA bEs b- bcorrect banswers✔✔Education, bExam, band bExperience
Public bcompanies, bor bissuers, bin bthe bUS bare brequired bby bfederal bgovernment bto
bhave b- bcorrect banswers✔✔an bannual bfinancial bstatement baudit band ban bICFR
baudit
Private bcompanies, bor bnon-issuers, bare b_______ bto bhave ban bannual baudit bby
bfederal bgovernment, bbut b- bcorrect banswers✔✔Not brequired bby blaw, bother
binterested busers bmay brequest baudited bfinancial bstatements b(i.e., blenders)
ICFR b- bcorrect banswers✔✔Internal bControl bover bFinancial bReporting
Integrated bAudit b- bcorrect banswers✔✔An baudit bthat bcombines bthe bfinancial
bstatement baudit bwith ban baudit bof bthe beffectiveness bof bICFR
The blimitations bof ban baudit bare bcause bby b- bcorrect banswers✔✔1. bthe bnature bof
bfinancial breporting
2. bthe bnature bof baudit bprocedures
3. bthe bneed bfor bthe baudit bto bbe bconducted bwithin ba breasonable bperiod bof btime bat
ba breasonable bcost
The bnature bof bfinancial breporting brefers bto b- bcorrect banswers✔✔the buse bof
bjudgment bwhen bpreparing bfinancial bstatements bdue bto bthe bsubjectivity brequired
bwhen barriving bat baccounting bestimates band bjudgment brequired bwhen bselecting
band bapplying baccounting bmethods
The bnature bof baudit bprocedures brefers bto b- bcorrect banswers✔✔Reliance bon
bevidence bprovided bby bthe bclient band bits bmanagements, bas bwell bas bthe bconcept
bof bmateriality
Materiality b- bcorrect banswers✔✔the bability bof binformation bto binfluence bdecisions
bthat busers bmake bon bthe bbasis bof bthe bfinancial binformation bof ba bspecific breporting
bentity
Compliance bAudit b- bcorrect banswers✔✔an baudit bto bdetermine bwhether bthe bentity
bhas bconformed bwith bregulations, brules, bor bprocesses
, Operational b(Performance) bAudit b- bcorrect banswers✔✔An bassessment bof bthe
beconomy, befficiency, band beffectiveness bof ban borganization's boperations
Operational bAudit beconomy, befficiency, band beffectiveness brefer bto b- bcorrect
banswers✔✔Economy brefers bto bthe bcost bof binputs
Efficiency brefers bto bthe brelationship bbetween binputs band boutputs
Effectiveness brefers bto bthe bachievement bof bcertain bgoals bor bthe bproduction bof ba
bcertain blevel bof boutputs
Internal bAudit b- bcorrect banswers✔✔A bfunction bwithin ban bentity bwhich bgenerally
bevaluates band bimproves brisk bmanagement, binternal bcontrol bprocedures, band
belements bof bthe bgovernance bprocess
Those bcharged bwith bgovernance b- bcorrect banswers✔✔Persons bwith bresponsibility
bfor boverseeing bthe bstrategic bdirection bof bthe bentity band bthe bobligations brelated bto
bthe baccountability bof bthe bentity
The bexternal bauditor bmay brely bon bthe bwork bdone bby b- bcorrect banswers✔✔Internal
bauditors bwhen bevaluating bthe bevidence bneeded bto bform ban bopinion bon bthe
bfinancial bstatements bor bon bICFR
Financial bStatement bUsers binclude b- bcorrect banswers✔✔Investors, bsuppliers,
bcustomers, blenders, bemployees, bgovernments, band bthe bgeneral bpublic
Sources bof bdemand bfor baudit band bassurance bservices b- bcorrect
banswers✔✔Remoteness b(users bdo bnot bhave baccess bto bthe bcompany)
Complexity b(amounts baffected bby bsignificant bestimates brequiring bknowledge band
bexperience bto bevaluate)
Competing bincentives b(determine bbiased binformation)
Reliability
Management bis bresponsible bfor b- bcorrect banswers✔✔1. bEnsuring bthe binformation
bincluded bin bthe bfinancial bstatements bis bpresented bfairly band bcomplies bwith bthe
bapplicable bfinancial breporting bframeowrk
2. bDesigning, bimplementing, band bmaintaining binternal bcontrol brelevant bto bthe
bpreparation band bfair bpresentation bof bthe bfinancial bstatements
3. bProviding bthe bauditor bwith baccess bto ball brecords, bdocumentation, band bpersonnel
brelevant bto bthe bpreparation band bfair bpresentation bof bthe bfinancial bstatements, band
bany badditional binformation bthe bauditors bmay bconsider brelevant bto bcomplete bthe
baudit
Also, bmgmt bis bresponsible bfor bmaking bestimates bfor bsome bf/s bitems band bselecting
bappropriate baccounting bpolicies bwithin bthe bapplicable bfinancial breporting bframework
Auditors bare bresponsible bfor b- bcorrect banswers✔✔1. bConducting bthe baudit bin
baccordance bwith bthe bappropriate bauditing bstandards
2. bPlanning band bperforming bthe baudit bwith bprofessional bskepticism
Questions And Answers
Audit bServices b- bcorrect banswers✔✔services bby ban bindependent bCPA bthat bprovide
bfinancial bstatement busers bwith b(1) ban bopinion bon bwhether bthe bfinancial bstatements
bare bpresented bfairly, bin ball bmaterial brespects, bin baccordance bwith ban bapplicable
bfinancial breporting bframework band b(2) ban bopinion bon bthe beffectiveness bof bICFR,
bwhich benhance bthe bdegree bof bconfidence bthat bintended busers bcan bplace bin bthe
bfinancial bstatements
Attestation bServices b- bcorrect banswers✔✔Services bperformed bwhen ban
bindependent bpractitioner, bor bCPA, bis bengaged bto bissue ba breport bon bsubject
bmatter bthat bis bthe bresponsibility bof banother bparty
Relationship bof bassurance, battestation, band bauditing bservices bfrom bmost bto bleast
bimproved bof bquality b(i.e., bassurance) b- bcorrect banswers✔✔Audit b- bhighest
bquality/reasonable bassurance b(i.e., bhistorical bfinancial bstatements)
Attestation b- bmid bquality/limited bassurance b(i.e., breview bof bhistorical bfinancial
bstatements, bexamination bof binternal bcontrols, breview bof bfinancial bforecast)
Assurance b- blowest bquality b(i.e., bcompilation bof bhistorical bfinancial bstatements,
bwebsite bsecurity, bIT boperations, bnon-financial binformation)
Assurance bServices b- bcorrect banswers✔✔independent bprofessional bservices bthat
bimprove bthe bquality bof binformation, bor bits bcontext, bfor bdecision bmakers
Applicable bfinancial breporting bframework brefers bto b- bcorrect banswers✔✔the bset bof
bstandards bused bin bpreparing bthe bhistorical bfinancial bstatements b(i.e., bGAAP, bIFRS,
bor bfederal bincome btax bbasis bof baccounting)
Independent bimplies bthat bthe bservice bis bperformed bby b- bcorrect
banswers✔✔someone bwho bwas bnot binvolved bwith bthe bcreation bof bthe binformation
band bwho bis bobjective bin bthe bevaluation bof bthe binformation
Quality brefers bto b- bcorrect banswers✔✔the brelevance band brealiability bof bthe
binformation
Information brefers bto b- bcorrect banswers✔✔subject bmatter bthat bcan bbe bfinancial bor
bnonfinancial, bhistorical bor bprospective, bstandalone bdata bor bentire bsystems bof bdata,
binternal bor bexternal bto ba bcompany
,CPAs bare bthe bonly b_________ baccounting bprofessionals bin bthe bUS band bthe
b________ bare bissued bat bthe b____________ blevel b- bcorrect banswers✔✔Licensed
baccounting bprofessionals bin bthe bUS.
Licenses bare bissued bat bthe bstate blevel, bnot bfederal
A bstate bboard bof baccountancy bwill bonly bissue b- bcorrect banswers✔✔a blicence bto
bpractice bafter ball bthree bEs bhave bbeen bearned
CPA bEs b- bcorrect banswers✔✔Education, bExam, band bExperience
Public bcompanies, bor bissuers, bin bthe bUS bare brequired bby bfederal bgovernment bto
bhave b- bcorrect banswers✔✔an bannual bfinancial bstatement baudit band ban bICFR
baudit
Private bcompanies, bor bnon-issuers, bare b_______ bto bhave ban bannual baudit bby
bfederal bgovernment, bbut b- bcorrect banswers✔✔Not brequired bby blaw, bother
binterested busers bmay brequest baudited bfinancial bstatements b(i.e., blenders)
ICFR b- bcorrect banswers✔✔Internal bControl bover bFinancial bReporting
Integrated bAudit b- bcorrect banswers✔✔An baudit bthat bcombines bthe bfinancial
bstatement baudit bwith ban baudit bof bthe beffectiveness bof bICFR
The blimitations bof ban baudit bare bcause bby b- bcorrect banswers✔✔1. bthe bnature bof
bfinancial breporting
2. bthe bnature bof baudit bprocedures
3. bthe bneed bfor bthe baudit bto bbe bconducted bwithin ba breasonable bperiod bof btime bat
ba breasonable bcost
The bnature bof bfinancial breporting brefers bto b- bcorrect banswers✔✔the buse bof
bjudgment bwhen bpreparing bfinancial bstatements bdue bto bthe bsubjectivity brequired
bwhen barriving bat baccounting bestimates band bjudgment brequired bwhen bselecting
band bapplying baccounting bmethods
The bnature bof baudit bprocedures brefers bto b- bcorrect banswers✔✔Reliance bon
bevidence bprovided bby bthe bclient band bits bmanagements, bas bwell bas bthe bconcept
bof bmateriality
Materiality b- bcorrect banswers✔✔the bability bof binformation bto binfluence bdecisions
bthat busers bmake bon bthe bbasis bof bthe bfinancial binformation bof ba bspecific breporting
bentity
Compliance bAudit b- bcorrect banswers✔✔an baudit bto bdetermine bwhether bthe bentity
bhas bconformed bwith bregulations, brules, bor bprocesses
, Operational b(Performance) bAudit b- bcorrect banswers✔✔An bassessment bof bthe
beconomy, befficiency, band beffectiveness bof ban borganization's boperations
Operational bAudit beconomy, befficiency, band beffectiveness brefer bto b- bcorrect
banswers✔✔Economy brefers bto bthe bcost bof binputs
Efficiency brefers bto bthe brelationship bbetween binputs band boutputs
Effectiveness brefers bto bthe bachievement bof bcertain bgoals bor bthe bproduction bof ba
bcertain blevel bof boutputs
Internal bAudit b- bcorrect banswers✔✔A bfunction bwithin ban bentity bwhich bgenerally
bevaluates band bimproves brisk bmanagement, binternal bcontrol bprocedures, band
belements bof bthe bgovernance bprocess
Those bcharged bwith bgovernance b- bcorrect banswers✔✔Persons bwith bresponsibility
bfor boverseeing bthe bstrategic bdirection bof bthe bentity band bthe bobligations brelated bto
bthe baccountability bof bthe bentity
The bexternal bauditor bmay brely bon bthe bwork bdone bby b- bcorrect banswers✔✔Internal
bauditors bwhen bevaluating bthe bevidence bneeded bto bform ban bopinion bon bthe
bfinancial bstatements bor bon bICFR
Financial bStatement bUsers binclude b- bcorrect banswers✔✔Investors, bsuppliers,
bcustomers, blenders, bemployees, bgovernments, band bthe bgeneral bpublic
Sources bof bdemand bfor baudit band bassurance bservices b- bcorrect
banswers✔✔Remoteness b(users bdo bnot bhave baccess bto bthe bcompany)
Complexity b(amounts baffected bby bsignificant bestimates brequiring bknowledge band
bexperience bto bevaluate)
Competing bincentives b(determine bbiased binformation)
Reliability
Management bis bresponsible bfor b- bcorrect banswers✔✔1. bEnsuring bthe binformation
bincluded bin bthe bfinancial bstatements bis bpresented bfairly band bcomplies bwith bthe
bapplicable bfinancial breporting bframeowrk
2. bDesigning, bimplementing, band bmaintaining binternal bcontrol brelevant bto bthe
bpreparation band bfair bpresentation bof bthe bfinancial bstatements
3. bProviding bthe bauditor bwith baccess bto ball brecords, bdocumentation, band bpersonnel
brelevant bto bthe bpreparation band bfair bpresentation bof bthe bfinancial bstatements, band
bany badditional binformation bthe bauditors bmay bconsider brelevant bto bcomplete bthe
baudit
Also, bmgmt bis bresponsible bfor bmaking bestimates bfor bsome bf/s bitems band bselecting
bappropriate baccounting bpolicies bwithin bthe bapplicable bfinancial breporting bframework
Auditors bare bresponsible bfor b- bcorrect banswers✔✔1. bConducting bthe baudit bin
baccordance bwith bthe bappropriate bauditing bstandards
2. bPlanning band bperforming bthe baudit bwith bprofessional bskepticism
