Auditing Exam 1 Chapters 1-6 Questions
and Verified Correct Answers
Business Risk answer - Risk associated with a company's survival and profitability
Information Risk answer - Risk that information used to assess business risk is not accurate
Assurance Service answer - Used to describe the broad range of information enhancement
services that are provided by CPA
Attestation Service answer - To attest to information means to provide assurance as to its
reliability
ASB: Auditing Standards Board answer - Responsibility for issuing official pronouncements on
auditing matters.
AICPA: America Institute of Certified Public Accountant answer - National organization of CPAs
FASB: Financial Accounting Standards Board answer - Body designated to establish accounting
standards for entities other than state and local governments.
GAO: Government Accountability Office answer - The audit arm of Congress.
FASAB: Federal Accounting Standards Advisory Board answer - Body designated to establish
accounting standards for the federal government.
, GASB: Governmental Accounting Standards Board answer - Body designated to establish
accounting standards for state and local governments
SEC: Security and Exchange Commission answer - Administers the Securities Acts.
Government Accountability Office Auditors answer - The work of GAO auditors includes
compliance, operational, and financial audits
Internal Revenue Agents answer - The Internal Revenue Service is responsible for enforcement
of the federal tax laws. (Compliance)
Audit risk answer - Risk that the auditors may unknowingly fail to appropriately modify the
opinion on financial statements that are materially misstated, is at an acceptable low level.
Errors answer - An unintentional misstatements or omissions of amounts or disclosure in the
financial statements
Frauds answer - Relates to intentional acts that cause a misstatement of the financial
statements
Misstatements due to fraud may occur due to either answer - (1) Fraudulent financial reporting
or
(2) Misappropriation of assets (also referred to as defalcation")
Financial statements may be misstated answer - due to various causes, including errors, fraud,
and noncompliance with certain laws and regulations
and Verified Correct Answers
Business Risk answer - Risk associated with a company's survival and profitability
Information Risk answer - Risk that information used to assess business risk is not accurate
Assurance Service answer - Used to describe the broad range of information enhancement
services that are provided by CPA
Attestation Service answer - To attest to information means to provide assurance as to its
reliability
ASB: Auditing Standards Board answer - Responsibility for issuing official pronouncements on
auditing matters.
AICPA: America Institute of Certified Public Accountant answer - National organization of CPAs
FASB: Financial Accounting Standards Board answer - Body designated to establish accounting
standards for entities other than state and local governments.
GAO: Government Accountability Office answer - The audit arm of Congress.
FASAB: Federal Accounting Standards Advisory Board answer - Body designated to establish
accounting standards for the federal government.
, GASB: Governmental Accounting Standards Board answer - Body designated to establish
accounting standards for state and local governments
SEC: Security and Exchange Commission answer - Administers the Securities Acts.
Government Accountability Office Auditors answer - The work of GAO auditors includes
compliance, operational, and financial audits
Internal Revenue Agents answer - The Internal Revenue Service is responsible for enforcement
of the federal tax laws. (Compliance)
Audit risk answer - Risk that the auditors may unknowingly fail to appropriately modify the
opinion on financial statements that are materially misstated, is at an acceptable low level.
Errors answer - An unintentional misstatements or omissions of amounts or disclosure in the
financial statements
Frauds answer - Relates to intentional acts that cause a misstatement of the financial
statements
Misstatements due to fraud may occur due to either answer - (1) Fraudulent financial reporting
or
(2) Misappropriation of assets (also referred to as defalcation")
Financial statements may be misstated answer - due to various causes, including errors, fraud,
and noncompliance with certain laws and regulations
