Auditing - D215 UPDATED Exam Questions
and CORRECT Answers
Identify a service that falls under audit services.
Compilation of historical financial statements
Review of financial forecast
Examination of historical financial statements
Inspection of website security - CORRECT ANSWER - Examination of historical
financial statements
Examination of internal controls is a service that comes under _______ services, which fall
under _______ services.
assurance; attestation
attestation; assurance
attestation; audit
acceptable; assurance - CORRECT ANSWER - attestation; assurance
Attestation services (under the umbrella of assurance services) include review of historical
financial statements, review of financial forecast, and examination of internal control.
Within a U.S. context, the applicable financial reporting framework is typically _______.
American Accounting Association (AAA)
Internationl Auditing and Assurance Standards Board (IAASB)
Generally Accepted Accounting Principles (GAAP)
Financial Accounting Standards Board (FASB) - CORRECT ANSWER - Generally
Accepted Accounting Principles (GAAP)
Which two audits does an integrated audit combine?
A compliance audit and an audit of the effectiveness of Internal Control Over Financial
Reporting (ICFR)
,A financial statement audit and a compliance audit
A financial statement audit and an audit of the effectiveness of Internal Control Over Financial
Reporting (ICFR)
A performance audit and an environmental audit - CORRECT ANSWER - A financial
statement audit and an audit of the effectiveness of Internal Control Over Financial Reporting
(ICFR)
Who among the following users of the financial statement of a company may be particularly
interested in evaluating whether the company is paying a fair amount of taxes given its reported
earnings, and to gain a better understanding of the company's activities?
government
employees
general pubic
customers - CORRECT ANSWER - government
Since users of financial statements make financial decisions that have real consequences, it is
very important that users can depend on the information contained in the financial statements.
What term captures this problem?
reliability
competing incentives
remoteness
complexity - CORRECT ANSWER - reliability
Which of the following falls within the purview of a financial statement preparer?
Independent audit
Changes in equity
Business valuation
,Mergers and acquisitions - CORRECT ANSWER - Changes in equity
Management is responsible for which of the following?
Preparing financial statements which will please the board of directors and investors.
Designing, implementing, and maintaining internal control relevant to the preparation of the
financial statements.
Preparing financial statements in accordance with the appropriate auditing standards.
Issuing an opinion on whether the financial statements are presented fairly in accordance with
the appropriate financial reporting framework. - CORRECT ANSWER - Designing,
implementing, and maintaining internal control relevant to the preparation of the financial
statements.
Which of the following comes under the purview of the Public Company Accounting Oversight
Board?
Auditing Standards (AS)
Statements on Standards for Attestation Engagement (SSAE)
Statements on Quality Control Standards (SQCS)
Statements on Auditing Standards (SAS) - CORRECT ANSWER - Auditing Standards
(AS)
Which of the following is a private professional membership organization of CPAs representing
the accounting profession?
IAASB
AICPA
ASB
PCAOB - CORRECT ANSWER - AICPA
Which statement is correct as to financial statement audit reports for public versus private
companies?
There is a standard report for the audit of private company financial statements but none for
auditing public company financial statements.
, There is a standard report for the audit of public company financial statements and a standard
report for the audit of private company financial statements.
There is a standard report for the audit of public company financial statements but none for
auditing private company financial statements.
There is no distinction between standard reports for the audit of financial statements, regardless
of whether the company is private or public. - CORRECT ANSWER - There is a standard
report for the audit of public company financial statements and a standard report for the audit of
private company financial statements.
With regard to financial statements, the auditor is required to obtain reasonable assurance, which
is a level of assurance that is _______.
subjective and not absolute
100%, but not objective
high, but not absolute
guaranteed and absolute - CORRECT ANSWER - high, but not absolute
If auditors conclude the company did not maintain effective Internal Control Over Financial
Reporting (ICFR) over the period under audit, it would mean the auditors discovered a/an
_______ in the client's ICFR.
Material weakness
Reasonable assurance
Audit risk
Inherent risk - CORRECT ANSWER - Material weakness
Which of the following is the discovery of material weakness?
Risk that an auditor expresses an inappropriate audit opinion when the financial statements are
materially misstated
Conclusion that the company did not maintain effective Internal Control Over Financial
Reporting (ICFR) over the period under audit
and CORRECT Answers
Identify a service that falls under audit services.
Compilation of historical financial statements
Review of financial forecast
Examination of historical financial statements
Inspection of website security - CORRECT ANSWER - Examination of historical
financial statements
Examination of internal controls is a service that comes under _______ services, which fall
under _______ services.
assurance; attestation
attestation; assurance
attestation; audit
acceptable; assurance - CORRECT ANSWER - attestation; assurance
Attestation services (under the umbrella of assurance services) include review of historical
financial statements, review of financial forecast, and examination of internal control.
Within a U.S. context, the applicable financial reporting framework is typically _______.
American Accounting Association (AAA)
Internationl Auditing and Assurance Standards Board (IAASB)
Generally Accepted Accounting Principles (GAAP)
Financial Accounting Standards Board (FASB) - CORRECT ANSWER - Generally
Accepted Accounting Principles (GAAP)
Which two audits does an integrated audit combine?
A compliance audit and an audit of the effectiveness of Internal Control Over Financial
Reporting (ICFR)
,A financial statement audit and a compliance audit
A financial statement audit and an audit of the effectiveness of Internal Control Over Financial
Reporting (ICFR)
A performance audit and an environmental audit - CORRECT ANSWER - A financial
statement audit and an audit of the effectiveness of Internal Control Over Financial Reporting
(ICFR)
Who among the following users of the financial statement of a company may be particularly
interested in evaluating whether the company is paying a fair amount of taxes given its reported
earnings, and to gain a better understanding of the company's activities?
government
employees
general pubic
customers - CORRECT ANSWER - government
Since users of financial statements make financial decisions that have real consequences, it is
very important that users can depend on the information contained in the financial statements.
What term captures this problem?
reliability
competing incentives
remoteness
complexity - CORRECT ANSWER - reliability
Which of the following falls within the purview of a financial statement preparer?
Independent audit
Changes in equity
Business valuation
,Mergers and acquisitions - CORRECT ANSWER - Changes in equity
Management is responsible for which of the following?
Preparing financial statements which will please the board of directors and investors.
Designing, implementing, and maintaining internal control relevant to the preparation of the
financial statements.
Preparing financial statements in accordance with the appropriate auditing standards.
Issuing an opinion on whether the financial statements are presented fairly in accordance with
the appropriate financial reporting framework. - CORRECT ANSWER - Designing,
implementing, and maintaining internal control relevant to the preparation of the financial
statements.
Which of the following comes under the purview of the Public Company Accounting Oversight
Board?
Auditing Standards (AS)
Statements on Standards for Attestation Engagement (SSAE)
Statements on Quality Control Standards (SQCS)
Statements on Auditing Standards (SAS) - CORRECT ANSWER - Auditing Standards
(AS)
Which of the following is a private professional membership organization of CPAs representing
the accounting profession?
IAASB
AICPA
ASB
PCAOB - CORRECT ANSWER - AICPA
Which statement is correct as to financial statement audit reports for public versus private
companies?
There is a standard report for the audit of private company financial statements but none for
auditing public company financial statements.
, There is a standard report for the audit of public company financial statements and a standard
report for the audit of private company financial statements.
There is a standard report for the audit of public company financial statements but none for
auditing private company financial statements.
There is no distinction between standard reports for the audit of financial statements, regardless
of whether the company is private or public. - CORRECT ANSWER - There is a standard
report for the audit of public company financial statements and a standard report for the audit of
private company financial statements.
With regard to financial statements, the auditor is required to obtain reasonable assurance, which
is a level of assurance that is _______.
subjective and not absolute
100%, but not objective
high, but not absolute
guaranteed and absolute - CORRECT ANSWER - high, but not absolute
If auditors conclude the company did not maintain effective Internal Control Over Financial
Reporting (ICFR) over the period under audit, it would mean the auditors discovered a/an
_______ in the client's ICFR.
Material weakness
Reasonable assurance
Audit risk
Inherent risk - CORRECT ANSWER - Material weakness
Which of the following is the discovery of material weakness?
Risk that an auditor expresses an inappropriate audit opinion when the financial statements are
materially misstated
Conclusion that the company did not maintain effective Internal Control Over Financial
Reporting (ICFR) over the period under audit
