Auditing Exam 1 UPDATED ACTUAL
Exam Questions and CORRECT Answers
The auditor's judgment concerning the overall fairness of the presentation of financial position,
results of operations, and changes in cash flow is applied within the framework of:
a.
Generally accepted accounting principles.
b.
The auditor's evaluation of the audited company's internal control.
c.
Generally accepted auditing standards.
d.
Generally accepted standards of quality control. - CORRECT ANSWER - a.
In performing an attestation engagement, a CPA typically :
a.
Supplies litigation support services.
b.
Assesses control risk at a low level.
c.
Expresses a conclusion about an assertion.
,d.
Provides management consulting advice. - CORRECT ANSWER - c.
Which of the following management assertions is an auditor most likely testing if the audit
objective states that none of the inventory in the balance is held on consignment for another
company?
a.
The entity has rights to the inventory
b.
Inventory is complete
c.
Inventory is properly valued
d.
Inventory is properly presented in the financial statements - CORRECT ANSWER - a.
The primary reason for an audit by an independent, external audit firm is to:
a.
Satisfy governmental regulatory requirements.
b.
Guarantee that there are no misstatements in the financial statements and ensure that any fraud
will be discovered.
,c.
Relieve management of responsibility for the financial statements.
d.
Provide increased assurance to users as to the fairness of the financial statements. - CORRECT
ANSWER - d.
Users of an issuer's financial statements demand independent audits because:
a.
Users demand assurance that fraud does not exist.
b.
Management may not be objective in reporting.
c.
Users expect auditors to correct management errors.
d.
Management relies on the auditor to improve internal control. - CORRECT ANSWER - b.
The members of the Public Company Accounting Oversight Board are appointed and overseen
by:
a.
The Securities and Exchange Commission.
b.
, By U.S. Congress.
c.
The Auditing Standards Board.
d.
The American Institute of Certified Public Accountants. - CORRECT ANSWER - a.
Breaux & Co. CPAs require that all audit documentation indicate the identity of the preparer and
the reviewer. This procedure provides evidence relating to which of the following?
a.
Independence.
b.
Adequate competence and capabilities.
c.
Adequate planning and supervision.
d.
Gathering sufficient appropriate evidence. - CORRECT ANSWER - c.
An auditor must obtain professional experience primarily to
a.
Exam Questions and CORRECT Answers
The auditor's judgment concerning the overall fairness of the presentation of financial position,
results of operations, and changes in cash flow is applied within the framework of:
a.
Generally accepted accounting principles.
b.
The auditor's evaluation of the audited company's internal control.
c.
Generally accepted auditing standards.
d.
Generally accepted standards of quality control. - CORRECT ANSWER - a.
In performing an attestation engagement, a CPA typically :
a.
Supplies litigation support services.
b.
Assesses control risk at a low level.
c.
Expresses a conclusion about an assertion.
,d.
Provides management consulting advice. - CORRECT ANSWER - c.
Which of the following management assertions is an auditor most likely testing if the audit
objective states that none of the inventory in the balance is held on consignment for another
company?
a.
The entity has rights to the inventory
b.
Inventory is complete
c.
Inventory is properly valued
d.
Inventory is properly presented in the financial statements - CORRECT ANSWER - a.
The primary reason for an audit by an independent, external audit firm is to:
a.
Satisfy governmental regulatory requirements.
b.
Guarantee that there are no misstatements in the financial statements and ensure that any fraud
will be discovered.
,c.
Relieve management of responsibility for the financial statements.
d.
Provide increased assurance to users as to the fairness of the financial statements. - CORRECT
ANSWER - d.
Users of an issuer's financial statements demand independent audits because:
a.
Users demand assurance that fraud does not exist.
b.
Management may not be objective in reporting.
c.
Users expect auditors to correct management errors.
d.
Management relies on the auditor to improve internal control. - CORRECT ANSWER - b.
The members of the Public Company Accounting Oversight Board are appointed and overseen
by:
a.
The Securities and Exchange Commission.
b.
, By U.S. Congress.
c.
The Auditing Standards Board.
d.
The American Institute of Certified Public Accountants. - CORRECT ANSWER - a.
Breaux & Co. CPAs require that all audit documentation indicate the identity of the preparer and
the reviewer. This procedure provides evidence relating to which of the following?
a.
Independence.
b.
Adequate competence and capabilities.
c.
Adequate planning and supervision.
d.
Gathering sufficient appropriate evidence. - CORRECT ANSWER - c.
An auditor must obtain professional experience primarily to
a.
