WGU D215 Auditing | Complete Chapter Questions & Answers
Module 1-LO1.1- Differentiate between assurance, Examination of historical financial statements
attestation, and audit services. 3 multiple choice options
Identify a service that falls under audit services.
Module 1-LO1.1- Differentiate between assurance, attestation; assurance
attestation, and audit services. 3 multiple choice options
Examination of internal controls is a service that comes
under _______ services, which fall under _______
services.
Module 1-LO1.2- Describe the different types of Generally Accepted Accounting Principles (GAAP)
assurance services. 3 multiple choice options
Within a U.S. context, the applicable financial reporting
framework is typically _______.
Module 1-LO1.2- Describe the different types of A financial statement audit and an audit of the effectiveness of Internal Control
assurance services. Over Financial Reporting (ICFR)
Which two audits does an integrated audit combine? 3 multiple choice options
Module 1-LO1.3-Identify the demand for audit and government
assurance services. 3 multiple choice options
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?
Which items are part of the organizational structure as division
detailed in the Committee of Sponsoring Organizations' 3 multiple choice options
framework?
Module 1-LO1.3-Identify the demand for audit and reliability
assurance services. 3 multiple choice options
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?
Module 1-LO1.4-Differentiate between the roles of the Changes in equity
financial statement preparer and the auditor. 3 multiple choice options
Which of the following falls within the purview of a
financial statement preparer?
Module 1-LO1.4- Differentiate between the roles of the Designing, implementing, and maintaining internal control relevant to the
financial statement preparer and the auditor. preparation of the financial statements.
Management is responsible for which of the following? 3 multiple choice options
Module 1-LO1.5- Identify the roles of different regulators Auditing Standards (AS)
and organizations that affect the audit profession. 3 multiple choice options
Which of the following comes under the purview of the
Public Company Accounting Oversight Board?
Module 1-LO1.5- Identify the roles of different regulators AICPA
and organizations that affect the audit profession. 3 multiple choice options
Which of the following is a private professional
membership organization of CPAs representing the
accounting profession?
Module 1-LO1.6- Describe the concepts of reasonable There is a standard report for the audit of public company financial statements
assurance, materiality, and the unqualified report on the and a standard report for the audit of private company financial statements.
audit of financial statements. 3 multiple choice options
Which statement is correct as to financial statement audit
reports for public versus private companies?
, WGU D215 Auditing | Complete Chapter Questions & Answers
Module 1-LO1.6- Describe the concepts of reasonable high, but not absolute
assurance, materiality, and the unqualified report on the 3 multiple choice options
audit of financial statements.
With regard to financial statements, the auditor is
required to obtain reasonable assurance, which is a level
of assurance that is _______.
Module 1-LO1.7- Describe the concept of reasonable Material weakness
assurance and the nature of an unqualified report on 3 multiple choice options
internal controls over financial reporting.
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.
Module 1-LO1.7- Describe the concept of reasonable Conclusion that the company did not maintain effective Internal Control Over
assurance and the nature of an unqualified report on Financial Reporting (ICFR) over the period under audit
internal controls over financial reporting. 3 multiple choice options
Which of the following is the discovery of material
weakness?
Module 1-LO1.8- Explain the audit expectation gap. There is no guarantee the auditor will find all material fraud, should fraud have
Which of the following beliefs will narrow the audit occurred.
expectation gap? 3 multiple choice options
Module 1-LO1.8-Explain the audit expectation gap. financial statement user's expectations
Economic conditions impact _______. 3 multiple choice options
Module 2-LO2.1-Identify what it means to be a concern for the public interest
professional and how these traits apply to auditors. 3 multiple choice options
In defining a profession or professional, one common
characteristic is _______.
Module 2-LO2.1-Identify what it means to be a The state boards of accountancy
professional and how these traits apply to auditors. 3 multiple choice options
Which group licenses CPAs?
Module 2-LO2.1-Identify what it means to be a Required education, pass the CPA exam, and requisite experience requirement.
professional and how these traits apply to auditors. 3 multiple choice options
What must CPAs complete to obtain licensure?
Module 2-LO2.1-Identify what it means to be a Code of Ethics
professional and how these traits apply to auditors. 3 multiple choice options
Susan, a college student, is preparing an essay. Which
of the following principles should she use to explain why
a Certified Public Accountant (CPA) is defined as a
Concern for Public Interest (CPI) professional?
Module 2-LO2.2-Identify the structure of the American rules of conduct
Institute of Certified Public Accountants (AICPA) Code of 3 multiple choice options
Professional Conduct.
Interpretations in the AICPA code provide additional
guidance regarding the scope and applicability of the
_______.
Module 2-LO2.2-Identify the structure of the American Rules of conduct
Institute of Certified Public Accountants (AICPA) Code of 3 multiple choice options
Professional Conduct.
Which of the following components of the AICPA are
enforceable?
Module 2-LO2.2-Identify the structure of the American Code of Professional Conduct
Institute of Certified Public Accountants (AICPA) Code of 3 multiple choice options
Professional Conduct.
The structure of the AICPA _______________ includes
four major sections: preface, rules for members in public
practice, rules for members in business, and rules for
other members.
, WGU D215 Auditing | Complete Chapter Questions & Answers
Module 2-LO2.2-Identify the structure of the American Code of Professional Conduct
Institute of Certified Public Accountants (AICPA) Code of 3 multiple choice options
Professional Conduct.
Which of the following provides guidance to all members
of the AICPA with respect to performance of their
professional responsibilities?
Module 3-LO2.3-Apply the conceptual framework Familiarity threat
approach to ethical decision-making for members of 3 multiple choice options
public practice.
Which of the following is the threat that, due to a long or
close relationship with a client, a CPA will become too
sympathetic to the client's interests or too accepting of
the client's work or product?
Module 3-LO2.3-Apply the conceptual framework Decline the engagement.
approach to ethical decision-making for members of 3 multiple choice options
public practice.
If a CPA is unable to implement effective safeguards,
what should the CPA do?
Module 3-LO2.3-Apply the conceptual framework self-review
approach to ethical decision-making for members of 3 multiple choice options
public practice.
A/an ________ threat exists if a CPA performs
bookkeeping services for a private company client and
that work needs to be evaluated by the same firm in the
course of an attest engagement.
Module 3-LO2.4- Evaluate the ethical behavior needed hide activities that could be a conflict of interest
to comply with rules of conduct on integrity and 3 multiple choice options
objectivity.
According to the integrity and objectivity rule, in the
performance of any professional service, a member shall
not knowingly _______.
Module 3-LO2.4- Evaluate the ethical behavior needed Provide tax services to only one of the two parties.
to comply with rules of conduct on integrity and 3 multiple choice options
objectivity.
How does a small firm resolve the conflict of interest
issue in a divorce case?
Module 3-LO2.4- Evaluate the ethical behavior needed Bring her concerns to the manager on the engagement.
to comply with rules of conduct on integrity and 3 multiple choice options
objectivity.
A CPA, who is a staff member on an audit engagement
team, has a difference of opinion from her supervisor
regarding the application of an auditing standard. She
concludes that the difference may result in a material
misrepresentation. She discussed her concerns with her
supervisor, but the difference of opinion is not resolved.
Which action should the staff member do next?
Module 3-LO2.5- Evaluate the ethical behavior needed The CPA must be removed from the engagement as he is a covered member
to comply with rules of conduct on independence. and his stepbrother is in a key position.
A CPA works as a staff on an attest engagement. The 3 multiple choice options
CPA’s stepbrother is employed on the board of directors
of the attest client.
What action, if any should be taken as a result of this
situation?
Module 3-LO2.5- Evaluate the ethical behavior needed the objectives of the engagement, the services to be performed, and any
to comply with rules of conduct on independence. limitations of the engagement
Interpretation 1.295 indicates that before performing 3 multiple choice options
nonattest services, the CPA should establish and
document in writing an understanding with the client
regarding ______.
Module 3-LO2.5- Evaluate the ethical behavior needed be a trustee, director, or officer of an attest client or of the client's pension or
to comply with rules of conduct on independence. profit-sharing trust
3 multiple choice options
As a general rule, professional employees in a CPA firm
who have not covered members and their immediate
family members cannot ______.
, WGU D215 Auditing | Complete Chapter Questions & Answers
Module 3-LO2.6- Evaluate the ethical behavior needed Professional Competence
to comply with rules of conduct on general auditing 3 multiple choice options
standards.
Which of the following standards refers to undertaking
professional services that can be completed with the
appropriate level of professional skill?
Module 3-LO2.6- Evaluate the ethical behavior needed other CPAs performing similar work
to comply with rules of conduct on general auditing 3 multiple choice options
standards.
According to the due professional care standard, CPAs
should exercise the professional care expected of
_______ in the performance of professional services
Module 3-LO2.6- Evaluate the ethical behavior needed Planning and Supervision
to comply with rules of conduct on general auditing 3 multiple choice options
standards.
Which of the following general standards refers to
adequately preparing for the engagement and providing
the appropriate management oversight of the
performance of professional services?
Module 3-LO2.7- Evaluate the ethical behavior needed Generally Accepted Accounting Principles (GAAP)
to comply with other rules of conduct for members in 3 multiple choice options
public practice.
Which of the following standards is used for preparing
financial statements with other accounting principles?
Module 3-LO2.7- Evaluate the ethical behavior needed subordinating judgment
to comply with other rules of conduct for members in 3 multiple choice options
public practice.
Thom is a new member of the audit team. In working on
his first audit engagement, he and his supervisor
disagreed, materially, on the amount that the client
should report for warranty liability. The auditing firm has
a policy for this situation in which both auditors document
their opinions and the rationale behind them.
This is an example of following which of the aspects of
the integrity and objectivity rule?
Module 3-LO2.7- Evaluate the ethical behavior needed The financial reporting framework
to comply with other rules of conduct for members in 3 multiple choice options
public practice.
What should CPAs clarify while preparing financial
statements for small businesses?
Module 4-LO3.1-Identify the different phases of an audit. gaining an understanding of the client.
The risk assessment phase of an audit includes: 3 multiple choice options
Module 4-LO3.1-Identify the different phases of an audit. Reporting phase
Which phase of an audit involves an evaluation of the 3 multiple choice options
results of the detailed testing in light of the auditor’s
understanding of the client and forming an opinion on the
fair presentation of the client’s financial statements?
Module 4-LO3.2- Describe professional skepticism. exhibiting professional skepticism.
When auditors remain independent of the entity, its 3 multiple choice options
management, and its staff when completing the audit
work, and work with an alert and questioning mind, the
auditor is
Module 4-LO3.2- Describe professional skepticism. Audit evidence recently gathered is contradictory to other evidence previously
Professional skepticism is an attitude that includes a gathered.
questioning mind, being alert to conditions that may 3 multiple choice options
indicate possible misstatement due to fraud or error and
a critical assessment of audit evidence.
Which condition would require the auditor to apply
professional skepticism?
Module 1-LO1.1- Differentiate between assurance, Examination of historical financial statements
attestation, and audit services. 3 multiple choice options
Identify a service that falls under audit services.
Module 1-LO1.1- Differentiate between assurance, attestation; assurance
attestation, and audit services. 3 multiple choice options
Examination of internal controls is a service that comes
under _______ services, which fall under _______
services.
Module 1-LO1.2- Describe the different types of Generally Accepted Accounting Principles (GAAP)
assurance services. 3 multiple choice options
Within a U.S. context, the applicable financial reporting
framework is typically _______.
Module 1-LO1.2- Describe the different types of A financial statement audit and an audit of the effectiveness of Internal Control
assurance services. Over Financial Reporting (ICFR)
Which two audits does an integrated audit combine? 3 multiple choice options
Module 1-LO1.3-Identify the demand for audit and government
assurance services. 3 multiple choice options
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?
Which items are part of the organizational structure as division
detailed in the Committee of Sponsoring Organizations' 3 multiple choice options
framework?
Module 1-LO1.3-Identify the demand for audit and reliability
assurance services. 3 multiple choice options
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?
Module 1-LO1.4-Differentiate between the roles of the Changes in equity
financial statement preparer and the auditor. 3 multiple choice options
Which of the following falls within the purview of a
financial statement preparer?
Module 1-LO1.4- Differentiate between the roles of the Designing, implementing, and maintaining internal control relevant to the
financial statement preparer and the auditor. preparation of the financial statements.
Management is responsible for which of the following? 3 multiple choice options
Module 1-LO1.5- Identify the roles of different regulators Auditing Standards (AS)
and organizations that affect the audit profession. 3 multiple choice options
Which of the following comes under the purview of the
Public Company Accounting Oversight Board?
Module 1-LO1.5- Identify the roles of different regulators AICPA
and organizations that affect the audit profession. 3 multiple choice options
Which of the following is a private professional
membership organization of CPAs representing the
accounting profession?
Module 1-LO1.6- Describe the concepts of reasonable There is a standard report for the audit of public company financial statements
assurance, materiality, and the unqualified report on the and a standard report for the audit of private company financial statements.
audit of financial statements. 3 multiple choice options
Which statement is correct as to financial statement audit
reports for public versus private companies?
, WGU D215 Auditing | Complete Chapter Questions & Answers
Module 1-LO1.6- Describe the concepts of reasonable high, but not absolute
assurance, materiality, and the unqualified report on the 3 multiple choice options
audit of financial statements.
With regard to financial statements, the auditor is
required to obtain reasonable assurance, which is a level
of assurance that is _______.
Module 1-LO1.7- Describe the concept of reasonable Material weakness
assurance and the nature of an unqualified report on 3 multiple choice options
internal controls over financial reporting.
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.
Module 1-LO1.7- Describe the concept of reasonable Conclusion that the company did not maintain effective Internal Control Over
assurance and the nature of an unqualified report on Financial Reporting (ICFR) over the period under audit
internal controls over financial reporting. 3 multiple choice options
Which of the following is the discovery of material
weakness?
Module 1-LO1.8- Explain the audit expectation gap. There is no guarantee the auditor will find all material fraud, should fraud have
Which of the following beliefs will narrow the audit occurred.
expectation gap? 3 multiple choice options
Module 1-LO1.8-Explain the audit expectation gap. financial statement user's expectations
Economic conditions impact _______. 3 multiple choice options
Module 2-LO2.1-Identify what it means to be a concern for the public interest
professional and how these traits apply to auditors. 3 multiple choice options
In defining a profession or professional, one common
characteristic is _______.
Module 2-LO2.1-Identify what it means to be a The state boards of accountancy
professional and how these traits apply to auditors. 3 multiple choice options
Which group licenses CPAs?
Module 2-LO2.1-Identify what it means to be a Required education, pass the CPA exam, and requisite experience requirement.
professional and how these traits apply to auditors. 3 multiple choice options
What must CPAs complete to obtain licensure?
Module 2-LO2.1-Identify what it means to be a Code of Ethics
professional and how these traits apply to auditors. 3 multiple choice options
Susan, a college student, is preparing an essay. Which
of the following principles should she use to explain why
a Certified Public Accountant (CPA) is defined as a
Concern for Public Interest (CPI) professional?
Module 2-LO2.2-Identify the structure of the American rules of conduct
Institute of Certified Public Accountants (AICPA) Code of 3 multiple choice options
Professional Conduct.
Interpretations in the AICPA code provide additional
guidance regarding the scope and applicability of the
_______.
Module 2-LO2.2-Identify the structure of the American Rules of conduct
Institute of Certified Public Accountants (AICPA) Code of 3 multiple choice options
Professional Conduct.
Which of the following components of the AICPA are
enforceable?
Module 2-LO2.2-Identify the structure of the American Code of Professional Conduct
Institute of Certified Public Accountants (AICPA) Code of 3 multiple choice options
Professional Conduct.
The structure of the AICPA _______________ includes
four major sections: preface, rules for members in public
practice, rules for members in business, and rules for
other members.
, WGU D215 Auditing | Complete Chapter Questions & Answers
Module 2-LO2.2-Identify the structure of the American Code of Professional Conduct
Institute of Certified Public Accountants (AICPA) Code of 3 multiple choice options
Professional Conduct.
Which of the following provides guidance to all members
of the AICPA with respect to performance of their
professional responsibilities?
Module 3-LO2.3-Apply the conceptual framework Familiarity threat
approach to ethical decision-making for members of 3 multiple choice options
public practice.
Which of the following is the threat that, due to a long or
close relationship with a client, a CPA will become too
sympathetic to the client's interests or too accepting of
the client's work or product?
Module 3-LO2.3-Apply the conceptual framework Decline the engagement.
approach to ethical decision-making for members of 3 multiple choice options
public practice.
If a CPA is unable to implement effective safeguards,
what should the CPA do?
Module 3-LO2.3-Apply the conceptual framework self-review
approach to ethical decision-making for members of 3 multiple choice options
public practice.
A/an ________ threat exists if a CPA performs
bookkeeping services for a private company client and
that work needs to be evaluated by the same firm in the
course of an attest engagement.
Module 3-LO2.4- Evaluate the ethical behavior needed hide activities that could be a conflict of interest
to comply with rules of conduct on integrity and 3 multiple choice options
objectivity.
According to the integrity and objectivity rule, in the
performance of any professional service, a member shall
not knowingly _______.
Module 3-LO2.4- Evaluate the ethical behavior needed Provide tax services to only one of the two parties.
to comply with rules of conduct on integrity and 3 multiple choice options
objectivity.
How does a small firm resolve the conflict of interest
issue in a divorce case?
Module 3-LO2.4- Evaluate the ethical behavior needed Bring her concerns to the manager on the engagement.
to comply with rules of conduct on integrity and 3 multiple choice options
objectivity.
A CPA, who is a staff member on an audit engagement
team, has a difference of opinion from her supervisor
regarding the application of an auditing standard. She
concludes that the difference may result in a material
misrepresentation. She discussed her concerns with her
supervisor, but the difference of opinion is not resolved.
Which action should the staff member do next?
Module 3-LO2.5- Evaluate the ethical behavior needed The CPA must be removed from the engagement as he is a covered member
to comply with rules of conduct on independence. and his stepbrother is in a key position.
A CPA works as a staff on an attest engagement. The 3 multiple choice options
CPA’s stepbrother is employed on the board of directors
of the attest client.
What action, if any should be taken as a result of this
situation?
Module 3-LO2.5- Evaluate the ethical behavior needed the objectives of the engagement, the services to be performed, and any
to comply with rules of conduct on independence. limitations of the engagement
Interpretation 1.295 indicates that before performing 3 multiple choice options
nonattest services, the CPA should establish and
document in writing an understanding with the client
regarding ______.
Module 3-LO2.5- Evaluate the ethical behavior needed be a trustee, director, or officer of an attest client or of the client's pension or
to comply with rules of conduct on independence. profit-sharing trust
3 multiple choice options
As a general rule, professional employees in a CPA firm
who have not covered members and their immediate
family members cannot ______.
, WGU D215 Auditing | Complete Chapter Questions & Answers
Module 3-LO2.6- Evaluate the ethical behavior needed Professional Competence
to comply with rules of conduct on general auditing 3 multiple choice options
standards.
Which of the following standards refers to undertaking
professional services that can be completed with the
appropriate level of professional skill?
Module 3-LO2.6- Evaluate the ethical behavior needed other CPAs performing similar work
to comply with rules of conduct on general auditing 3 multiple choice options
standards.
According to the due professional care standard, CPAs
should exercise the professional care expected of
_______ in the performance of professional services
Module 3-LO2.6- Evaluate the ethical behavior needed Planning and Supervision
to comply with rules of conduct on general auditing 3 multiple choice options
standards.
Which of the following general standards refers to
adequately preparing for the engagement and providing
the appropriate management oversight of the
performance of professional services?
Module 3-LO2.7- Evaluate the ethical behavior needed Generally Accepted Accounting Principles (GAAP)
to comply with other rules of conduct for members in 3 multiple choice options
public practice.
Which of the following standards is used for preparing
financial statements with other accounting principles?
Module 3-LO2.7- Evaluate the ethical behavior needed subordinating judgment
to comply with other rules of conduct for members in 3 multiple choice options
public practice.
Thom is a new member of the audit team. In working on
his first audit engagement, he and his supervisor
disagreed, materially, on the amount that the client
should report for warranty liability. The auditing firm has
a policy for this situation in which both auditors document
their opinions and the rationale behind them.
This is an example of following which of the aspects of
the integrity and objectivity rule?
Module 3-LO2.7- Evaluate the ethical behavior needed The financial reporting framework
to comply with other rules of conduct for members in 3 multiple choice options
public practice.
What should CPAs clarify while preparing financial
statements for small businesses?
Module 4-LO3.1-Identify the different phases of an audit. gaining an understanding of the client.
The risk assessment phase of an audit includes: 3 multiple choice options
Module 4-LO3.1-Identify the different phases of an audit. Reporting phase
Which phase of an audit involves an evaluation of the 3 multiple choice options
results of the detailed testing in light of the auditor’s
understanding of the client and forming an opinion on the
fair presentation of the client’s financial statements?
Module 4-LO3.2- Describe professional skepticism. exhibiting professional skepticism.
When auditors remain independent of the entity, its 3 multiple choice options
management, and its staff when completing the audit
work, and work with an alert and questioning mind, the
auditor is
Module 4-LO3.2- Describe professional skepticism. Audit evidence recently gathered is contradictory to other evidence previously
Professional skepticism is an attitude that includes a gathered.
questioning mind, being alert to conditions that may 3 multiple choice options
indicate possible misstatement due to fraud or error and
a critical assessment of audit evidence.
Which condition would require the auditor to apply
professional skepticism?
