Louwers, Bagley, Strawser, Thibodeau, Sinason
Practice Questions
Inzanzattestationzengagement,zazCPAzpractitionerziszengagedztoz-zCORRECTzANSWER-
Preparezazwrittenzreportzcontainingzazconclusionzaboutzthezreliabilityzofzazmanagementzassertion.
Bankerszwhozarezprocessingzloanzapplicationszfromzcompanieszseekingzlargezloanszwillzprobablyzaskzforzfi
nancialzstatementszauditedzbyzanzindependentzCPAzbecausez-zCORRECTzANSWER-
Theyzgenerallyzseezazpotentialzconflictzofzinterestzbetweenzcompanyzmanagerszwhozwantztozgetzloanszand
zthezbank'szneedszfor
reliablezfinancialzstatements.
Thezobjectivezinzanzauditor'szreviewzofzcreditzratingszofzazclient'szcustomerszisztozobtainzevidencezrelatedzt
ozmanagement'szassertionzaboutz-zCORRECTzANSWER-Valuationzandzallocation
Jones,zCPA,ziszplanningzthezauditzofzRhonda'szCompany.zRhondazverballyzassertsztozJoneszthatzallzexpense
szforzthezyearzhavezbeenzrecordedzinzthezaccounts.zRhonda'szrepresentationzinzthiszregardz-
zCORRECTzANSWER-
IsznotzconsideredzazsufficientzbasiszforzJonesztozconcludezthatzallzexpenseszhavezbeenzrecorded.
ThezSarbanes-OxleyzActzofz2002zgenerallyzprohibitszpubliczaccountingzfirmszfromz-zCORRECTzANSWER-
Actingzinzazmanagerialzdecision-
makingzrolezforzanzauditzclient,zauditingzthezfirm'szownzworkzonzanzauditzclient,zandzprovidingztaxzconsulti
ngztozanzauditzclientzwithoutzauditzcommitteezapproval.
Substantialzequivalencyzrefersztoz-zCORRECTzANSWER-
PermittingzazCPAztozpracticezinzanotherzstatezwithoutzhavingztozobtainzazlicensezinzthatzstate.
Whenzauditingzanzinvestmentzinzanotherzcompany,zanzauditorzmostzlikelyzwouldzseekztozconductzwhichza
uditzprocedureztozhelpzsatisfyzthezvaluationzassertion?z-zCORRECTzANSWER-
ObtainzmarketzquotationszfromzThezWallzStreetzJournalzorzanotherzindependentzsource.