Audit Ch 1 SB Questions and Verified Correct
Answers
The risk associated with a company's survivability and profitability is ______ risk. answer -
business
Standards used in an attest engagement that are established or developed by groups composed
of experts are referred to as _____ _____ answer - Blank 1: suitable
Blank 2: criteria
The auditing profession's shift in emphasis to taking a greater responsibility for the detection of
fraud resulted from ______. answer - successful lawsuits for undetected frauds
congressional pressure
Increased reliance upon sampling and internal control led professional standards to begin to
emphasize limitations on the auditors' ability to detect answer - fraud
Many of the Treadway Commission's recommendations lead to a group of Statements on
Auditing Standards known as the ______ ______ standards. answer - Blank 1: expectation
Blank 2: gap
Beginning in the 1960s, the detection of large-scale fraud assumed a larger role in the audit
process and professional standards used the term ________ in place of fraud to describe
fraudulent financial reporting and misappropriation of assets. answer - irregularities
The Sarbanes-Oxley Act of 2002 created the ______ to regulate audits and auditors of public
companies.
, Multiple choice question. answer - PCAOB
In response to the collapse of the U.S. subprime market and reversal of the housing U.S. boom
in 2008, Congress passed the ______. answer - Dodd-Frank Act
The work of the Treadway Commission increased the demand for attestation by auditors to the
effectiveness of ______. answer - internal control
Audits are often viewed as falling into three major categories: _______ audits, _______ audits
and operational audits answer - Blank 1: financial
Blank 2: compliance
Which of the following is not a proper factor for assessing the business risk of a company?
answer - The quality and integrity of its non-managerial employees.
Determining whether the balance sheet and related statements of income, retained earnings,
and cash flows have been prepared in accordance with GAAP is the goal of a(n) _______ audit.
answer - financial
The Sarbanes-Oxley Act of 2002 ______.
increased penalties for corporate fraud
created the PCAOB to oversee the accounting profession
put more emphasis on the accounting profession's self-regulation of audits of public companies
restricted types of consulting CPAs may perform for public audit clients answer - created the
PCAOB to oversee the accounting profession
increased penalties for corporate fraud
restricted types of consulting CPAs may perform for public audit clients
Answers
The risk associated with a company's survivability and profitability is ______ risk. answer -
business
Standards used in an attest engagement that are established or developed by groups composed
of experts are referred to as _____ _____ answer - Blank 1: suitable
Blank 2: criteria
The auditing profession's shift in emphasis to taking a greater responsibility for the detection of
fraud resulted from ______. answer - successful lawsuits for undetected frauds
congressional pressure
Increased reliance upon sampling and internal control led professional standards to begin to
emphasize limitations on the auditors' ability to detect answer - fraud
Many of the Treadway Commission's recommendations lead to a group of Statements on
Auditing Standards known as the ______ ______ standards. answer - Blank 1: expectation
Blank 2: gap
Beginning in the 1960s, the detection of large-scale fraud assumed a larger role in the audit
process and professional standards used the term ________ in place of fraud to describe
fraudulent financial reporting and misappropriation of assets. answer - irregularities
The Sarbanes-Oxley Act of 2002 created the ______ to regulate audits and auditors of public
companies.
, Multiple choice question. answer - PCAOB
In response to the collapse of the U.S. subprime market and reversal of the housing U.S. boom
in 2008, Congress passed the ______. answer - Dodd-Frank Act
The work of the Treadway Commission increased the demand for attestation by auditors to the
effectiveness of ______. answer - internal control
Audits are often viewed as falling into three major categories: _______ audits, _______ audits
and operational audits answer - Blank 1: financial
Blank 2: compliance
Which of the following is not a proper factor for assessing the business risk of a company?
answer - The quality and integrity of its non-managerial employees.
Determining whether the balance sheet and related statements of income, retained earnings,
and cash flows have been prepared in accordance with GAAP is the goal of a(n) _______ audit.
answer - financial
The Sarbanes-Oxley Act of 2002 ______.
increased penalties for corporate fraud
created the PCAOB to oversee the accounting profession
put more emphasis on the accounting profession's self-regulation of audits of public companies
restricted types of consulting CPAs may perform for public audit clients answer - created the
PCAOB to oversee the accounting profession
increased penalties for corporate fraud
restricted types of consulting CPAs may perform for public audit clients
