Gleim’s CPA Test Prep Auditing Complete 100 Questions
And Correct Detailed Answers (Verified Answers) |Already
Graded A+
1. An audit firm has a responsibility to adopt a system of quality control
and establish policies and procedures to provide reasonable assurance
that personnel comply with ______________. - ans -B). A firm of
independent auditors has a responsibility to adopt a system of quality
control in conducting an audit practice. Thus, a firm should establish
quality control procedures to provide it with reasonable assurance that
its personnel comply with generally accepted auditing standards (GAAS)
in its audit engagements.
2. An audit firm has a responsibility to _______________ in accordance
with the applicable legal and regulatory requirements.
- ans -A), B), and C). A firm of independent auditors has a responsibility
to adopt a system of quality control in conducting an audit practice.
Thus, a firm should establish quality control procedures to provide it
with reasonable assurance that its personnel comply with generally
accepted auditing standards in its audit engagements. AU-C 250 states
that "the auditor should remain alert to the possibility that other audit
procedures applied may bring instances of noncompliance or suspected
noncompliance with laws and regulations to the auditor's attention."
Also, AU-C 220 states that, "within the context of the firm's system of
quality control, engagement teams have a responsibility to implement
quality control procedures that are applicable to the audit
engagement."
3. Quality control for a CPA firm applies to all ____________ services. -
ans -C) and D). Quality control for a CPA firm does not explicitly apply to
consulting and tax services, but quality control does apply to all review
and compilation services.
,4. Quality control policies and procedures applicable to a CPA firm
should encompass the element(s) of ________________.
- ans -A) and B). The quality control policies and procedures applicable
to a firm's accounting and auditing practice encompass the following
elements: •Independence, integrity, and objectivity
•Personnel management
•Acceptance and continuance of clients and engagements
•Engagement performance
•Monitoring
5. A CPA firm must appropriately document _______ to properly
administer a quality control system.
- ans -A), C), and D). QC 10 states that the firm should establish policies
and procedures requiring (a) appropriate documentation to provide
evidence of the operation of each element of its system of quality
control, (b) retention of documentation for a period of time sufficient
to permit those performing monitoring procedures and peer review of
the firm to evaluate the firm's compliance with its system of quality
control or for a longer period if required by law or regulation, and (c)
documentation of complaints and allegations and responses to them.
6. The form and content of documentation evidencing the operation of
each of the elements of the system of quality control depend on factors
such as __________________. - ans -A), B), and C). QC 10 states, "The
form and content of documentation evidencing the operation of each
of the elements of the system of quality control is a matter of judgment
and depends on a number of factors, including the following: •The size
of the firm and the number of offices
•The nature and complexity of the firm's practices and organization."
7. Public accounting firms establish a monitoring process involving
_____________ to provide reasonable assurance that policies relating
, to the system of quality control are relevant, adequate, and operating
effectively. - ans -B) and C). QC 10 indicates that the firm should
establish a monitoring process to provide reasonable assurance that
policies relating to the system of quality control are relevant, adequate,
and operating effectively. This process should include an ongoing
consideration and evaluation of the firm's system of quality control,
including inspection or a periodic review of engagement
documentation, reports, and clients' financial statements for a selection
of completed engagements.
8. An effective system of quality control provides reasonable assurance
that the firm and personnel follow policies and procedures pertaining
to _________________. - ans -A), B), and C). QC 10 indicates that the
firm must establish and maintain a system of quality control, which
should include policies and procedures addressing each of the following
elements:a.Leadership responsibilities for quality within the firm (the
tone at the top)
b.Relevant ethical requirements
c.Acceptance and continuance of client relationships and specific
engagements
d.Human resources
e.Engagement performance
f.Monitoring
9. An effective system of quality control provides reasonable assurance
that the firm and personnel comply with the AICPA Code of
Professional Conduct's fundamental principles of professional ethics.
These principles include _________________.
- ans -A), D), and E). QC 10 states, "The AICPA Code of Professional
Conduct establishes the fundamental principles of professional ethics,
which include the following:•Responsibilities
•The public interest
•Integrity
And Correct Detailed Answers (Verified Answers) |Already
Graded A+
1. An audit firm has a responsibility to adopt a system of quality control
and establish policies and procedures to provide reasonable assurance
that personnel comply with ______________. - ans -B). A firm of
independent auditors has a responsibility to adopt a system of quality
control in conducting an audit practice. Thus, a firm should establish
quality control procedures to provide it with reasonable assurance that
its personnel comply with generally accepted auditing standards (GAAS)
in its audit engagements.
2. An audit firm has a responsibility to _______________ in accordance
with the applicable legal and regulatory requirements.
- ans -A), B), and C). A firm of independent auditors has a responsibility
to adopt a system of quality control in conducting an audit practice.
Thus, a firm should establish quality control procedures to provide it
with reasonable assurance that its personnel comply with generally
accepted auditing standards in its audit engagements. AU-C 250 states
that "the auditor should remain alert to the possibility that other audit
procedures applied may bring instances of noncompliance or suspected
noncompliance with laws and regulations to the auditor's attention."
Also, AU-C 220 states that, "within the context of the firm's system of
quality control, engagement teams have a responsibility to implement
quality control procedures that are applicable to the audit
engagement."
3. Quality control for a CPA firm applies to all ____________ services. -
ans -C) and D). Quality control for a CPA firm does not explicitly apply to
consulting and tax services, but quality control does apply to all review
and compilation services.
,4. Quality control policies and procedures applicable to a CPA firm
should encompass the element(s) of ________________.
- ans -A) and B). The quality control policies and procedures applicable
to a firm's accounting and auditing practice encompass the following
elements: •Independence, integrity, and objectivity
•Personnel management
•Acceptance and continuance of clients and engagements
•Engagement performance
•Monitoring
5. A CPA firm must appropriately document _______ to properly
administer a quality control system.
- ans -A), C), and D). QC 10 states that the firm should establish policies
and procedures requiring (a) appropriate documentation to provide
evidence of the operation of each element of its system of quality
control, (b) retention of documentation for a period of time sufficient
to permit those performing monitoring procedures and peer review of
the firm to evaluate the firm's compliance with its system of quality
control or for a longer period if required by law or regulation, and (c)
documentation of complaints and allegations and responses to them.
6. The form and content of documentation evidencing the operation of
each of the elements of the system of quality control depend on factors
such as __________________. - ans -A), B), and C). QC 10 states, "The
form and content of documentation evidencing the operation of each
of the elements of the system of quality control is a matter of judgment
and depends on a number of factors, including the following: •The size
of the firm and the number of offices
•The nature and complexity of the firm's practices and organization."
7. Public accounting firms establish a monitoring process involving
_____________ to provide reasonable assurance that policies relating
, to the system of quality control are relevant, adequate, and operating
effectively. - ans -B) and C). QC 10 indicates that the firm should
establish a monitoring process to provide reasonable assurance that
policies relating to the system of quality control are relevant, adequate,
and operating effectively. This process should include an ongoing
consideration and evaluation of the firm's system of quality control,
including inspection or a periodic review of engagement
documentation, reports, and clients' financial statements for a selection
of completed engagements.
8. An effective system of quality control provides reasonable assurance
that the firm and personnel follow policies and procedures pertaining
to _________________. - ans -A), B), and C). QC 10 indicates that the
firm must establish and maintain a system of quality control, which
should include policies and procedures addressing each of the following
elements:a.Leadership responsibilities for quality within the firm (the
tone at the top)
b.Relevant ethical requirements
c.Acceptance and continuance of client relationships and specific
engagements
d.Human resources
e.Engagement performance
f.Monitoring
9. An effective system of quality control provides reasonable assurance
that the firm and personnel comply with the AICPA Code of
Professional Conduct's fundamental principles of professional ethics.
These principles include _________________.
- ans -A), D), and E). QC 10 states, "The AICPA Code of Professional
Conduct establishes the fundamental principles of professional ethics,
which include the following:•Responsibilities
•The public interest
•Integrity
