Audit Exam 1 Review UPDATED Exam
Questions and CORRECT Answers
Although independent audits of today place more emphasis on sampling than did the audits of
the 19th century, in increasing circumstances, changes in information technology are again
making possible audits of aspects of all transactions in large populations.
True or False ? - CORRECT ANSWER - True
A summary of findings rather than assurance is most likely to be included in a(n):
- Agreed-upon procedures report.
- Compilation report.
- Audit report.
- Review report. - CORRECT ANSWER - agreed upon procedures report
The risk that a company's financial statements will materially depart from generally accepted
accounting principles is referred to as:
- Business Risk.
- Information Risk.
- Detection Risk.
- Document Risk. - CORRECT ANSWER - Information Risk
The attest function:
- Is an essential part of every engagement by the CPA, whether performing auditing, tax work, or
other services.
- Includes the preparation of a report of the CPA's findings.
,- Requires consideration of internal control.
- Requires a complete review of all transactions during the period under examination. -
CORRECT ANSWER - Includes the preparation of a report of the CPA's findings.
The review of a company's financial statements by a CPA firm:
- Is substantially less in the scope of procedures than an audit.
- Requires detailed analysis of the major accounts.
- Is of similar scope as an audit and adds similar credibility to the statements.
- Culminates in the issuance of a report expressing the CPA's opinion as to the fairness of the
statements. - CORRECT ANSWER - Is substantially less in scope of procedures than an
audit.
Inquiries and analytical procedures ordinarily form the basis for which type of engagement?
- Agreed-upon procedures.
- Audit.
- Examination.
- Review. - CORRECT ANSWER - Review
An integrated audit performed under the Sarbanes-Oxley Act requires that auditors provide
opinions on:
Financial Statements Law Compliance
A. Yes Yes
, B. Yes No
C. No Yes
D. No No
- Option A
- Option B
- Option C
- Option D - CORRECT ANSWER - Option B
Accountants are regulated by a variety of organizations. Match the following statements with the
most directly related organizations. Organizations may be used once or not at all.
Develops accounting standards for public and nonpublic companies.... - CORRECT
ANSWER - - (FASB) Financial accounting standards board
Accountants are regulated by a variety of organizations. Match the following statements with the
most directly related organizations. Organizations may be used once or not at all.
Develops accounting standards for the US government... - CORRECT ANSWER -
(FASAB)
Federal accounting standards advisory board
Accountants are regulated by a variety of organizations. Match the following statements with the
most directly related organizations. Organizations may be used once or not at all.
Improves Standards of financial accounting for state and local government entities. - CORRECT
ANSWER - (GASB)
Government Accounting Standards Board
Questions and CORRECT Answers
Although independent audits of today place more emphasis on sampling than did the audits of
the 19th century, in increasing circumstances, changes in information technology are again
making possible audits of aspects of all transactions in large populations.
True or False ? - CORRECT ANSWER - True
A summary of findings rather than assurance is most likely to be included in a(n):
- Agreed-upon procedures report.
- Compilation report.
- Audit report.
- Review report. - CORRECT ANSWER - agreed upon procedures report
The risk that a company's financial statements will materially depart from generally accepted
accounting principles is referred to as:
- Business Risk.
- Information Risk.
- Detection Risk.
- Document Risk. - CORRECT ANSWER - Information Risk
The attest function:
- Is an essential part of every engagement by the CPA, whether performing auditing, tax work, or
other services.
- Includes the preparation of a report of the CPA's findings.
,- Requires consideration of internal control.
- Requires a complete review of all transactions during the period under examination. -
CORRECT ANSWER - Includes the preparation of a report of the CPA's findings.
The review of a company's financial statements by a CPA firm:
- Is substantially less in the scope of procedures than an audit.
- Requires detailed analysis of the major accounts.
- Is of similar scope as an audit and adds similar credibility to the statements.
- Culminates in the issuance of a report expressing the CPA's opinion as to the fairness of the
statements. - CORRECT ANSWER - Is substantially less in scope of procedures than an
audit.
Inquiries and analytical procedures ordinarily form the basis for which type of engagement?
- Agreed-upon procedures.
- Audit.
- Examination.
- Review. - CORRECT ANSWER - Review
An integrated audit performed under the Sarbanes-Oxley Act requires that auditors provide
opinions on:
Financial Statements Law Compliance
A. Yes Yes
, B. Yes No
C. No Yes
D. No No
- Option A
- Option B
- Option C
- Option D - CORRECT ANSWER - Option B
Accountants are regulated by a variety of organizations. Match the following statements with the
most directly related organizations. Organizations may be used once or not at all.
Develops accounting standards for public and nonpublic companies.... - CORRECT
ANSWER - - (FASB) Financial accounting standards board
Accountants are regulated by a variety of organizations. Match the following statements with the
most directly related organizations. Organizations may be used once or not at all.
Develops accounting standards for the US government... - CORRECT ANSWER -
(FASAB)
Federal accounting standards advisory board
Accountants are regulated by a variety of organizations. Match the following statements with the
most directly related organizations. Organizations may be used once or not at all.
Improves Standards of financial accounting for state and local government entities. - CORRECT
ANSWER - (GASB)
Government Accounting Standards Board
