8) Attestation services on information technology
B) SysTrust services provide assurance on system
include WebTrust services and SysTrust services. Which
reliability in critical areas such as security and data
of the following statements most accurately describes
SysTrust services?
integrity
11) A common way for a CPA firm to
demonstrate its lack of duty to perform audit contract, or engagement letter
is by use of a(n):
Absence of reasonable care that can be
expected of a person in a set of ordinary negligence
circumstances defines:
According to the Code of Professional Extensive analyses of inventory prepared by the
client at the auditor's request are working papers that
Conduct which of the following is truewith belong to the auditor and need not be furnished to
respect to records in a CPA's possession? the client upon request.
According to the principle established
a reasonably limited and identifiable
by the Restatement of Torts case,
user group.
foreseen users must be members of:
According to the Principles section of in public practice should be independent
the Code of Professional Conduct, all in fact and in appearance when providing
members: auditing and other attestations services.
According to the profession's ethical standards, The auditor's checking account, which is
an auditor would be considered independent in fully insured by a federal agency, is held
which of the following instances? at a client fina ncial institution.
The overall financial statements are so materially
An adverse opinion is issued when the misstated that they do not present fairly the financial
auditor believes: position or results of operations and cash flows in
conformity with GAAP.
After the balance sheet date but prior to issuance of the auditor's
report the auditor learns that the client's facility in a foreign provide the information in the report
country has been expropriated. Management refuses to disclose
this information in a financial statement footnote or present pro- and modify the opinion.
forma data as to the effect of the event. The auditor should:
The AICPA has authority to establish Auditing standards applicable to
standards and rules in all but which of financial statements of private and
the following areas? public companies
,The AICPA's Code of Professional Conduct ________ a
CPA firm from doing both bookkeeping and auditing prohibits
services for the same public company client?
The AICPA's Code of Professional
attestation engagements.
Conduct requires independence for all:
The AICPA's Code of Professional Conduct states
that a CPA should maintain integrity and objectivity. Maintain an impartial attitude on matters
The term "objectivity" in the Code refers to a CPA's that come under the CPA's review.
ability to:
All of the following are conditions Mmnagement decided not to allow the auditor to
confirm significant accounts receivable, but the
requiring a departure from a standard auditor obtained sufficient appropriate evidence by
unqualified audit report except: examining subsequent cash receipts.
A(n) ________ failure occurs when an auditor issues
an erroneous opinion because it failed to Audit
comply with requirements of auditing standards.
Any service that requires a CPA firm to issue a report
about the reliability of an assertion that is made attestation service
by another party is a(n):
As a consequence of his failure to adhere to generally accepted auditing
standards in the course of his examination of the Lamp Corp., Harrison, CPA,
did not detect the embezzlement of a material amount of funds by the
He would be liable for losses
company's controller. As a matter of common law, to what extent would
Harrison be liable to the Lamp Corp. for losses attributable to the theft?
attributable to his negligence.
As a result of management's refusal to permit the
auditor to physically examine inventory. The auditor the scope of the audit has been
must depart from the unqualified audit report restricted.
because:
the assessment against a defendant of
that portion of the damage caused by separate and proportionate liability
the defendant's negligence is called
the assessment against a defendant of the full loss
suffered by a plaintiff regardless of the extent to
which other parties shared in the wrongdoing is joint and several liability
called:
,Assume the Public Company Accounting Oversight can enforce disciplinary action against the accounting firm-Y
Board (PCAOB) identifies a violation during its
report the matter to the Securities and Exchange Commission-Y
inspection of a registered accounting firm. The
PCAOB: suspend the license to practice of the CPA guilty of the violation-N
Audit contracts (engagement letters) must be written
a misstatement is made and there is
an audit fraud occurs when both knowledge of its falsity and and
the intent to deceive
The Auditing Standards Board of the AICPA has undertaken a Clarity and
Convergence Project whose aim is to make GAAS easier to read, apply and
converge with International Audit Standards. As a result the GAAS will
become "Auditing Principles". The principles will be consistent with the three
I and II
categories of GAAS. Accordingly, which of the following is true?
Auditing standards require that the audit
report must be titled and that the title Include the word "independent."
must
An audit of historical financial
statements is most often performed to none of these choices.
determine whether the:
An audit of historical financial
balance sheet, income statement, and
statements most commonly includes
the statement of cash flows.
the:
Departure from GAAP -Y
An auditor can express a qualified
Lack of Consistency-Y
opinion due to a:
Lack of Sufficient Evidence -Y
An auditor determines the financial statements Disclaimer-N
include at least a material departure from GAAP. Qualified-Y
Which type of opinion may be issued? Adverse-Y
An auditor need not abide by a
the issue in question is immaterial in
particular auditing standard if the
amount.
auditor believes that:
, a joint, closely held business investment
An auditor's independence is
with the client that is material to the
considered impaired if the auditor has:
auditor's net worth.
Auditors may be liable to their clients Punitive Damages: Yes
for Compensatory Damages: Yes
auditors who fail to exercise due care in
their performance of professional breach of contract
services may be liable for
An auditor who issues a qualified opinion because Scope paragraph-Y
sufficient appropriate evidence was not obtained
should describe the limitations in an explanatory Opinion paragraph-Y
paragraph. The auditor should also modify the: Notes to the financial statements-N
the last day of the auditor's responsibility for the
The audit report date on a standard
review of significant events that occurred subsequent
unqualified report indicates: to the date of the financial statements.
The Audit Standards Board of the AICPA has undertaken the Clarity &
Convergence Project to make GAAS easier to read understand and
apply; as well as converge GAAS with the International Standards on I, II and III
Auditing (ISAs). Which of the following statements concerning the
Clarity & Convergence Project is(are) true?
An audit to determine whether an entity is following
specific procedures or rules set down by some compliance audit
higher authority is classified as a(n):
The basic legal concept which was
the auditor's defense of privity of
affirmed in the 1985 New York case,
contract is still valid against third parties.
Credit Alliance, was that:
A basic objective of a CPA firm is to provide
professional services to conform to professional
standards. Reasonable assurance of achieving this a system of quality control.
basic objective is provided through:
A broad interpretation of the rights of third-party beneficiaries
holds that users that the auditor should have been able to
foresee as being likely users of financial statements have the foreseeable users
same rights as those with privity of contract. This is known as the
concept of
B) SysTrust services provide assurance on system
include WebTrust services and SysTrust services. Which
reliability in critical areas such as security and data
of the following statements most accurately describes
SysTrust services?
integrity
11) A common way for a CPA firm to
demonstrate its lack of duty to perform audit contract, or engagement letter
is by use of a(n):
Absence of reasonable care that can be
expected of a person in a set of ordinary negligence
circumstances defines:
According to the Code of Professional Extensive analyses of inventory prepared by the
client at the auditor's request are working papers that
Conduct which of the following is truewith belong to the auditor and need not be furnished to
respect to records in a CPA's possession? the client upon request.
According to the principle established
a reasonably limited and identifiable
by the Restatement of Torts case,
user group.
foreseen users must be members of:
According to the Principles section of in public practice should be independent
the Code of Professional Conduct, all in fact and in appearance when providing
members: auditing and other attestations services.
According to the profession's ethical standards, The auditor's checking account, which is
an auditor would be considered independent in fully insured by a federal agency, is held
which of the following instances? at a client fina ncial institution.
The overall financial statements are so materially
An adverse opinion is issued when the misstated that they do not present fairly the financial
auditor believes: position or results of operations and cash flows in
conformity with GAAP.
After the balance sheet date but prior to issuance of the auditor's
report the auditor learns that the client's facility in a foreign provide the information in the report
country has been expropriated. Management refuses to disclose
this information in a financial statement footnote or present pro- and modify the opinion.
forma data as to the effect of the event. The auditor should:
The AICPA has authority to establish Auditing standards applicable to
standards and rules in all but which of financial statements of private and
the following areas? public companies
,The AICPA's Code of Professional Conduct ________ a
CPA firm from doing both bookkeeping and auditing prohibits
services for the same public company client?
The AICPA's Code of Professional
attestation engagements.
Conduct requires independence for all:
The AICPA's Code of Professional Conduct states
that a CPA should maintain integrity and objectivity. Maintain an impartial attitude on matters
The term "objectivity" in the Code refers to a CPA's that come under the CPA's review.
ability to:
All of the following are conditions Mmnagement decided not to allow the auditor to
confirm significant accounts receivable, but the
requiring a departure from a standard auditor obtained sufficient appropriate evidence by
unqualified audit report except: examining subsequent cash receipts.
A(n) ________ failure occurs when an auditor issues
an erroneous opinion because it failed to Audit
comply with requirements of auditing standards.
Any service that requires a CPA firm to issue a report
about the reliability of an assertion that is made attestation service
by another party is a(n):
As a consequence of his failure to adhere to generally accepted auditing
standards in the course of his examination of the Lamp Corp., Harrison, CPA,
did not detect the embezzlement of a material amount of funds by the
He would be liable for losses
company's controller. As a matter of common law, to what extent would
Harrison be liable to the Lamp Corp. for losses attributable to the theft?
attributable to his negligence.
As a result of management's refusal to permit the
auditor to physically examine inventory. The auditor the scope of the audit has been
must depart from the unqualified audit report restricted.
because:
the assessment against a defendant of
that portion of the damage caused by separate and proportionate liability
the defendant's negligence is called
the assessment against a defendant of the full loss
suffered by a plaintiff regardless of the extent to
which other parties shared in the wrongdoing is joint and several liability
called:
,Assume the Public Company Accounting Oversight can enforce disciplinary action against the accounting firm-Y
Board (PCAOB) identifies a violation during its
report the matter to the Securities and Exchange Commission-Y
inspection of a registered accounting firm. The
PCAOB: suspend the license to practice of the CPA guilty of the violation-N
Audit contracts (engagement letters) must be written
a misstatement is made and there is
an audit fraud occurs when both knowledge of its falsity and and
the intent to deceive
The Auditing Standards Board of the AICPA has undertaken a Clarity and
Convergence Project whose aim is to make GAAS easier to read, apply and
converge with International Audit Standards. As a result the GAAS will
become "Auditing Principles". The principles will be consistent with the three
I and II
categories of GAAS. Accordingly, which of the following is true?
Auditing standards require that the audit
report must be titled and that the title Include the word "independent."
must
An audit of historical financial
statements is most often performed to none of these choices.
determine whether the:
An audit of historical financial
balance sheet, income statement, and
statements most commonly includes
the statement of cash flows.
the:
Departure from GAAP -Y
An auditor can express a qualified
Lack of Consistency-Y
opinion due to a:
Lack of Sufficient Evidence -Y
An auditor determines the financial statements Disclaimer-N
include at least a material departure from GAAP. Qualified-Y
Which type of opinion may be issued? Adverse-Y
An auditor need not abide by a
the issue in question is immaterial in
particular auditing standard if the
amount.
auditor believes that:
, a joint, closely held business investment
An auditor's independence is
with the client that is material to the
considered impaired if the auditor has:
auditor's net worth.
Auditors may be liable to their clients Punitive Damages: Yes
for Compensatory Damages: Yes
auditors who fail to exercise due care in
their performance of professional breach of contract
services may be liable for
An auditor who issues a qualified opinion because Scope paragraph-Y
sufficient appropriate evidence was not obtained
should describe the limitations in an explanatory Opinion paragraph-Y
paragraph. The auditor should also modify the: Notes to the financial statements-N
the last day of the auditor's responsibility for the
The audit report date on a standard
review of significant events that occurred subsequent
unqualified report indicates: to the date of the financial statements.
The Audit Standards Board of the AICPA has undertaken the Clarity &
Convergence Project to make GAAS easier to read understand and
apply; as well as converge GAAS with the International Standards on I, II and III
Auditing (ISAs). Which of the following statements concerning the
Clarity & Convergence Project is(are) true?
An audit to determine whether an entity is following
specific procedures or rules set down by some compliance audit
higher authority is classified as a(n):
The basic legal concept which was
the auditor's defense of privity of
affirmed in the 1985 New York case,
contract is still valid against third parties.
Credit Alliance, was that:
A basic objective of a CPA firm is to provide
professional services to conform to professional
standards. Reasonable assurance of achieving this a system of quality control.
basic objective is provided through:
A broad interpretation of the rights of third-party beneficiaries
holds that users that the auditor should have been able to
foresee as being likely users of financial statements have the foreseeable users
same rights as those with privity of contract. This is known as the
concept of
