Chapter 1. Quality Auditing, Why It Matters

TEST BANK FOR AUDITING: A RISK BASED-APPROACH, 11TH EDITION, KARLA M. JOHNSTONE, AUDREY A. GRAMLING, LARRY E. RITTENBERG Chapter 1. Quality Auditing: Why It Matters. 1. The need for independent assurance arises because the interests of the users of information may be different from the interests of those responsible for providing information. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Need for Independent Assurance 2. A financial statement audit is a systematic process of objectively obtaining and evaluating evidence. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined 3. A bank using Milton Company's financial statements to evaluate Milton’s loan application is an example of a user’s need for unbiased reporting. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: User’s Need for Reliable Financial Reporting 4. An integrated audit requires the auditor to assess the effectiveness of internal controls. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Integrated Audit 5. Auditors obtain and evaluate evidence regarding assertions about economic actions and events to verify the accuracy of those assertions. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined DATE CREATED: 1/17/2018 3:03 AM DATE MODIFIED: 1/17/2018 7:42 AM 6. Auditing is the process of verifying the accuracy of the financial statements. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined 7. Management may have incentives to present biased financial information, but the various users of the statements are not likely to have conflicting interests in the financial information. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Users’ Needs for Reliable Financial Information 8. Auditing exists because users need unbiased information on which to assess management performance and make economic decisions. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Need for Independent Assurance 9. Users rely on the auditors' independent assessment of financial statement presentation because few users have direct knowledge of the company's operations. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Need for Independent Assurance 10. If the auditor has no reservations about management’s financial statements, then the auditor will issue a qualified opinion. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditor’s Opinion DATE CREATED: 1/17/2018 3:09 AM DATE MODIFIED: 1/17/2018 7:42 AM 11. Independence is often referred to as the cornerstone of the auditing profession. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Importance of Auditor Independence DATE CREATED: 1/17/2018 3:09 AM DATE MODIFIED: 1/17/2018 7:42 AM 12. Auditors generally need quantitative and mathematical skills more than they need communication and leadership skills. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Skills and Knowledge Needed by Professionals DATE CREATED: 1/17/2018 3:10 AM DATE MODIFIED: 1/17/2018 7:42 AM 13. The overall objective of an audit is to obtain assurance whether the financial statements are free of misstatement. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Overview of the External Auditing Profession DATE CREATED: 1/17/2018 3:12 AM DATE MODIFIED: 1/17/2018 7:42 AM 14. The foundation for the audit opinion formulation process relies on obtaining evidence to support the auditor’s opinion. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Audit Opinion Formulation Process DATE CREATED: 1/17/2018 3:12 AM DATE MODIFIED: 1/17/2018 7:42 AM 15. Complex transactions, information, and processing systems provide an opportunity for management to mislead users of financial statements. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Need for Independent Assurance DATE CREATED: 1/17/2018 3:13 AM DATE MODIFIED: 1/17/2018 7:42 AM 16. Users of audited financial statements include a company’s bondholders but not its stockholders, who are the owners of the company. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Users of Audited Financial Statements DATE CREATED: 1/17/2018 3:14 AM DATE MODIFIED: 1/17/2018 7:42 AM 17. A key responsibility of the internal audit function is to provide assurance on the reliability of financial information reported to external users of audited financial statements. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Parties Involved in Preparing and Auditing Financial Statements DATE CREATED: 1/17/2018 3:16 AM DATE MODIFIED: 1/17/2018 7:42 AM 18. The audit committee oversees both the internal and external auditors. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Role of the Audit Committee DATE CREATED: 1/17/2018 3:17 AM DATE MODIFIED: 1/17/2018 7:42 AM 19. A CPA is a certified public accountant who is licensed by a state board of accountancy. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:18 AM DATE MODIFIED: 1/17/2018 7:42 AM 20. Internal controls are the responsibility of management. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Parties Involved in Financial Reporting DATE CREATED: 1/17/2018 3:19 AM DATE MODIFIED: 1/17/2018 7:42 AM 21. Audit staff performing audit work must be appropriately supervised by partners and managers. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Audit Engagement Team DATE CREATED: 1/17/2018 3:21 AM DATE MODIFIED: 1/17/2018 7:42 AM 22. An auditor who has reservations about the effectiveness of a client company’s internal controls would issue an adverse opinion on internal controls. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Audit Report on Internal Controls DATE CREATED: 1/17/2018 3:22 AM DATE MODIFIED: 1/17/2018 7:42 AM 23. Audit firm culture is one of the primary drivers of audit quality. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Drivers of Audit Quality DATE CREATED: 1/17/2018 3:23 AM DATE MODIFIED: 1/17/2018 7:42 AM 24. Effective audit processes, by themselves, are sufficient to achieve audit quality. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Achieving Audit Quality DATE CREATED: 1/17/2018 3:23 AM DATE MODIFIED: 1/17/2018 7:42 AM 25. A quality audit is one performed “in accordance with generally accepted auditing standards (GAAS) to provide reasonable assurance that the audited financial statements and related disclosures are presented in accordance with generally accepted accounting principles (GAAP) and (2) are not materially misstated whether due to errors or fraud.” a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Quality Audit Defined DATE CREATED: 1/17/2018 3:25 AM DATE MODIFIED: 1/17/2018 7:42 AM 26. Audit quality is driven, in part, by the skills and personal qualities of audit partners and staff. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Drivers of Audit Quality DATE CREATED: 1/17/2018 3:26 AM DATE MODIFIED: 1/17/2018 7:42 AM 27. The Financial Reporting Council’s Audit Quality Framework is the only framework for audit quality recognized by audit professionals worldwide. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Frameworks of Audit Quality DATE CREATED: 1/17/2018 3:27 AM DATE MODIFIED: 1/17/2018 7:42 AM 28. Some factors affecting audit quality are outside the direct control of the auditor, such as the amount of time allotted for completion of the audit. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Frameworks of Audit Quality DATE CREATED: 1/17/2018 3:28 AM DATE MODIFIED: 1/17/2018 7:42 AM 29. Auditors should conduct their work with an attitude of professional skepticism. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Frameworks of Audit Quality DATE CREATED: 1/17/2018 3:29 AM DATE MODIFIED: 1/17/2018 7:42 AM 30. In the United States, auditors form conclusions about whether the financial statements are presented fairly in accordance with generally accepted auditing standards (GAAS). a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Frameworks of Audit Quality DATE CREATED: 1/17/2018 3:30 AM DATE MODIFIED: 1/17/2018 7:42 AM 31. The International Auditing and Assurance Standards Board sets international standards on auditing and has developed a framework for audit quality. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:31 AM DATE MODIFIED: 1/17/2018 7:42 AM 32. To ensure audit quality, audits of public companies must be performed by multinational accounting firms. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.02 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Audit Quality DATE CREATED: 1/17/2018 3:32 AM DATE MODIFIED: 1/17/2018 7:42 AM 33. The PCAOB requires disclosure of the names of engagement partners for all public company audits. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:33 AM DATE MODIFIED: 1/17/2018 7:42 AM 34. The PCAOB is a public board, appointed by Congress, to provide oversight of the firms that audit public companies registered with the SEC. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:34 AM DATE MODIFIED: 1/17/2018 7:42 AM 35. The SEC is the governmental body with oversight responsibility for the efficient operation of capital markets in the United States. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:35 AM DATE MODIFIED: 1/17/2018 7:42 AM 36. The PCAOB provides the criteria against which the auditor measures the fairness of financial statement presentation. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:36 AM DATE MODIFIED: 1/17/2018 7:42 AM 37. The AICPA sets auditing standards for nonpublic companies. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:37 AM DATE MODIFIED: 1/17/2018 7:42 AM 38. Though often relying on the FASB, the SEC has authority to establish GAAP for public companies. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:38 AM DATE MODIFIED: 1/17/2018 7:42 AM 39. The SEC has authority to establish GAAP for all business enterprises. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:39 AM DATE MODIFIED: 1/17/2018 7:42 AM 40. The Center for Audit Quality is responsible for the oversight of the peer review process for registered audit firms. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:40 AM DATE MODIFIED: 1/17/2018 7:42 AM 41. The SEC and PCAOB independence rules for auditors are identical to those of the AICPA. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Professional and Regulatory Organizations DATE CREATED: 1/17/2018 3:41 AM DATE MODIFIED: 1/17/2018 7:42 AM 42. Compliance with the AICPA Code of Professional Conduct depends primarily on the threat of disciplinary actions for violating the Code. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:42 AM DATE MODIFIED: 1/17/2018 7:42 AM 43. The AICPA’s conceptual framework of “threats and safeguards” included in the Code of Professional Conduct applies only to AICPA members in public practice. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:45 AM DATE MODIFIED: 1/17/2018 7:42 AM 44. Threats to an auditor’s independence may occur when the auditor has a long-standing relationship with an important person associated with the client. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:46 AM DATE MODIFIED: 1/17/2018 7:42 AM 45. A safeguard is an action or other measure that may eliminate a threat or reduce the threat to an acceptable level. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:47 AM DATE MODIFIED: 1/17/2018 7:42 AM 46. Safeguards implemented by the audit client include mandatory audit partner rotation requirements for public companies. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:48 AM DATE MODIFIED: 1/17/2018 7:42 AM 47. An AICPA member who is not in public practice is not subject to any of the Principles of Professional Conduct. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:50 AM DATE MODIFIED: 1/17/2018 7:42 AM 48. Specific rules of conduct contained in the AICPA Code of Professional Conduct and related interpretations of those rules cover many, but not all, relationships and circumstances that an auditor may encounter. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:51 AM DATE MODIFIED: 1/17/2018 7:42 AM 49. An individual does not need to agree to uphold the AICPA’s Code of Professional Conduct in order to become licensed as a CPA. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:52 AM DATE MODIFIED: 1/17/2018 7:42 AM 50. A covered member’s investment in a mutual fund that owns stock in a firm being audited by the covered member is a direct financial interest resulting in the impairment of independence. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:53 AM DATE MODIFIED: 1/17/2018 7:42 AM 51. When an auditor identifies threats to compliance with the rules of conduct, the auditor must demonstrate that safeguards were applied that totally eliminated the threat. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:54 AM DATE MODIFIED: 1/17/2018 7:42 AM 52. A covered member may not have a direct financial interest in an audit client if the interest is material. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:56 AM DATE MODIFIED: 1/17/2018 7:42 AM 53. The AICPA's Code of Professional Conduct defines an indirect financial interest as an investment of one percent or less of a client's organization, and because the amount is so small it is considered immaterial. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:56 AM DATE MODIFIED: 1/17/2018 7:42 AM 54. Auditors are permitted to perform for a contingent fee an audit of the financial statements if the audit committee approves the agreement in advance of the services being provided. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:58 AM DATE MODIFIED: 1/17/2018 7:42 AM 55. An auditor may not disclose any confidential client information unless the auditor determines that disclosure is in the public interest. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 3:59 AM DATE MODIFIED: 1/17/2018 7:42 AM 56. Contingent fees are prohibited for tax professionals when preparing tax returns for clients. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:00 AM DATE MODIFIED: 1/17/2018 7:42 AM 57. Contingent fees are prohibited for any client for which the auditor performs audit services, but are otherwise permitted. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:01 AM DATE MODIFIED: 1/17/2018 7:42 AM 58. Commissions and referral fees are allowed to audit firms as long as the audit client is informed of the fees. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:02 AM DATE MODIFIED: 1/17/2018 7:42 AM 59. A CPA firm may include the name of only one past owner in the firm name. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:03 AM DATE MODIFIED: 1/17/2018 7:42 AM 60. A covered member under the AICPA’s rules includes individuals on the engagement team, any individual in a position to influence the engagement team, and a partner or manager who provides more than 10 hours of nonattest services to the audit client within a fiscal year. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:04 AM DATE MODIFIED: 1/17/2018 7:42 AM 61. Rule 102 on integrity and objectivity applies only to covered members as defined by the AICPA. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:05 AM DATE MODIFIED: 1/17/2018 7:42 AM 62. The AICPA may revoke a member’s CPA license for violating its Code of Professional Conduct. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:06 AM DATE MODIFIED: 1/17/2018 7:42 AM 63. A new staff member on an audit engagement may own stock in that client until the audit report is issued. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:07 AM DATE MODIFIED: 1/17/2018 7:42 AM 64. A contingency fee is a situation in which no fee will be charged unless a specified finding or result is attained. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:08 AM DATE MODIFIED: 1/17/2018 7:42 AM 65. Rule 102, Integrity and Objectivity, of the AICPA Professional Code of Conduct, does not apply to a CPA who is a corporate CFO. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Professional Code of Conduct DATE CREATED: 1/17/2018 4:09 AM DATE MODIFIED: 1/17/2018 7:42 AM 66. Loans between the auditor and the client are permitted in some circumstances. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:11 AM DATE MODIFIED: 1/17/2018 7:42 AM 67. The auditor is permitted to violate the confidentiality rule in providing relevant information to an inquiry by a major shareholder of the client. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:12 AM DATE MODIFIED: 1/17/2018 7:42 AM 68. A covered member’s independence would be impaired if an immediate family member was employed by the client company in any position. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:13 AM DATE MODIFIED: 1/17/2018 7:42 AM 69. The AICPA Code of Professional Conduct prohibits an auditor from providing any non-audit services to audit clients because of the threat posed to the auditor’s independence. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: AICPA Code of Professional Conduct DATE CREATED: 1/17/2018 4:14 AM DATE MODIFIED: 1/17/2018 7:42 AM 70. The SEC and PCOAB have independence requirements that apply only to auditors of public companies. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.03 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: SEC and PCOAB Independence Requirements DATE CREATED: 1/17/2018 4:15 AM DATE MODIFIED: 1/17/2018 7:42 AM 71. According to the framework for professional decision making, the first step in decision-making is to structure the audit problem. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: General Decision-Making Framework DATE CREATED: 1/17/2018 4:16 AM DATE MODIFIED: 1/17/2018 7:42 AM 72. According to Rights Theory, the highest-order rights include rights granted by the government, such as civil rights, legal rights, rights to own property, and license privileges. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Framework for Ethical Decision Making DATE CREATED: 1/17/2018 4:17 AM DATE MODIFIED: 1/17/2018 7:42 AM 73. An ethical dilemma occurs in a situation in which moral duties or obligations conflict. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Framework for Ethical Decision Making DATE CREATED: 1/17/2018 4:18 AM DATE MODIFIED: 1/17/2018 7:42 AM 74. An ethical dilemma occurs when an ethically correct action may conflict with an individual’s immediate selfinterest. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Framework for Ethical Decision Making DATE CREATED: 1/17/2018 4:19 AM DATE MODIFIED: 1/17/2018 7:42 AM 75. Rights theory focuses on evaluating actions in terms of the fundamental rights of the parties involved. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Framework for Ethical Decision Making DATE CREATED: 1/17/2018 4:21 AM DATE MODIFIED: 1/17/2018 7:42 AM 76. There is a hierarchy of rights to consider when applying rights theory. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: An Ethical Decision-Making Framework DATE CREATED: 1/17/2018 4:22 AM DATE MODIFIED: 1/17/2018 7:42 AM 77. Utilitarian theory is an approach for addressing ethical problems by identifying a hierarchy of rights that should be considered in solving ethical dilemmas. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Ethical Theories DATE CREATED: 1/17/2018 5:35 AM DATE MODIFIED: 1/17/2018 7:42 AM 78. Professional judgment is an attitude that includes a questioning mind and a critical evaluation of audit evidence. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Framework for Professional Decision Making DATE CREATED: 1/17/2018 5:36 AM DATE MODIFIED: 1/17/2018 7:42 AM 79. Without professional skepticism, auditors are susceptible to accepting weak or inaccurate audit evidence. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.04 NATIONAL STANDARDS: United States - BUSPROG: Comprehension United States - BUSPROG: Ethics STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Framework for Professional Decision Making DATE CREATED: 1/17/2018 5:37 AM DATE MODIFIED: 1/17/2018 7:42 AM 80. Both client acceptance decisions and client continuance decisions are based on an evaluation of relative risk and audit fees. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.05 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Client Acceptance and Continuance DATE CREATED: 1/17/2018 5:37 AM DATE MODIFIED: 1/17/2018 7:42 AM 81. Auditors consider both quantitative and qualitative risk factors when making client acceptance or continuance decisions. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.05 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Client Acceptance and Continuance DATE CREATED: 1/17/2018 5:38 AM DATE MODIFIED: 1/17/2018 7:42 AM 82. An auditor is not permitted to contact the predecessor auditor when considering a prospective new client. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.05 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Client Acceptance and Continuance DATE CREATED: 1/17/2018 5:39 AM DATE MODIFIED: 1/17/2018 7:42 AM 83. Engagement letters issued to new clients do not specify the amount of audit fees to be charged because fees cannot be determined until the audit has been completed. a. True b. False ANSWER: False POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.05 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Client Acceptance and Continuance DATE CREATED: 1/17/2018 5:40 AM DATE MODIFIED: 1/17/2018 7:42 AM 84. Which of the following is not a reason for audits of financial statements of public companies? a. Potential bias in providing information. b. Greater likelihood of fraud in large public companies. c. Complexity of the processing systems. d. Remoteness between a user and the organization. ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Need for Independent Assurance DATE CREATED: 1/17/2018 5:41 AM DATE MODIFIED: 1/17/2018 7:42 AM 85. What is the term used to describe a systematic process of objectively obtaining evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users? a. Internal audit. b. Financial statement audit. c. External audit. d. Program audit ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined DATE CREATED: 1/17/2018 5:42 AM DATE MODIFIED: 1/17/2018 7:42 AM 86. An Integrated Audit Report provides opinion(s) on which of the following? a. The financial statements. b. Internal controls. c. Both financial statements and internal controls. d. Neither financial statements nor internal controls. ANSWER: c POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Integrated Audit Defined DATE CREATED: 1/17/2018 5:43 AM DATE MODIFIED: 1/17/2018 7:42 AM 87. Who are the users of the financial statements? a. Management. b. Auditors. c. Taxing Authorities. d. Both A and C. ANSWER: d POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined DATE CREATED: 1/17/2018 5:45 AM DATE MODIFIED: 1/17/2018 7:42 AM 88. Which of the following is a factor that creates a need for an independent auditor's assessment of the financial statement presentation? a. Complexity of transactions affecting the financial statements. b. Lack of criteria on which to base information. c. Remoteness of the user from the organization. d. Both A and C. ANSWER: d POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Need for Independent Assurance DATE CREATED: 1/17/2018 5:46 AM DATE MODIFIED: 1/17/2018 7:42 AM 89. What can users of the audit report reasonably expect from the audited financial statements? a. The financial statements are complete and contain many of the important financial disclosures. b. The financial statements are presented fairly according to the substance of GAAP. c. The financial statements are free from all errors. d. All of the above. ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined DATE CREATED: 1/17/2018 5:47 AM DATE MODIFIED: 1/17/2018 7:42 AM 90. To conduct an audit, what must an auditor do? a. Comply with relevant ethical standards. b. Exercise perfect judgment. c. Obtain sufficient appropriate evidence to provide absolute assurance. d. All of the above. ANSWER: a POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined DATE CREATED: 1/17/2018 6:00 AM DATE MODIFIED: 1/17/2018 7:42 AM 91. What is the first phase in an audit? a. Client acceptance or client continuance. b. Understanding the client. c. Understanding internal controls. d. Testing of account balances. ANSWER: a POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined DATE CREATED: 1/17/2018 6:02 AM DATE MODIFIED: 1/17/2018 7:42 AM 92. How is the audit report referred to when the auditor has no reservations about management’s financial statements? a. An unqualified report. b. A qualified report. c. An adverse report. d. An integrated report. ANSWER: a POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Overview of the External Auditing Profession DATE CREATED: 1/17/2018 6:03 AM DATE MODIFIED: 1/17/2018 7:42 AM 93. Why is auditing important in a free market society? a. The public requires auditors to function as divisions of regulatory bodies. b. Auditors detect all errors and fraud perpetrated by company employees. c. Audits provide reliable information upon which to judge economic performance. d. The auditor is a form of insurance policy for investors. ANSWER: c POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined DATE CREATED: 1/17/2018 6:05 AM DATE MODIFIED: 1/17/2018 7:42 AM 94. What must an auditor do in an audit? a. Consider how the economic activity is portrayed in the financial statements. b. Force management to make operational decisions that will improve the company’s financial performance. c. Disregard independence in order to find the underlying truth of the evidence. d. Establish new criteria by which financial statements may be compared. ANSWER: a POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False LEARNING OBJECTIVES: AUDI.JOHN.18.01.01 NATIONAL STANDARDS: United States - BUSPROG: Comprehension STATE STANDARDS: United States - AK - AICPA BB - Critical thinking TOPICS: Auditing Defined DATE CREATED: 1/17/2018 6:08 AM DATE MODIFIED: 1/17/2018 7:42 AM 95. What document communicates the conclusions of the financial statement audit? a. The financial statements. b. Written management assertions. c. The audit report. d. None of the above. ANSWER: c POINTS: