MODULE C MC EXAMINATION
QUESTIONS WITH ALL CORRECT
ANSWERS
When accountants agree to perform a compilation or review of unaudited financial
statements, the best way to avoid client's misunderstanding the nature of the work is to
describe it completely in
the auditor's opinion
an engagement letter
a report to the client's board of directors at the close of the engagement
A management letter to the board of directors' audit committee - Answer-an
engagement letter
Entities desiring to issue equity or debt must provide a set of financial statements to any
prospective purchaser. This set of financial statements and other information for
prospective purchasers is known as a
Review
Patron's acquisition statemetn
projected audited financial information
prospectus - Answer-prospectus
The Securities Act of 1933 and Securities Exchange Act of 1934 contain
Civil liability provisions applicable to auditors
Criminal liability provisions applicable to auditors
Both a and b
Neither a nor b - Answer-Both a and b
Which of the following third parties is known by name to auditors as the audit is
conducted?
, General third party
Foreseen third party
Primary beneficiary
Foreseeable third party - Answer-Primary beneficiary
Which of the following would be the auditors' most likely defense in the action brought
under the Securities Exchange Act of 1934
the investor did not have a privity with auditors
the financial statements were not filed with the Securities and Exchange Commission
the investor did not suffer a loss based on the materially misstated financial statements
the auditors acted in good faith and were not aware of the materially misstated financial
statements - Answer-the financial statements were not filed with the Securities and
Exchange Commission
Which of the following statements regarding auditors' liability under the Securities Act of
1933 is not true?
Auditors may be liable if they are found to have engaged in ordinary negligence
Auditors' liability arises because of audited financial information filed with the SEC
Third parties must demonstrate that they relied on misstated financial statements that
were examined by auditors
the act related to the initial issuance of securities to the public, normally through an
initial public offering - Answer-Third parties must demonstrate that they relied on
misstated financial statements that were examined by auditors
Under the Securities Exchange Act of 1934, entities are required to report to the public
changing auditors on
Form 10-K
Form S-1
Form 10-Q
Form 8-K - Answer-Form 8-K
QUESTIONS WITH ALL CORRECT
ANSWERS
When accountants agree to perform a compilation or review of unaudited financial
statements, the best way to avoid client's misunderstanding the nature of the work is to
describe it completely in
the auditor's opinion
an engagement letter
a report to the client's board of directors at the close of the engagement
A management letter to the board of directors' audit committee - Answer-an
engagement letter
Entities desiring to issue equity or debt must provide a set of financial statements to any
prospective purchaser. This set of financial statements and other information for
prospective purchasers is known as a
Review
Patron's acquisition statemetn
projected audited financial information
prospectus - Answer-prospectus
The Securities Act of 1933 and Securities Exchange Act of 1934 contain
Civil liability provisions applicable to auditors
Criminal liability provisions applicable to auditors
Both a and b
Neither a nor b - Answer-Both a and b
Which of the following third parties is known by name to auditors as the audit is
conducted?
, General third party
Foreseen third party
Primary beneficiary
Foreseeable third party - Answer-Primary beneficiary
Which of the following would be the auditors' most likely defense in the action brought
under the Securities Exchange Act of 1934
the investor did not have a privity with auditors
the financial statements were not filed with the Securities and Exchange Commission
the investor did not suffer a loss based on the materially misstated financial statements
the auditors acted in good faith and were not aware of the materially misstated financial
statements - Answer-the financial statements were not filed with the Securities and
Exchange Commission
Which of the following statements regarding auditors' liability under the Securities Act of
1933 is not true?
Auditors may be liable if they are found to have engaged in ordinary negligence
Auditors' liability arises because of audited financial information filed with the SEC
Third parties must demonstrate that they relied on misstated financial statements that
were examined by auditors
the act related to the initial issuance of securities to the public, normally through an
initial public offering - Answer-Third parties must demonstrate that they relied on
misstated financial statements that were examined by auditors
Under the Securities Exchange Act of 1934, entities are required to report to the public
changing auditors on
Form 10-K
Form S-1
Form 10-Q
Form 8-K - Answer-Form 8-K
