Auditing Chapter 1 Test Questions
and Answers All Correct
The primary objective of compliance auditing is to?
-Give an opinion
-Develop a basis
-Perform a study
-Determine whether client personnel - Answer ✔ Determine whether client personnel
are following laws, rules, regulations, and policies.
What requirements are usually necessary to become licensed as a CPA?
-Succesful completion
-Experience in the accounting field
-Education
-All of the above - Answer ✔ Succesfull completion of the Uniform CPA Exam
The organization primarily responsible for ensuring that public officials are using public
funds efficiently, economically, and effectively is the?
-GIAA
-CIA
-SEC
-GAO - Answer ✔ GAO
Performance audits usually include (two answers)
-Financial adits
-Economy and efficiency audits
-Compliance audits
-Program audits - Answer ✔ Economy and efficiency audits
The objective in an auditors review of CREDIT RATINGS of a clients customers is to
obtain evidence related to managements assertion about?
-Completness
-Existence
-Valuation and allocation
-Rights and obligations
-Occurance - Answer ✔ Valuation and allocation
Jones, CPA, is planning the audit of Rhonda's Company. Rhonda verbally asserts to
Jones that all expenses for the year have been recorded in the accounts. Rhonda's
representation in this regard?
-Is sufficient evidence
-Can enable Jones to conclude
, -Should be disregarded
-Is not considered sufficient - Answer ✔ Is not considered a sufficient basis for jones to
conclude that all expenses have been recorded
The risk to investors that a company's financial statements may be materially
misleading is called?
-Client acceptance risk
-Information risk
-Moral hazard
-Business risk - Answer ✔ Information risk
When auditing merchandise inventory at year end, the auditor performs audit
procedures to ensure that all goods purchased BEFORE YEAR-END are received
before the physical inventory count. This audit procedure provides assurance about
which management assertion?
-Cutoff
-Existence
-Valuation and allocation
-Rights and obligations
-Occurance - Answer ✔ Cutoff
Which of the following would be considered an assurance engagement?
-Giving an opinion on a Prize
-Giving an opinion on the conformity
-Giving an opinion on the fair presentation
- All of the above - Answer ✔ All of the above
It is always a good idea for auditors to begin an audit with the professional skepticism
characterized by the assumption that?
-A potential conflict of interest always exist
-In audits of financial statements, the auditor
-The professional status of the independent auditor
-Financial statements and financial data are verifiable - Answer ✔ A potential conflict of
interest always exists between the auditor and the management of the enterprise under
audit.
In an attestation engagement, a CPA practitioner is engaged to?
-Compile a company financial forecast
-Prepare a written report
-Prepare a tax return
-Give expert testimony in court - Answer ✔ Prepare a written report containing a
conclusion about the reliability of a management assertion
A determination of cost savings obtained by outsourcing cafeteria services is most likely
to be an objective of?
-Environmental auditing
and Answers All Correct
The primary objective of compliance auditing is to?
-Give an opinion
-Develop a basis
-Perform a study
-Determine whether client personnel - Answer ✔ Determine whether client personnel
are following laws, rules, regulations, and policies.
What requirements are usually necessary to become licensed as a CPA?
-Succesful completion
-Experience in the accounting field
-Education
-All of the above - Answer ✔ Succesfull completion of the Uniform CPA Exam
The organization primarily responsible for ensuring that public officials are using public
funds efficiently, economically, and effectively is the?
-GIAA
-CIA
-SEC
-GAO - Answer ✔ GAO
Performance audits usually include (two answers)
-Financial adits
-Economy and efficiency audits
-Compliance audits
-Program audits - Answer ✔ Economy and efficiency audits
The objective in an auditors review of CREDIT RATINGS of a clients customers is to
obtain evidence related to managements assertion about?
-Completness
-Existence
-Valuation and allocation
-Rights and obligations
-Occurance - Answer ✔ Valuation and allocation
Jones, CPA, is planning the audit of Rhonda's Company. Rhonda verbally asserts to
Jones that all expenses for the year have been recorded in the accounts. Rhonda's
representation in this regard?
-Is sufficient evidence
-Can enable Jones to conclude
, -Should be disregarded
-Is not considered sufficient - Answer ✔ Is not considered a sufficient basis for jones to
conclude that all expenses have been recorded
The risk to investors that a company's financial statements may be materially
misleading is called?
-Client acceptance risk
-Information risk
-Moral hazard
-Business risk - Answer ✔ Information risk
When auditing merchandise inventory at year end, the auditor performs audit
procedures to ensure that all goods purchased BEFORE YEAR-END are received
before the physical inventory count. This audit procedure provides assurance about
which management assertion?
-Cutoff
-Existence
-Valuation and allocation
-Rights and obligations
-Occurance - Answer ✔ Cutoff
Which of the following would be considered an assurance engagement?
-Giving an opinion on a Prize
-Giving an opinion on the conformity
-Giving an opinion on the fair presentation
- All of the above - Answer ✔ All of the above
It is always a good idea for auditors to begin an audit with the professional skepticism
characterized by the assumption that?
-A potential conflict of interest always exist
-In audits of financial statements, the auditor
-The professional status of the independent auditor
-Financial statements and financial data are verifiable - Answer ✔ A potential conflict of
interest always exists between the auditor and the management of the enterprise under
audit.
In an attestation engagement, a CPA practitioner is engaged to?
-Compile a company financial forecast
-Prepare a written report
-Prepare a tax return
-Give expert testimony in court - Answer ✔ Prepare a written report containing a
conclusion about the reliability of a management assertion
A determination of cost savings obtained by outsourcing cafeteria services is most likely
to be an objective of?
-Environmental auditing
