TESTfBANKfAUDITI
NGfTHEORY
Overview
1. Providingfquantitative finformationfthatfmanagementfandfothersfcanfuseftofmakefdecisionsfisfthe ffu
nctionfof
A. Accounting
B. Auditing
C. Finance
D. Managementfof finformationfsystems
2. The fseriesfofftasksfandfrecordsfoffanfentityfbyfwhichftransactionsfarefprocessedfasfafmeansfoff main
tainingffinancialfrecords
A. Accountingfsystem
B. Computerfinformationfsystem
C. Controlfenvironment
D. Internalfcontrolfsystem
3. The fexpertise fthatfdistinguishesfauditorsffromfaccountantsfisfinfthe
A. Abilityftofinterpretfaccountingfstandards
B. Accumulationfandfinterpretationfof fevidence
C. Abilityftofinterpretfgenerallyfacceptedfaccountingfprinciples
D. Requirementftofpossessfeducationfbeyondfthe fbachelor’sfdegree
4. Comprisesfofficersfandfothersfwhofalsofperformfseniorfmanagerialffunctions
A. Auditfcommittee C.fGovernance
B. Boardfoffdirectors D.fManagement
5. Anfauditfconductedftofdeterminefwhetherfanfentityfisffollowingfspecificfproceduresforfrulesfsetfdo
wnfbyfsome fhigherfauthority
A. Compliance faudit C.fFinancialfaudit
B. Detailedfaudit D.fOperationalfaudit
6. Af reviewf of f anyf partf off anf organization’sf andf methodsf forf the f purpose f of f evaluatingf efficiency
andfeffectivenessfisfclassifiedfasfa(n)
A. Auditfof ffinancialfstatements
B. Compliance faudit
C. Operationalfaudit
D. Productionfaudit
7. Operationalfauditingfisfprimarilyforientedftoward
A. Pastfprotectionfprovidedfbyfexistingfinternalfcontrol
, B. Future fimprovementsftofaccomplishfthe fgoalsfof fmanagement
C. The faccuracyfof fdatafreflectedfinfmanagement’sffinancialfrecords
D. The fverificationfthatfafcompany’sffinancialfstatementsfare ffairlyfpresented
8. Aftypicalfobjective fof fanfoperationalfauditfis
A. Make frecommendationsfforfimprovingfperformance
B. Evaluate fthe ffeasibilityfof fattainingfthe fentity’sfoperationalfobjectives
C. Reportfonfthe fentity’sfrelative fsuccessfinfattainingfprofitfmaximization
D. Determine fwhetherfthe ffinancialfstatementsffairlyfpresentfthe fentity’sfoperations
9. Underfthe flaw,fthe fchief fexecutive fofficerfof fthe fCommissionfonfAuditfisfthe
A. Chairman C.fCommissioner
B. CommissionfSecretary D.fExecutive fDirector
10. One fof fthe fgovernmentfauditingfstandardsfwhichfisfnotfobservedfbyfindependentfCPAsfinfthef priva
te fsectorfis:
A. Anfevaluationfshallfbe fmade fof fthe fsystemfof finternalfcontrol
B. Afreviewfshallfbe fmade fof fcompliance fwithflegalfandfstatutoryfrequirements
C. The fauditfisftofbe fadequatelyfplannedfandfassistantsfare ftofbe fproperlyfsupervised
D. Sufficientf competentfevidentialfmatterf shallf bef obtainedf throughf inspection,fobservation, fin
quiries,fandfconfirmations
11. Whichfoffthe ffollowingfisfmore fdifficultftofevaluate fobjectively?
A. Compliance fwithfgovernmentfregulations
B. Efficiencyfandfeffectivenessfof foperations
C. Presentationf off financialf statementsf inf accordancef withf generallyf acceptedf accountingfpri
nciples
D. Allfthree fof fthe fabove fare fequallyfdifficult
ProfessionalfPractice foffAccounting
12. The fCore fCompetenciesfoffCPAsfinclude:
A. Assurance fandfinformationfintegrity
B. Objectivity
C. Pursuitfofflife-longflearningfandfexcellence
D. Strategicfandfcriticalfthinkingfskills
13.
refersftofthe fapplicationfoffrelevant,ftraining,fknowledge fandfexperience,fwithinfthe fcont
extfprovidedfbyfauditing,faccountingfandfethicalfstandardsfinfmakingfinformedfdecisionsfaboutfthe f
course foffactionfthatfare fappropriate finfthe fcircumstancesfoffthe fauditfengagement.
A. Compliance C.fProfessionalfjudgment
B. Professionalfcompetence D.fReasonable fassurance
, 14. While fperformingfservicesfforftheirfclients,fprofessionalsfhavefafdutyftofprovidefaflevelfoffcaref whic
hfis
A. Free ffromfjudgmentferrors C.fReasonable
B. Greaterfthanfaverage D.fSuperior
15. “Absence foff reasonable f care f thatf canf be f expectedf off af personf inf af setf off circumstances”f isf the
definitionfof
A. Constructive ffraud C.fGrossfnegligence
B. Fraud D.fOrdinaryfnegligence
QualityfControlfStandards
16. The fpoliciesfandfproceduresfadoptedfbyfaffirmftofprovide freasonable fassurance fthatfallfauditsfdone f
byfthe ffirmfare fbeingfcarriedfoutfinfaccordance fwithfthe fObjective fandfGeneralfPrinciplesfGoverning
fanfAuditfof fFinancialfStatements.
A. Generalfcontrols C.fPeerfreview
B. Internalfcontrols D.fQualityfcontrols
17. The fmainfpurpose fof fimplementingfqualityfcontrolfpoliciesfandfproceduresfis:
A. Tofhave faffavorable fpeerfreview
B. Tofcomplyfwithfregulatoryfagency
C. Tofstandardize fthe fpoliciesfandfproceduresfoffthe fauditffirms
D. Tofprovide freasonable fassurance fthatfauditfwillfbe fconductedfinfaccordance fwithfPSA
18. Affirmfshouldfestablishfandfmaintainfafsystemfof fqualityfcontrolftofprovide fitfwithfreasonable f assur
ance fthat:
I. The f firmf andf itsf personnelf complyf withf professionalf standardsf andf applicable f legalf andfre
gulatoryfrequirements
II. Reportsfissuedfbyfthe ffirmforfengagementfpartnersfare fappropriate finfthe fcircumstances
A. Ifonly C.fBothfIfandfII
B. IIfonly D.fNeitherfIfnorfII
19. The ffirmfshallfestablishfpoliciesfandfproceduresfdesignedftofprovidefitfwithfreasonablefassurance fth
atfengagementsfare fperformedfinfaccordance fwithfprofessionalfstandardsfandfregulatoryfandflegalf
requirements, fandfthatfthe ffirmforfthe fengagementfpartnerfissue freportfthatfare fappropriate finfthe fci
rcumstance.fSuchfpoliciesfandfproceduresfshallfinclude:
A. Reviewfresponsibilities
B. Supervisionfresponsibilities
C. Mattersfrelevantftofpromotingfconsistencyfinfthe fqualityfoffengagementfperformance
D. Allfoffthe fchoices
20. The fobjectivesfoffthe fqualityfcontrolfpoliciesftofbe fadoptedfbyfthe fauditffirmfwillfordinarilyfincorpor
ate:
A B C D
, Skillsfandfcompetence Yes Yes Yes No
Monitoring Yes No Yes Yes
Professionalfrequirements Yes Yes No Yes
21. The fnature fandfextentfof fafCPAffirm’sfqualityfcontrolfpoliciesfandfproceduresfdependfon
A B C D
The fCPAffirm’s Yes Yes No Yes
The fnature fof fCPAffirm’sfpractice Yes Yes Yes No
Cost-benefitfconsiderations Yes No Yes Yes
22. Qualityfcontrolfpoliciesfandfproceduresfshouldfbe fimplementedfat
A B C D
Levelfoffthe fauditffirm Yes Yes No No
Individualfaudits Yes No Yes No
23. Anfauditffirmfshouldfimplementfqualityfcontrolfpoliciesfandfproceduresfdesignedftofensure fthatfallf
auditsfare fconductedfinfaccordance fwithfPSAsforfrelevantfnationalfstandardsforfpractices.fThese fpol
iciesfandfproceduresfshouldfbe fimplemented
A. Onfindividualfauditsfonly
B. Atfthe fauditfformflevelfonly
C. Eitherfatfthe fauditffirmflevelforfonfindividualfaudits
D. Bothfatfthe fauditffirmflevelfandfonfindividualfaudits
24. Whichfoffthe ffollowingfisfnotfonce foffthe fmajorfconcernsfof fthefauditorfwhenfestablishingfqualityfcon
trolfpoliciesfandfprocedures?
A. Billingfarrangement C.fEthicalfrequirements
B. Engagementfperformance D.fIndependence
25. Whichfoffthe ffollowingfqualityfcontrolfobjectivesfwouldfbe fleastfimportance ftofthe fauditor?
A. Determinationfoffauditffee C.fProfessionalfadvancement
B. Hiringfpersonnel D.fReviewfandfsupervision
26. The ffirm’sfsystemfof fqualityfcontrolfshouldfinclude fpoliciesfandfproceduresfthatfaddressfeachfof
the ffollowingfelements,fexcept
A. Controlfenvironment
B. Humanfresources
C. Relevantfethicalfrequirements
D. Relevantfethicalfrequirements
27. Infpursuingfaffirm’sfqualityfcontrolfobjectives,faffirmfshouldfadoptfpoliciesfandfproceduresftofenabl
e fitftofidentifyfandfevaluate fcircumstancesfandfrelationshipsfthatfcreate fthreatsforfreduce fthemftofa
nfacceptable flevelfbyfapplyingfsafeguards,for,fiffconsideredfappropriate,ftofwithdrawffromfthe fenga
gement.fWhichfqualityfcontrolfelementfwouldfbe fmostflikelyftofsatisfy?
A. Monitoring
B. Humanfresources
NGfTHEORY
Overview
1. Providingfquantitative finformationfthatfmanagementfandfothersfcanfuseftofmakefdecisionsfisfthe ffu
nctionfof
A. Accounting
B. Auditing
C. Finance
D. Managementfof finformationfsystems
2. The fseriesfofftasksfandfrecordsfoffanfentityfbyfwhichftransactionsfarefprocessedfasfafmeansfoff main
tainingffinancialfrecords
A. Accountingfsystem
B. Computerfinformationfsystem
C. Controlfenvironment
D. Internalfcontrolfsystem
3. The fexpertise fthatfdistinguishesfauditorsffromfaccountantsfisfinfthe
A. Abilityftofinterpretfaccountingfstandards
B. Accumulationfandfinterpretationfof fevidence
C. Abilityftofinterpretfgenerallyfacceptedfaccountingfprinciples
D. Requirementftofpossessfeducationfbeyondfthe fbachelor’sfdegree
4. Comprisesfofficersfandfothersfwhofalsofperformfseniorfmanagerialffunctions
A. Auditfcommittee C.fGovernance
B. Boardfoffdirectors D.fManagement
5. Anfauditfconductedftofdeterminefwhetherfanfentityfisffollowingfspecificfproceduresforfrulesfsetfdo
wnfbyfsome fhigherfauthority
A. Compliance faudit C.fFinancialfaudit
B. Detailedfaudit D.fOperationalfaudit
6. Af reviewf of f anyf partf off anf organization’sf andf methodsf forf the f purpose f of f evaluatingf efficiency
andfeffectivenessfisfclassifiedfasfa(n)
A. Auditfof ffinancialfstatements
B. Compliance faudit
C. Operationalfaudit
D. Productionfaudit
7. Operationalfauditingfisfprimarilyforientedftoward
A. Pastfprotectionfprovidedfbyfexistingfinternalfcontrol
, B. Future fimprovementsftofaccomplishfthe fgoalsfof fmanagement
C. The faccuracyfof fdatafreflectedfinfmanagement’sffinancialfrecords
D. The fverificationfthatfafcompany’sffinancialfstatementsfare ffairlyfpresented
8. Aftypicalfobjective fof fanfoperationalfauditfis
A. Make frecommendationsfforfimprovingfperformance
B. Evaluate fthe ffeasibilityfof fattainingfthe fentity’sfoperationalfobjectives
C. Reportfonfthe fentity’sfrelative fsuccessfinfattainingfprofitfmaximization
D. Determine fwhetherfthe ffinancialfstatementsffairlyfpresentfthe fentity’sfoperations
9. Underfthe flaw,fthe fchief fexecutive fofficerfof fthe fCommissionfonfAuditfisfthe
A. Chairman C.fCommissioner
B. CommissionfSecretary D.fExecutive fDirector
10. One fof fthe fgovernmentfauditingfstandardsfwhichfisfnotfobservedfbyfindependentfCPAsfinfthef priva
te fsectorfis:
A. Anfevaluationfshallfbe fmade fof fthe fsystemfof finternalfcontrol
B. Afreviewfshallfbe fmade fof fcompliance fwithflegalfandfstatutoryfrequirements
C. The fauditfisftofbe fadequatelyfplannedfandfassistantsfare ftofbe fproperlyfsupervised
D. Sufficientf competentfevidentialfmatterf shallf bef obtainedf throughf inspection,fobservation, fin
quiries,fandfconfirmations
11. Whichfoffthe ffollowingfisfmore fdifficultftofevaluate fobjectively?
A. Compliance fwithfgovernmentfregulations
B. Efficiencyfandfeffectivenessfof foperations
C. Presentationf off financialf statementsf inf accordancef withf generallyf acceptedf accountingfpri
nciples
D. Allfthree fof fthe fabove fare fequallyfdifficult
ProfessionalfPractice foffAccounting
12. The fCore fCompetenciesfoffCPAsfinclude:
A. Assurance fandfinformationfintegrity
B. Objectivity
C. Pursuitfofflife-longflearningfandfexcellence
D. Strategicfandfcriticalfthinkingfskills
13.
refersftofthe fapplicationfoffrelevant,ftraining,fknowledge fandfexperience,fwithinfthe fcont
extfprovidedfbyfauditing,faccountingfandfethicalfstandardsfinfmakingfinformedfdecisionsfaboutfthe f
course foffactionfthatfare fappropriate finfthe fcircumstancesfoffthe fauditfengagement.
A. Compliance C.fProfessionalfjudgment
B. Professionalfcompetence D.fReasonable fassurance
, 14. While fperformingfservicesfforftheirfclients,fprofessionalsfhavefafdutyftofprovidefaflevelfoffcaref whic
hfis
A. Free ffromfjudgmentferrors C.fReasonable
B. Greaterfthanfaverage D.fSuperior
15. “Absence foff reasonable f care f thatf canf be f expectedf off af personf inf af setf off circumstances”f isf the
definitionfof
A. Constructive ffraud C.fGrossfnegligence
B. Fraud D.fOrdinaryfnegligence
QualityfControlfStandards
16. The fpoliciesfandfproceduresfadoptedfbyfaffirmftofprovide freasonable fassurance fthatfallfauditsfdone f
byfthe ffirmfare fbeingfcarriedfoutfinfaccordance fwithfthe fObjective fandfGeneralfPrinciplesfGoverning
fanfAuditfof fFinancialfStatements.
A. Generalfcontrols C.fPeerfreview
B. Internalfcontrols D.fQualityfcontrols
17. The fmainfpurpose fof fimplementingfqualityfcontrolfpoliciesfandfproceduresfis:
A. Tofhave faffavorable fpeerfreview
B. Tofcomplyfwithfregulatoryfagency
C. Tofstandardize fthe fpoliciesfandfproceduresfoffthe fauditffirms
D. Tofprovide freasonable fassurance fthatfauditfwillfbe fconductedfinfaccordance fwithfPSA
18. Affirmfshouldfestablishfandfmaintainfafsystemfof fqualityfcontrolftofprovide fitfwithfreasonable f assur
ance fthat:
I. The f firmf andf itsf personnelf complyf withf professionalf standardsf andf applicable f legalf andfre
gulatoryfrequirements
II. Reportsfissuedfbyfthe ffirmforfengagementfpartnersfare fappropriate finfthe fcircumstances
A. Ifonly C.fBothfIfandfII
B. IIfonly D.fNeitherfIfnorfII
19. The ffirmfshallfestablishfpoliciesfandfproceduresfdesignedftofprovidefitfwithfreasonablefassurance fth
atfengagementsfare fperformedfinfaccordance fwithfprofessionalfstandardsfandfregulatoryfandflegalf
requirements, fandfthatfthe ffirmforfthe fengagementfpartnerfissue freportfthatfare fappropriate finfthe fci
rcumstance.fSuchfpoliciesfandfproceduresfshallfinclude:
A. Reviewfresponsibilities
B. Supervisionfresponsibilities
C. Mattersfrelevantftofpromotingfconsistencyfinfthe fqualityfoffengagementfperformance
D. Allfoffthe fchoices
20. The fobjectivesfoffthe fqualityfcontrolfpoliciesftofbe fadoptedfbyfthe fauditffirmfwillfordinarilyfincorpor
ate:
A B C D
, Skillsfandfcompetence Yes Yes Yes No
Monitoring Yes No Yes Yes
Professionalfrequirements Yes Yes No Yes
21. The fnature fandfextentfof fafCPAffirm’sfqualityfcontrolfpoliciesfandfproceduresfdependfon
A B C D
The fCPAffirm’s Yes Yes No Yes
The fnature fof fCPAffirm’sfpractice Yes Yes Yes No
Cost-benefitfconsiderations Yes No Yes Yes
22. Qualityfcontrolfpoliciesfandfproceduresfshouldfbe fimplementedfat
A B C D
Levelfoffthe fauditffirm Yes Yes No No
Individualfaudits Yes No Yes No
23. Anfauditffirmfshouldfimplementfqualityfcontrolfpoliciesfandfproceduresfdesignedftofensure fthatfallf
auditsfare fconductedfinfaccordance fwithfPSAsforfrelevantfnationalfstandardsforfpractices.fThese fpol
iciesfandfproceduresfshouldfbe fimplemented
A. Onfindividualfauditsfonly
B. Atfthe fauditfformflevelfonly
C. Eitherfatfthe fauditffirmflevelforfonfindividualfaudits
D. Bothfatfthe fauditffirmflevelfandfonfindividualfaudits
24. Whichfoffthe ffollowingfisfnotfonce foffthe fmajorfconcernsfof fthefauditorfwhenfestablishingfqualityfcon
trolfpoliciesfandfprocedures?
A. Billingfarrangement C.fEthicalfrequirements
B. Engagementfperformance D.fIndependence
25. Whichfoffthe ffollowingfqualityfcontrolfobjectivesfwouldfbe fleastfimportance ftofthe fauditor?
A. Determinationfoffauditffee C.fProfessionalfadvancement
B. Hiringfpersonnel D.fReviewfandfsupervision
26. The ffirm’sfsystemfof fqualityfcontrolfshouldfinclude fpoliciesfandfproceduresfthatfaddressfeachfof
the ffollowingfelements,fexcept
A. Controlfenvironment
B. Humanfresources
C. Relevantfethicalfrequirements
D. Relevantfethicalfrequirements
27. Infpursuingfaffirm’sfqualityfcontrolfobjectives,faffirmfshouldfadoptfpoliciesfandfproceduresftofenabl
e fitftofidentifyfandfevaluate fcircumstancesfandfrelationshipsfthatfcreate fthreatsforfreduce fthemftofa
nfacceptable flevelfbyfapplyingfsafeguards,for,fiffconsideredfappropriate,ftofwithdrawffromfthe fenga
gement.fWhichfqualityfcontrolfelementfwouldfbe fmostflikelyftofsatisfy?
A. Monitoring
B. Humanfresources
