Question 1

Auditing standards are considered to be

Accepted Answer

A)   Specialized to obtain evidence to render an opinion.
B)   Guides for the quality of audits that apply to all audits.
C)   Standards for preparation of financial statements.
D)   Standards to govern the quality of a specific firm's audit practice.

Question 2

Which of the following presumptions does not relate to the reliability of audit evidence?

Accepted Answer

A)   The more effective the client's internal control, the more assurance it provides about the accounting data and financial statements.
B)   The auditors' opinion, to be economically useful, is formed within a reasonable time and based on evidence obtained at a reasonable cost.
C)   Evidence obtained from independent sources outside the entity is more reliable than evidence secured solely within the entity.
D)   The independent auditors' direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly.

Question 3

Which of the following is true with respect to PCAOB inspections of accounting firms?

Accepted Answer

A)   All firms performing audits of public companies are required to have annual inspections conducted by the PCAOB.
B)   PCAOB inspections review a sample of audits conducted by firms as well as the firm's systems of quality control.
C)   All results of PCAOB inspections are made available to the public following the inspection.
D)   Firms performing audits of 100 or fewer public entities may elect to have a peer review conducted through the AICPA in lieu of a PCAOB inspection.

Question 4

To properly plan the audit,auditors should be engaged before the client's fiscal year-end or date of the ______________________________.

Accepted Answer

financial ...

Question 5

Which of the following opinions would be issued if auditors believed that the entity's financial statements were not presented in conformity with GAAP?

Accepted Answer

A)   Adverse opinion.
B)   Disclaimer of opinion.
C)   Qualified opinion.
D)   Unqualified opinion.

Question 6

Which of the following types of auditors' reports does not require an explanatory paragraph to support the opinion?

Accepted Answer

A)   Unqualified opinion.
B)   Adverse opinion.
C)   Qualified opinion.
D)   Disclaimer of opinion.

Question 7

Which of the following would normally be considered earliest in the audit examination?

Accepted Answer

A)   Determination of materiality levels to use during the audit.
B)   Consideration of the ability of the entity's internal control to prevent or detect errors.
C)   Preparation of a written audit plan.
D)   Evaluation of the type of audit opinion to be issued based on the auditor's findings.

Question 8

Audit evidence is usually considered sufficient when

Accepted Answer

A)   It is reliable.
B)   There is enough quantity to afford a reasonable basis for an opinion on financial statements.
C)   It has the qualities of being relevant, objective, and free from unknown bias.
D)   It has been obtained through random selection methods.

Question 9

Under the performance principle,auditors are required to provide absolute assurance that the client's financial statements do not contain material misstatements.

Accepted Answer

A) True 
 B)False

Question 10

The preparation of an audit plan prior to the beginning of fieldwork is appropriately considered documentation of

Accepted Answer

A)   Planning.
B)   Supervision.
C)   Information evaluation.
D)   Quality assurance.

Question 11

Under the ____________________________ principle of GAAS,the auditor expresses an opinion in accordance with the auditor's findings.

Accepted Answer

The answer of Under the ____________________________ principle of GAAS,the auditor...

Question 12

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

Accepted Answer

A)   Receiving confirmation from third parties as to the existence of securities is more reliable than the auditors' personal inspection of those securities.
B)   Verbal inquiries received from the client regarding sales made to customers are more reliable than sales invoices prepared by the client for its customers.
C)   A bank confirmation received directly by the auditor is more reliable than a bank confirmation initially received by the client and forwarded to the auditor.
D)   Evidence drawn from a document prepared by the client is more reliable than evidence drawn from a document prepared by an external party that is forwarded to the auditor by the client.

Question 13

The performance principle sets forth the quality criteria for conducting an audit.

Accepted Answer

A) True 
 B)False

Question 14

Alan Fallon was recently promoted to senior accountant.He was put in charge of the Mellow Markets audit because of his experience with other grocery clients.Mellow Markets has a small,but growing,chain of natural food stores.This is the first year Mellow Markets has been audited.Because of their growth,Mellow Markets needs additional capital and intends to use its audited financial statements to secure a loan.
Fallon has been assigned two inexperienced staff assistants for the audit.Because this is his first engagement as a senior,he intends to bring the job in on budget.To save time,he provided his assistants with a copy of the audit plan for Happy Time Food Stores.He told them that this would make things go more quickly.He also told them that he could not spend much time with them at the client's place of business because "my time is billed out at such a high rate,we'll go right over budget." However,he did call them once a day from another audit on which he was working.
After beginning their work,the assistants told Fallon that the audit plan did not always match what they found at Mellow Markets.Fallon responded,"Just cross out whatever is not relevant in the audit plan and don't add anything - it will only make us go over the budget." When Fallon came to the client near the end of fieldwork,one assistant was concerned that no inventory observation was done at the out-of-town locations of Mellow Markets (the audit plan had stipulated that inventory should be observed for in-town stores only).Happy Time had only one out-of-town location while three of Mellow Markets' five stores were in other cities.Fallon told the assistant to get inventory sheets from the client for the other stores and added,"Make sure that the inventory balance in the general ledger agrees with the total for all the inventory sheets." The next day,Fallon reviewed all audit documentation and submitted the job for review by the manager.
Required:
1.Describe the performance principle of GAAS.
2.Do you believe that the Mellow Markets audit complies with the performance principle? Explain.

Accepted Answer

According to the performance principle,t...

Question 15

Under the reporting principle of GAAS,the report will contain either an expression of ______________________ regarding the financial statements,taken as a whole,or an assertion to the effect that an opinion cannot be expressed.

Accepted Answer

The answer of Under the reporting principle of GAAS,the report...

Question 16

Evidence is considered appropriate when it is both valid and relevant.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would most likely be a violation of the independence requirement found in the responsibilities principle under generally accepted auditing standards?

Accepted Answer

A)   An auditor on the engagement has a distant relative who is employed by a vendor that does a significant amount of business with clients.
B)   The client's chief executive officer graduated from the same university as the partner in charge of the accounting firm.
C)   An auditor on the engagement owns a financial interest in the client's stock.
D)   The client provides financial support to a number of charitable causes that also receive support from the accounting firm.

Question 18

The purpose of a system of quality control is to provide reasonable assurance that the firm and its personnel issue reports that are appropriate under the circumstances.

Accepted Answer

A) True 
 B)False

Question 19

(Appendix) Which of the following is a conceptual difference between attestation standards and generally accepted auditing standards?

Accepted Answer

A)   The attestation standards provide a framework for the attest function beyond historical financial statements.
B)   The requirement that the practitioner be independent is not required under attestation standards.
C)   The attestation standards do not permit an attestation engagement to examine prospective "what-if " financial statements.
D)   Requirements related to evidence are not included in the attestation standards.

Question 20

For each of the matters below,indicate through the appropriate letter the fundamental principle to which the matter is most closely related.
A. Responsibilities principle
B. Performance principle
C. Reporting principle

Accepted Answer

1.A,2.C,3....

Exam 2: Professional Standards

Correct Answer
verified
According to the performance principle,t...
View Answer

Which of the following would normally be considered earliest in the audit examination?

Correct Answer
verified

Under the reporting principle of GAAS,the report will contain either an expression of ______________________ regarding the financial statements,taken as a whole,or an assertion to the effect that an opinion cannot be expressed.

Correct Answer
verified

Which of the following presumptions does not relate to the reliability of audit evidence?

Correct Answer
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Under the performance principle,auditors are required to provide absolute assurance that the client's financial statements do not contain material misstatements.

Correct Answer
verified

Which of the following opinions would be issued if auditors believed that the entity's financial statements were not presented in conformity with GAAP?

Correct Answer
verified

Under the ____________________________ principle of GAAS,the auditor expresses an opinion in accordance with the auditor's findings.

Correct Answer
verified

(Appendix) Which of the following is a conceptual difference between attestation standards and generally accepted auditing standards?

Correct Answer
verified

Which of the following is true with respect to PCAOB inspections of accounting firms?

Correct Answer
verified

For each of the matters below,indicate through the appropriate letter the fundamental principle to which the matter is most closely related. A. Responsibilities principle B. Performance principle C. Reporting principle

Correct Answer
verified
1.A,2.C,3....
View Answer

Evidence is considered appropriate when it is both valid and relevant.

Correct Answer
verified

The purpose of a system of quality control is to provide reasonable assurance that the firm and its personnel issue reports that are appropriate under the circumstances.

Correct Answer
verified

The performance principle sets forth the quality criteria for conducting an audit.

Correct Answer
verified

The preparation of an audit plan prior to the beginning of fieldwork is appropriately considered documentation of

Correct Answer
verified

To properly plan the audit,auditors should be engaged before the client's fiscal year-end or date of the ______________________________.

Correct Answer
verified
financial ...
View Answer

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

Correct Answer
verified

Which of the following types of auditors' reports does not require an explanatory paragraph to support the opinion?

Correct Answer
verified

Which of the following would most likely be a violation of the independence requirement found in the responsibilities principle under generally accepted auditing standards?

Correct Answer
verified

Auditing standards are considered to be

Correct Answer
verified

Audit evidence is usually considered sufficient when

Correct Answer
verified

Exam 2: Professional Standards

Correct AnswerverifiedAccording to the performance principle,t...View AnswerShow Answer

Which of the following would normally be considered earliest in the audit examination?

Correct AnswerverifiedShow Answer

Under the reporting principle of GAAS,the report will contain either an expression of ______________________ regarding the financial statements,taken as a whole,or an assertion to the effect that an opinion cannot be expressed.

Correct AnswerverifiedShow Answer

Which of the following presumptions does not relate to the reliability of audit evidence?

Correct AnswerverifiedShow Answer

Under the performance principle,auditors are required to provide absolute assurance that the client's financial statements do not contain material misstatements.

Correct AnswerverifiedShow Answer

Which of the following opinions would be issued if auditors believed that the entity's financial statements were not presented in conformity with GAAP?

Correct AnswerverifiedShow Answer

Under the ____________________________ principle of GAAS,the auditor expresses an opinion in accordance with the auditor's findings.

Correct AnswerverifiedShow Answer

(Appendix) Which of the following is a conceptual difference between attestation standards and generally accepted auditing standards?

Correct AnswerverifiedShow Answer

Which of the following is true with respect to PCAOB inspections of accounting firms?

Correct AnswerverifiedShow Answer

For each of the matters below,indicate through the appropriate letter the fundamental principle to which the matter is most closely related. A. Responsibilities principle B. Performance principle C. Reporting principle

Correct Answerverified1.A,2.C,3....View AnswerShow Answer

Evidence is considered appropriate when it is both valid and relevant.

Correct AnswerverifiedShow Answer

The purpose of a system of quality control is to provide reasonable assurance that the firm and its personnel issue reports that are appropriate under the circumstances.

Correct AnswerverifiedShow Answer

The performance principle sets forth the quality criteria for conducting an audit.

Correct AnswerverifiedShow Answer

The preparation of an audit plan prior to the beginning of fieldwork is appropriately considered documentation of

Correct AnswerverifiedShow Answer

To properly plan the audit,auditors should be engaged before the client's fiscal year-end or date of the ______________________________.

Correct Answerverifiedfinancial ...View AnswerShow Answer

Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?

Correct AnswerverifiedShow Answer

Which of the following types of auditors' reports does not require an explanatory paragraph to support the opinion?

Correct AnswerverifiedShow Answer

Which of the following would most likely be a violation of the independence requirement found in the responsibilities principle under generally accepted auditing standards?

Correct AnswerverifiedShow Answer

Auditing standards are considered to be

Correct AnswerverifiedShow Answer

Audit evidence is usually considered sufficient when

Correct AnswerverifiedShow Answer

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According to the performance principle,t...
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1.A,2.C,3....
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financial ...
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