4652619
Description
Quiz by amanda.padilla, updated more than 1 year ago
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Created by amanda.padilla
almost 9 years ago
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Question 1
Question
41. In a leading securities law and CPA liabilities case, the U.S. Supreme Court ruled in 1976 in Hochfelder v. Ernst and Ernst that before CPAs could be held liable for Rule 10b-5 of the Securities Exchange Act of 1934, what would be required to be shown to the court was the auditor's:
Answer
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ordinary negligence
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gross negligence
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knowledge and intent to deceive
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financial gain at the expense of the plaintiff
Question 2
Question
42. In describing the cycle approach to segmenting an audit, which of the following statements is not true?
Answer
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all general ledger acounts and journals are included at least once.
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some journals and general ledger accounts are included in more than one cycle.
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the "capital acquisition and repayment" cycle is closely related to the "acquisition of goods and services and payment" cycle.
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the "inventory and warehousing" cycle may be audited at any time during the engagement since it is unrelated to the other cycles.
Question 3
Question
48. Which of the following statements best describes the auditor's responsibility regarding the detection of fraud?
Answer
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the auditor is responsible for the failure to detect fraud only when such failure clearly results from nonperformance of audit procedures specifically describd in the engagement letter
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the auditor is required to provide reasonable assurance that the financial statements are free of both material errors and fraud
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the auditor is responsible for detecting material financial statement fraud, but not a material misappropriation of assets
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the auditor is responsible for the failure to detect fraud only when an unqualified opinion is issued
Question 4
Question
46. The essence of the attest function is to:
Answer
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assure the consistent application of correct accounting procedures
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determine whether the client's financial statements are fairly stated in accordance with an applicable financial reporting framework
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examine individual transactions so that the auditor may certify as to their validity
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detect collusion and fraud
Question 5
Question
49. Two overriding considerations affect the many ways an auditor can accumulate evidence:
1. Sufficient appropriate evidence must be accumulated to meet the auditor's professional responsibility.
2. Cost of accumulating evidence should be minimized.
Answer
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the first is more important than the second
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the second is more important than the first
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they are equally important
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it is impossible to prioritize them
Question 6
Question
Professional skepticism requires auditors to possess a(n) ______ mind.
Answer
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introspective
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questioning
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intelligent
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unbelieving
Question 7
Question
which of the following is not one of the four phases in the audit process?
Answer
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inform client of any adjustments or corrections made to the financial statements
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test controls and transactions
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complete the audit and issue the report
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plan and design an audit approach
Question 8
Question
three common types of confirmations used by auditors are 1. negative confirmations. 2. positive confirmations with a request for information 3. positive confirmations with the information included. if they were placed in the order of importance from highest to lowest, the sequence would be
Answer
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3,2,1
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3,1,2
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2,3,1
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1,2,3
Question 9
Question
when making decisions about evidence for a given audit, the auditors goal is to obtain a sufficient amount of timely, reliable evidence that is relevant to the information being verified, and to do so
Answer
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no matter what the cost involved in obtaining such evidence
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at any cost because the costs are billed to the client
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at the lowest possible total cost
Question 10
Question
traditionally, confirmations are used to verify
Answer
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bank balances and accounts
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fixed asset additions
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individual transactions between organizations, such as sales transactions
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all of the above
Question 11
Question
Which of the following statements is not true?
Answer
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A large sample of highly competent evidence is not persuasive unless it is relevant to the objective being tested.
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A large sample of evidence that is neither competent nor timely is not persuasive.
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A small sample of only one or two pieces of relevant, competent, and timely evidence lacks persuasiveness.
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The persuasiveness of evidence can be evaluated after considering its competence and its sufficiency.
Question 12
Question
Evidence obtained directly by the auditor is more competent than information obtained indirectly. Which of the following is not an example of the auditor's direct knowledge
Answer
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inquiry
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computation
Question 13
Question
An auditor would be least likely to use confirmations in connection with the examination of
Answer
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property, plant, and equipment
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Refundable income taxes.
Question 14
Question
to adequately plan the appropriate audit evidence to gather, generally accepted auditing standards require the auditor to gain and understanding of
Answer
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the clients internal control
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the clients procedural manuals
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the clients organization charts
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all of the above
Question 15
Question
If there is fraud involving the collusion of several employees that includes the falsification of documents, the chancedocuments, the chance a normal audit would uncover such acts is:
Answer
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very low
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very high
Question 16
Question
an audit process is a well defined methodology for organizing an audit to ensure that
Answer
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all appropriate audit objectives
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the evidence gathered is sufficient and appropriate
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all of the above
Question 17
Question
In testing for cutoff, the objective is to determine:
Answer
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whether transactions are recorded in the correct accounting period.
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that no transactions of the current period have been...
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