AUD 4

Question 1

The authoritative body designated to promulgate standards concerning an accountant’s association with unaudited financial statements of an entity that is not required to file financial statements with an agency regulating the issuance of the entity’s securities is the:

Answer 1

Accounting and Review Services Committee.

Question 2

When performing a review of interim financial information, an accountant would typically do each of the following except:

Answer 2

test controls related to the preparation of annual financial information.

Question 3

During the initial planning phase of an audit, a CPA most likely would:

Answer 3

discuss the timing of the audit procedures with the client’s management.

Question 4

Harris, CPA, has been asked to audit and report on the balance sheet of Fox Co., but not on the statements of income, retained earnings, or cash flows. Harris will have access to all information underlying the basic financial statements. Under these circumstances, Harris may:

Answer 4

accept the engagement because such engagements merely involve limited reporting objectives.

Question 5

Which of the following services would constitute a management function under Government Auditing Standards and result in the impairment of a CPA’s independence if performed by the CPA?

Answer 5

Developing entity program policies

Question 6

An auditor may provide an issuer client any of the following nonaudit services without impairing independence and without obtaining the preapproval of the audit committee, except:

Answer 6

nonaudit services to perform financial information systems design and implementation

Question 7

Which of the following is a correct statement about the circumstances under which a CPA firm may or may not disclose the names of its clients without the clients’ express permission?

Answer 7

A CPA firm may disclose this information unless disclosure would suggest that the client may be experiencing financial difficulties

Question 8

Under the Statements on Standards for Consulting Services, which of the following statements best reflects a CPA’s responsibility when undertaking a consulting services engagement? The CPA must:

Answer 8

obtain a written understanding with the client concerning the time for completion of the engagement.