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ACCT303 > ch 2: connect > Flashcards

ch 2: connect Flashcards

1
Q

Generally accepted auditing standards

A

SASs

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2
Q

Peer review

A

Quality control

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3
Q

Reasonable assurance they follow GAAP

A

Audited financial statements

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4
Q

Protection of investors

A

SEC

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5
Q

Operational audits

A

Internal auditor

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6
Q

Essential element for the attest function

A

Independence

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7
Q

Compliance audits

A

Internal Revenue Service

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8
Q

Guide to scope of substantive procedures

A

Consideration of internal control

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9
Q

Compilation and preparation of financial statements

A

Accounting services by CPA

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10
Q

Providing credibility to various types of information

A

Attest functionselected answer correct

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11
Q

The audit arm of Congress.

A

GAO

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12
Q

National organization of CPAs.

A

AICPA

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13
Q

Body designated to establish accounting standards for state and local governments.

A

GASB

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14
Q

International organization of internal auditors.

A

IIA

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15
Q

Administers the Securities Acts.

A

SEC

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16
Q

Body designated to establish accounting standards for the federal government.

A

FASAB

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17
Q

Group created to oversee and discipline CPAs and public accounting firms that audit public companies.

A

PCAOB

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18
Q

Body designated to establish accounting standards for entities other than state and local governments.

A

FASB

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19
Q

Primary responsibility for audited financial statements rests with __________ even though the statements may be drafted and processed in the auditors’ office.

A

management

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20
Q

The two most essential qualities for a CPA to perform the attest function properly are professional competence and _____

A

independence

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21
Q

Accounting and review services is the term used by CPA firms to describe work done for small businesses that do not want audits, but periodically need the services of professional accountants. Such services often consist of the preparation, compilation or __________ of financial statements.

A

review

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22
Q

The AICPA requires members in public practice to obtain 120 hours of ___________ every three years.

A

continuing education

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23
Q

The __________ regulates all accounting firms that audit public companies.

A

Public Company Accounting Oversight Board

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24
Q

a. Which of the following best describes the relationship between assurance services and attest services?

A

Both attest and assurance services require independence.

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25
Q

The most important benefit of having an annual audit by a public accounting firm is to:

A

Provide assurance to investors and other outsiders that the financial statements are reliable.

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26
Q

Which of the following has primary responsibility for the fairness of the representations made in financial statements?

A

management

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27
Q

The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB). Which of the following is not one of the responsibilities of that board?

A

Review financial reports filed with the SEC.

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28
Q

Which of these organizations has the responsibility to perform inspections of auditors of public companies?

A

Public Company Accounting Oversight Board.

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29
Q

Governmental auditing, in addition to including audits of financial statements, often includes audits of efficiency, effectiveness, and:

A

compliance

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30
Q

n general, internal auditors’ independence will be greatest when they report directly to the:

A

Audit committee of the board of directors.

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31
Q

Which of the following did not precipitate the passage of the Sarbanes-Oxley Act of 2002 to regulate public accounting firms:

A

Ethical scandals at the AICPA.

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32
Q

Which of the following organizations establishes accounting standards for U.S. government agencies?

A

The Federal Accounting Standards Advisory Board.

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33
Q

j. Which of the following is correct about forensic audits?

A

Forensic audits are usually performed in situations in which fraud has been found or is suspected.

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34
Q

What best describes the purpose of the auditors’ consideration of internal control in a financial statement audit for a nonpublic company?

A

To determine the nature, timing, and extent of audit testing.

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35
Q

Which of the following is an example of a compliance audit?

A

An audit of a company’s policies and procedures for adhering to environmental laws and regulations.

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36
Q

To __________ to information means to provide assurance as to its fairness and dependability.

A

attest

37
Q

Accounting and review services” is the term used by CPA firms to describe work done for small businesses that do not want audits, but periodically need the services of professional accountants. Such services often consist of the preparation, compilation or __________ of financial statements.

A

review

38
Q

The __________ is a governmental organization that regulates the sale of securities.

A

SEC

39
Q

The __________ regulates all accounting firms that audit public companies.

A

PCAOB

40
Q
  1. Public accounting firms are organized as sole proprietorships, partnerships, professional corporations, or __________.
A

limited liability companies (limited liability partnerships)

41
Q

The professional staff of a typical public accounting firm includes partners, managers, senior auditors and __________.

A

staff assistants

42
Q

An operational audit is a study of a unit of an organization to evaluate the efficiency and __________ of the unit.

A

effectiveness

43
Q

Most large corporations typically have a large group of _______________

A

internal auditors

44
Q

Headed by the Auditor General, the work of _________includes compliance, operational, and financial audits.

A

governmental auditors

45
Q

__________perform compliance audits of income tax returns of individuals and corporations to determine that income has been computed and taxes paid as required.

A

irs

46
Q

____are the only auditors that work for the company that they are auditing.

A

intenral

47
Q

_____ are required to be public accountants.

A

external

48
Q

Auditing Standards

A

aicpa

49
Q

Statements on Auditing Standards (SASs).

A

aicpa

50
Q

The Journal of Accountancy.

A

aicpa

51
Q

Regulation S-X, Form and Content of Financial Statement

A

sec

52
Q

Statements on Standards for Accounting and Review Services (SSARSs)

A

aicpa

53
Q

Financial Reporting Releases (FRRs).s

A

sec

54
Q

Accounting and Reporting Standards for Corporate Financial Statement

A

fasb

55
Q

Accounting and Reporting Standards for Governmental Entities.

A

gasb

56
Q

Industry Audit and Accounting Guides.

A

American Institute of Certified Public Accountants (AICPA).s.

57
Q

Audit Risk Alerts.

A

American Institute of Certified Public Accountants (AICPA).

58
Q

The Tax Advisor.

A

American Institute of Certified Public Accountants (AICPA).

59
Q

Auditing Standards

A

Public Company Accounting Oversight Board (PCAOB).

60
Q

Audited financial Statements

A

Opinion

61
Q

Internal control

A

Basis for sampling and testing

62
Q

Auditing staff reporting to Congress

A

Government Accountability Office

63
Q

Disclosure

A

material info

64
Q

Registration statement

A

sec

65
Q

Critical characteristic that must be maintained by the accounting profession

A

credibility

66
Q

Guide to scope of substantive procedures

A

Consideration of internal control

67
Q

The FDIC Improvement Act requires that management of large financial institutions engage auditors to attest to assertions by management about the effectiveness of the institution’s internal controls over:

A

fnan reporting

68
Q

Attest engagements always have:

A

Subject matter.

69
Q

In cases of a publicly traded company audit in the United States, when International Standards on Auditing (ISAs) conflict with the PCAOB, standards, which of the following is correct?

A

The PCAOB standard is applicable.

70
Q

The review of a company’s financial statements by a CPA firm:

A

Is substantially less in scope of procedures than an audit.

71
Q

The American Institute of Certified Public Accountants has the primary authority to establish accounting standards.

A

no, fasb

72
Q

The risk that a company will not be able to meet its obligations when they become due is an aspect of:

A

business risk

73
Q

When compared to an audit performed prior to 1900, an audit today:

A

Is more likely to use sampling in more areas.

74
Q

The right to practice as a CPA is given by which of the following organizations?

A

State Boards of Accountancy.

75
Q

Operational auditing is primarily oriented toward:

A

Future improvements to accomplish the goals of management.

76
Q

The financial statements of a United States public company are most likely to follow:

A

gaap

77
Q

Because of the prospective nature of financial forecasts, auditors never are not allowed to attest to forecasts.

A

true

78
Q

CPA firms sometimes compile or review financial statements for small companies. Under these circumstances the CPA firm issues a report, but a report that differs from that issued as a result of an audit.

A

true

79
Q

The internal auditing staff of a large corporation usually reports to a committee of the board of directors, to a member of the top management group, or both

A

true

80
Q

The primary purpose of an audit is the detection or prevention of fraud.

A

false

81
Q

As compared to the largest CPA firms, smaller CPA firms always spend a greater percentage of the time performing audits.

A

false

82
Q

An independent audit on an annual basis is required by the AICPA for all corporations.

A

false

83
Q

The CPA exam:

A

has 4 sections

84
Q

Which of the following is not an example of an assurance service?

A

tax return

85
Q

Which of the following has oversight responsibility of the Public Company Accounting Oversight Board?

A

sec

86
Q

An effect of the Sarbanes-Oxley Act of 2002 was to:

A

reduce the accounting profession’s level of self-regulation.

87
Q

In a review engagement the CPA issues a report with:

A

limited assurance.

88
Q

Senior auditors typically perform all of the following tasks, except:

A

sign the report

ACCT303 (17 decks)

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