ch 2: connect

Question 1

Generally accepted auditing standards

Answer 1

SASs

Question 2

Peer review

Answer 2

Quality control

Question 3

Reasonable assurance they follow GAAP

Answer 3

Audited financial statements

Question 4

Protection of investors

Answer 4

SEC

Question 5

Operational audits

Answer 5

Internal auditor

Question 6

Essential element for the attest function

Answer 6

Independence

Question 7

Compliance audits

Answer 7

Internal Revenue Service

Question 8

Guide to scope of substantive procedures

Answer 8

Consideration of internal control

Question 9

Compilation and preparation of financial statements

Answer 9

Accounting services by CPA

Question 10

Providing credibility to various types of information

Answer 10

Attest functionselected answer correct

Question 11

The audit arm of Congress.

Answer 11

GAO

Question 12

National organization of CPAs.

Answer 12

AICPA

Question 13

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

Answer 13

GASB

Question 14

International organization of internal auditors.

Answer 14

IIA

Question 15

Administers the Securities Acts.

Answer 15

SEC

Question 16

Body designated to establish accounting standards for the federal government.

Answer 16

FASAB

Question 17

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

Answer 17

PCAOB

Question 18

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

Answer 18

FASB

Question 19

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

Answer 19

management

Question 20

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

Answer 20

independence

Question 21

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.

Answer 21

review

Question 22

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

Answer 22

continuing education

Question 23

The __________ regulates all accounting firms that audit public companies.

Answer 23

Public Company Accounting Oversight Board

Question 24

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

Answer 24

Both attest and assurance services require independence.

Question 25

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

Answer 25

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

Question 26

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

Answer 26

management

Question 27

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?

Answer 27

Review financial reports filed with the SEC.

Question 28

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

Answer 28

Public Company Accounting Oversight Board.

Question 29

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

Answer 29

compliance

Question 30

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

Answer 30

Audit committee of the board of directors.

Question 31

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

Answer 31

Ethical scandals at the AICPA.

Question 32

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

Answer 32

The Federal Accounting Standards Advisory Board.

Question 33

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

Answer 33

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

Question 34

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

Answer 34

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

Question 35

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

Answer 35

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

Question 36

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

Answer 36

attest

Question 37

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.

Answer 37

review

Question 38

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

Answer 38

SEC

Question 39

The __________ regulates all accounting firms that audit public companies.

Answer 39

PCAOB

Question 40

7. Public accounting firms are organized as sole proprietorships, partnerships, professional corporations, or __________.

Answer 40

limited liability companies (limited liability partnerships)

Question 41

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

Answer 41

staff assistants

Question 42

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

Answer 42

effectiveness

Question 43

Most large corporations typically have a large group of _______________

Answer 43

internal auditors

Question 44

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

Answer 44

governmental auditors

Question 45

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

Answer 45

irs

Question 46

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

Answer 46

intenral

Question 47

_____ are required to be public accountants.

Answer 47

external

Question 48

Auditing Standards

Answer 48

aicpa

Question 49

Statements on Auditing Standards (SASs).

Answer 49

aicpa

Question 50

The Journal of Accountancy.

Answer 50

aicpa

Question 51

Regulation S-X, Form and Content of Financial Statement

Answer 51

sec

Question 52

Statements on Standards for Accounting and Review Services (SSARSs)

Answer 52

aicpa

Question 53

Financial Reporting Releases (FRRs).s

Answer 53

sec

Question 54

Accounting and Reporting Standards for Corporate Financial Statement

Answer 54

fasb

Question 55

Accounting and Reporting Standards for Governmental Entities.

Answer 55

gasb

Question 56

Industry Audit and Accounting Guides.

Answer 56

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

Question 57

Audit Risk Alerts.

Answer 57

American Institute of Certified Public Accountants (AICPA).

Question 58

The Tax Advisor.

Answer 58

American Institute of Certified Public Accountants (AICPA).

Question 59

Auditing Standards

Answer 59

Public Company Accounting Oversight Board (PCAOB).

Question 60

Audited financial Statements

Answer 60

Opinion

Question 61

Internal control

Answer 61

Basis for sampling and testing

Question 62

Auditing staff reporting to Congress

Answer 62

Government Accountability Office

Question 63

Disclosure

Answer 63

material info

Question 64

Registration statement

Answer 64

sec

Question 65

Critical characteristic that must be maintained by the accounting profession

Answer 65

credibility

Question 66

Guide to scope of substantive procedures

Answer 66

Consideration of internal control

Question 67

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:

Answer 67

fnan reporting

Question 68

Attest engagements always have:

Answer 68

Subject matter.

Question 69

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?

Answer 69

The PCAOB standard is applicable.

Question 70

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

Answer 70

Is substantially less in scope of procedures than an audit.

Question 71

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

Answer 71

no, fasb

Question 72

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

Answer 72

business risk

Question 73

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

Answer 73

Is more likely to use sampling in more areas.

Question 74

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

Answer 74

State Boards of Accountancy.

Question 75

Operational auditing is primarily oriented toward:

Answer 75

Future improvements to accomplish the goals of management.

Question 76

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

Answer 76

gaap

Question 77

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

Answer 77

true

Question 78

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.

Answer 78

true

Question 79

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

Answer 79

true

Question 80

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

Answer 80

false

Question 81

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

Answer 81

false

Question 82

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

Answer 82

false

Question 83

The CPA exam:

Answer 83

has 4 sections

Question 84

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

Answer 84

tax return

Question 85

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

Answer 85

sec

Question 86

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

Answer 86

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

Question 87

In a review engagement the CPA issues a report with:

Answer 87

limited assurance.

Question 88

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

Answer 88

sign the report