Day 24

Question 1

What is the primary reason auditor’s are hesitate to use embedded audit modules?

Answer 1

Auditors are required to be involved in the system design when the application is being programed.

MCQ-02917

Question 2

What cognizant agency would be most likely assigned an auditee?

Answer 2

The federal agency that provides the most funding to the auditee

MCQ-08927

Question 3

If a CPA disclaims an opinion, can a qualified or adverse opinion be given in the report?

Answer 3

No, disclaiming an opinion = No Assurance provided

MCQ-05820

Question 4

Define: Inherent Limitation of Internal Controls

Answer 4

Is a limitation that prevents good controls from working such as, mgmt override

MCQ-05720

Question 5

When would services performed by another entity not be considered part of the client’s information system?

Answer 5

Services performed by another entity when the services provided are limited to executing transaction that are specifically authorized by the client

MCQ-03250

Question 6

Confidential Client Information Rule:

Answer 6

States that it is permissible for a member to disclose the name of a client without the client’s consent UNLESS the disclosure of the client’s name results in the release of confidential information.

MCQ-06738

Question 7

Define: Nonsampling Risk

Answer 7

Nonsampling Risk includes all aspects of audit risk that are not due to sampling.

It is always present and cannot be measured

The auditor can only attempt to reduce this risk to a low level

MCQ-08181

Question 8

In assessing an internal auditor’s competence, a CPA ordinarily obtains information about what?

Answer 8

• Quality of audit documentation
• Educational level and professional experience
• The audit plan and audit procedures

MCQ-02818

Question 9

Probability Proportional to Size (PPS)

Answer 9

The auditor controls the risk of incorrect acceptance by specifying that risk level for the sampling plan

MCQ-02879

Question 10

An auditor analyzes repairs and maintenance accounts primary to obtain evidence in support of the audit assertion that all:

Answer 10

Expenditures for property and equipment have not been charged to expense

MCQ-02484

Question 11

If a report on a review of interim financial information is presented in a registration statement, the prospectus should include a statement that the report is not a “report” or “part” of the registration statement. The accountant should also read the other portions of the registration statement to ensure that his or her name is not used in a way that indicates greater responsibility than s/he intends.

Answer 11

MCQ-03402

Question 12

Define: Analytical Procedures

Answer 12

Involve comparison of recorded amounts, or ratios developed from recorded amounts, to the auditor’s expectations

MCQ-02350

Question 13

When can the auditor refer to the work of a specialist in the auditor’s report?

Answer 13

When the auditor’s report is modified due to a difference between the client’s and specialist’s valuations of an asset

MCQ-05730

Question 14

The nature and extent of a CPA firm’s quality control policies and procedures depend on:

Answer 14

• The CPA firm’s size
• The nature of the CPA firm’s practice
• Cost-benefit considerations

MCQ-02422

Question 15

The objective of tests of details of transactions performed as tests of controls is to:

Answer 15

Evaluate whether internal controls operated effectively

MCQ-02492

Question 16

Opinion Type: the auditor is unable to obtain the audited FS of a consolidated investee

Answer 16

Disclaimer or Qualified (depending on materiality)

MCQ-05706

Question 17

Opinion Type: Mgmt does not provide reasonable justification for a change in accounting principles

Answer 17

Qualified or Adverse

MCQ-05706

Question 18

The authoritative body designed to promulgate standards concerning an accountant’s association with unaudited FS of an entity that is NOT required to file FS with an agency regulating the issuance of an entity’s securities is the:

Answer 18

Accounting and Review Services Committee

MCQ-06329

Question 19

Included in the PCAOB auditing standards, what factors influence the nature and extent of planning activities?

Answer 19

• The size and complexity of the client company
• The auditor’s previous experience with the company
• Changes in circumstances that occur during the audit

MCQ-06829

Question 20

According to Sarbanes-Oxley, public accounting firms are required to maintain audit WPS for how long?

Answer 20

Seven years

MCQ-07079

Question 21

Qualitative PCAOB standards that should be considered when evaluating the the materiality of an uncorrected misstatement

Answer 21

• The effects of misclassifications - EX: between operating and non-operating
• the significance of the misstatement relative to the needs of the user
• The cost of the correction

MCQ-06812

Question 22

Emphasis-of-Matter

“GAASP”

Answer 22

• Going Concern
• Acctg principal change
• Audit option change
• Special
• Purpose framework