Final

Question 1

The audit objective that all transactions and accounts that should be presented in the financial statements are in fact included is related to what PCAOB assertion?

Answer 1

Completeness

Question 2

determination of whether the client’s financial statement assertions are fairly stated is the essential purpose of the…

Answer 2

audit function

Question 3

When auditors lack independence, they should issue what opinion on the entity’s financial statements

Answer 3

disclaimer of opinion

Question 4

if financial statements contain a material but non-pervasive departure from GAAP, the auditors should render what opinion

Answer 4

qualified opinion

Question 5

management determined it was probable that a pending litigation claim would result in a material loss. The loss was disclosed in the footnotes to the financial statement. If the auditors believe an accrual should be made what type of report should be issued?

Answer 5

qualified or adverse opinion

Question 6

during the year under audit, F Corp experienced significant losses due to a pervasive fraud scheme. Because of the lack of documentary evidence and inability to perform appropriate auditing procedures, the auditors were unable to determine the total amount of the loss. What type of report should the auditors issue?

Answer 6

Disclaimer or qualified opinion

Question 7

The responsibilities principle under GAAS includes what 4 things?

Answer 7

competence and capabilities, independence, due care, and professional skepticism

Question 8

Planning and supervision, materiality, risk assessment, and audit evidence are part of what principle

Answer 8

Performance

Question 9

When there is enough quantity to afford a reasonable basis for an opinion on financial statements the audit evidence is usually considered

Answer 9

sufficient

Question 10

Which opinion is given if financial statements are not in conformity with GAAP

Answer 10

Adverse

Question 11

What agency has ultimate authority in defining independence for public comapnies?

Answer 11

SEC

Question 12

Pronouncements issues by the PCAOB are subject to formal approval by the

Answer 12

SEC

Question 13

An important role of the PCAOB is to oversee the ______ of firms that audit issuers

Answer 13

regulation

Question 14

Based on Sarbanes-Oaxley who is ultimately responsible for the independence of the external auditor?

Answer 14

audit committee

Question 15

An auditor most likely would review an entity’s periodic accounting for the number sequence of shipping documents and invoices to support management’s financial statement assertion of

Answer 15

completeness

Question 16

the confirmation of a cash balance provides primary evidence regarding which management assertion?

Answer 16

existence

Question 17

Analytical procedures used in planning an audit should focus on enhancing the auditor’s understanding of the

Answer 17

client’s business

Question 18

Inherent risk and control risk are functions of the

Answer 18

client and its environment

Question 19

If immaterial fraud is discovered in the sales account identified during the auditor’s internal control testing what should happen

Answer 19

increase the assessment of control risk for sales

Question 20

Comparing current-year to prior-year sales volumes is an analytical procedure performed in what stage of the audit

Answer 20

planning

Question 21

what are the components of internal controls

Answer 21

Control environment, control activities, monitoring, risk assessment, information and communication

Question 22

integrity and ethical values, board of directors, management’s philosophy and operating style, organizational structure, financial reporting competencies, and human resources are factors of what

Answer 22

control environment

Question 23

When an entity will not allow legal inquiry of outside legal counsel, the auditor should issue a

Answer 23

disclaimer of opinion

Question 24

Auditor’s judgment concerning the overall fairness of the presentation of financial position, results of operations and cash flows is applied within the framework of

Answer 24

GAAP

Question 25

Independent professional services that improve the quality of information for decision makers

Answer 25

assurance services

Question 26

Primary purpose of auditors’ study of internal control for a nonpublic entity is to determine what?

Answer 26

nature, timing, and extent of further audit procedures

Question 27

Inherent risk and control risk exist ______ of the audit

Answer 27

independent