Midterm 1 - Module 1 Flashcards
Which of the followin best desribes what is meant by the term generally accepted auditing standards?
Measures of the quality of the auditor’s performance.
For which of the following can a member of the AICPA receive an automatic explusion from the AICPA?
I, II, and III
Which of the following is an example of a safeguard implemented by the client that might mitigate a threat to independence?
An effective corporate governance structure
Which of the following is a “self review” threat to member independence?
An engagement team member prepares invoices for the attest client.
According to the standards of the profession, which of the following circumstances will prevent a CPA performing audit engagements from being independent?
Employment of the CPA’s spouse as a client’s diretor of internal audit.
The profession’s ethical standards most likely would be considered to have been violated when a CPA represents that specific consulting services will be performed for a stated fee and it is apparent at the time of the represetnation that the…
Actual fee would be substaintially higher.
According to the ethical standards of the profession, which of the following acts is generally prohibited?
Retaining client records after an engagement is terminated prior to completion and the client has demanded their return.
According to the profession’s ethical standards, which of the following events may justify a departure from Statement of the Governmental Accounting Standards Board?
Yes, Yes. New Legislation & Evolution of a new form of business transaction.
May a CPA hire for the CPA’s public accounting firm a non-CPA systems analyst who specializes in developing computer systems?
Yes, provided the CPA is able to supervice the specialist and evaluate the specialist’s end product.
Stephanie Seals is a CPA who is working as a controller for Brentwood Corporation. She is not in public practice. Which statement is true?
She may use the CPA designation on her business cards if she also puts her employment title on them.
According to the standards of the profession, which of the following activities would most likely not impair a CPA’s independence?
Providing advisory services for a client.
Which of the following reports may be isused only by an accountant who is independent of a client?
Standard report on an examination of a financial forecast.
According to the standards of the profession, which of the following activities may be required in excercising due care?
YES, NO: Consulting with experts, obtaining specialty accrdiation
Larry Sampson is a CPA and is serving as an expert witness in a trial concerning a corporation’s financial statements. Which of the following is true?
I and II Only
According to the ethical standards of the profession, which of the following acts is genrally prohibited?
Accepting commission for recommending a product to an audit client.
To exercise due professional care an auditor should…
Crticially review the judgment excercised by those assisting in the audit.
Kar, CPA, is a staff auditor partciipating in the audit egnagement of Fort, Inc. Which of the following circumstances impairs Kar’s independence?
Kar’s sibling is director of internal audit at Fort.
On June 1, 2008, a CPA obtained a $100,000 personal loan from a financial instituation client for whom the CPA proided cimplation services. The loan was fully secured and considered matiral to the CPA’s net worth. The CPA paid the loan in full on Decemer 31, 2009. On april 3, 2009, the client asked the CPA to audit the client’s financial statemtns for the year neded December 31, 2009. Is the CPA considred independent with respect to the audit of the client’s December 31, 2009 financial statments?
Yes, because the CPA was not required to be independent at the time the loan was granted.
