Monday Quiz

Question 0

A registered statement filed with the SEC contains the reports of two independent auditors on their audits of financial statements for different periods. The predecessor auditor who audited the prior period financial statements generally should obtain a letter of representation from the…

Answer 0

Successor independent auditor

Question 1

In the first audit of a new client, an auditor was able to extend auditing procedures to gather sufficient evidence about consistency. Under these circumstances the auditor should…

Answer 1

Not refer to consistency in the auditor’s report

Question 2

When financial statements contain a departure from GAAP because, due to unusual circumstances, the statements would otherwise be misleading, the auditor should explain the unusual circumstances in a separate paragraph and express an opinion that is…

Answer 2

Unqualified

Question 3

An auditor is testing the reasonableness of dividend income from investments in publicly held companies. The auditor most likely would compute the amount that should have been received and recorded by the client by…

Answer 3

Electronically accessing the details of dividend records on the
Internet

Question 4

According to the standards of the profession, which of the following activities would most likely not impair a CPA’s independence?

Answer 4

Providing extensive advisory services for a client

Question 5

Which of the following is a prospective financial statement for general use upon which an accountant may appropriately report?

Answer 5

Financial forecast

Question 6

An auditor makes separate compliance and substantive tests in the accounts payable area which has good internal control. If the auditor uses statistical sampling for both of these tests, the confidence level established for the substantive tests is normally…

Answer 6

Less than that for tests of compliance

Question 7

Before reissuing the prior year’s auditor’s report on the financial statements of a former client, the predecessor auditor should obtain a letter of representation from the…

Answer 7

Successor auditor

Question 8

Which of the following factors is most likely to affect the extent of the documentation of the auditor’s understanding of a client’s system of internal controls?

Answer 8

The degree to which information technology is used in the

accounting function

Question 9

If a registered public accounting firm is in violation of any rule or regulation of the SEC or PCAOB…

Answer 9

They may not prepare or issue any audit report with respect to
That issuer

Question 10

Resolution of deficiencies, including management’s response to known deficiencies and audit findings, is a control activity that does not impact…

Answer 10

An auditor’s consideration of the effect of IT on internal control

Question 11

Which of the following information that comes to an auditor’s attention most likely would raise a question about the occurrence of illegal acts?

Answer 11

Discovery of unexplained payments made to government

Employees

Question 12

A member of a group engagement team will not be subject to discipline if a foreign component auditor departed from the ethics requirement as long as the foreign component auditor is…

Answer 12

In accord with ethics and independence requirements set forth
In the IESBA’s Code of Ethics for Professional Accountants

Question 13

Under which set of standards does an audit report not allow reference to another audit firm involved in a portion of the audit?

Answer 13

International Standards on Auditing (ISAs)

Question 14

When an accountant is engaged to compile a nonissuer’s financial statements that omit substantially all disclosures with no reference to basis but are otherwise in conformity with another comprehensive basis of accounting, the accountant should disclose in his report that the…

Answer 14

Financial statements were prepared in conformity with a comprehensive basis of accounting other than GAAP

Question 15

Materiality levels are generally considered in terms of the…

Answer 15

Smallest aggregate level of misstatement that could be considered material to any one of the financial statements

Question 16

What activity would detect whether payroll data was altered during processing?

Answer 16

Use test data to verify the performance of edit routines

Question 17

A summary of all uncorrected misstatements related to known and likely misstatements would not be used in evaluating…

Answer 17

The overall effect of audit findings on the auditor’s report

Question 18

When an auditor is asked to report on the fair presentation of financial statements of a regulated entity that are prepared in accordance with a basis of accounting prescribed by a regulatory agency, the auditor’s report should include…2

Answer 18

1 a standard audit report modified as appropriate because of departures from GAAP and

2 in an additional paragraph express an opinion on whether FS are presented in conformity with the regulatory basis

Question 19

Which of the following procedures concerning accounts receivable would an auditor most likely perform to obtain audit evidence in support of an assessed level of control risk below the maximum level?

Answer 19

Observing an entity’s employee prepare the schedule of past due accounts receivable

Question 20

If a client will not permit inquiry of outside legal counsel, the auditor’s report ordinarily will contain…

Answer 20

A disclaimer of opinion

Question 21

During the initial planning phase of an audit, a CPA would likely…

Answer 21

Discuss the timing of the audit procedures with the client’s management