Quality Control Standards (SQCS) Flashcards
Within the context of quality control, a primary purpose of the engagement performance element is to help ensure that
CPA firm personnel have adequate technical training.
Engagements are adequately supervised.
The CPA firm undertakes only those engagements it is competent to perform.
CPA firm personnel comply with relevant ethical requirements.
Engagements are adequately supervised.
This answer is correct because it is an objective of the engagement performance element of quality control.
After fieldwork audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second or wrap-up working paper review. This second review usually focuses on
The fair presentation of the financial statements in conformity with GAAP.
Fraud involving the client’s management and its employees.
The materiality of the adjusting entries proposed by the audit staff.
The communication of internal control weaknesses to the client’s audit committee.
The fair presentation of the financial statements in conformity with GAAP.
This second or “cold” review aims at determining whether the financial statements result in fair presentation in conformity with GAAP and with whether sufficient appropriate evidence has been obtained.
Which of the following is not an element of quality control for a CPA firm?
Relevant ethical requirements.
Acceptance and continuance of clients relationships and specific engagements.
Professional skepticism
Monitoring.
Professional skepticism
This answer is correct because professional skepticism is not an element of quality control. This is an individual auditor’s mindset.
One purpose of establishing quality control policies and procedures for acceptance and continuance of client relationships and specific engagements is to
Undertake engagements only that the accounting firm is competent to perform.
Monitor significant deficiencies in the design and operation of the client’s internal control.
Identify noncompliance with aspects of contractual agreements that affect the financial statements.
Provide reasonable assurance that personnel will be adequately trained to fulfill their assigned responsibilities.
Undertake engagements only that the accounting firm is competent to perform
This answer is correct because the quality control standards indicate that a primary purpose is to help insure that the firm is competent to perform any engagements that are accepted.
A CPA firm may communicate its quality control policies and procedures to its personnel in which manner(s):
Orally Written No No No Yes Yes No Yes Yes
Yes Yes
The requirements relating to quality control standard documentation state that either orally or written are acceptable.
Quality control policies and procedures that are established to decide whether to accept a new client should provide the CPA firm with reasonable assurance that
The CPA firm’s duty to the public concerning the acceptance of new clients is satisfied.
The likelihood of associating with clients whose management lacks integrity is minimized.
Client-prepared schedules that are necessary for the engagement are completed on a timely basis.
Sufficient corroborating evidence to support the financial statement assertions is available.
The likelihood of associating with clients whose management lacks integrity is minimized.
This answer is correct because CPAs wish to minimize the likelihood of becoming associated with clients whose management lacks integrity.
The auditor with final responsibility for an engagement and one of the assistants have a difference of opinion about the results of an auditing procedure. If the assistant believes it is necessary to be disassociated from the matter’s resolution, the CPA firm’s procedures should enable the assistant to
Refer the disagreement to the AICPA’s Quality Review Committee.
Document the details of the disagreement with the conclusion reached.
Discuss the disagreement with the entity’s management or its audit committee.
Report the disagreement to an impartial peer review monitoring team.
Document the details of the disagreement with the conclusion reached.
The quality control standards require documentation of the considerations involved in the resolution of differences of opinion.
The purpose of establishing quality control policies and procedures for deciding whether to accept or continue a client relationship is to
Monitor the risk factors concerning misstatements arising from the misappropriation of assets.
Provide reasonable assurance that personnel are adequately trained to fulfill their responsibilities.
Minimize the likelihood of associating with clients whose management lacks integrity.
Document objective criteria for the CPA firm’s responses to peer review comments.
Minimize the likelihood of associating with clients whose management lacks integrity.
This answer is correct because the quality control element on accepting or continuing a client relationship has the purposes of (1) considering the integrity of the client, (2) determining that the firm is competent to perform the engagement, and (3) determining that the firm can comply with legal and ethical requirements.
The nature and extent of a CPA firm’s quality control policies and procedures depend on
The CPA firm's size The nature of the CPA firm's practice Cost-benefit considerations A. Yes Yes Yes B. Yes Yes No C. Yes No Yes D. No Yes Yes A. B. C. D.
A.
The nature and extent of a firm’s quality control policies and procedures depend on a number of factors, including its size, the degree of operating autonomy allowed to its personnel and practice offices, the nature of its practice, its organization, and appropriate cost-benefit considerations.
Which of the following actions should a CPA firm take to comply with the AICPA’s quality control standards?
Establish procedures that comply with the standards of the Sarbanes-Oxley Act.
Use attributes sampling techniques in testing internal controls.
Consider inherent risk and control risk before determining detection risk.
Establish policies to ensure that the audit work meets applicable professional standards.
Establish policies to ensure that the audit work meets applicable professional standards.
This answer is correct because the engagement performance element of quality control standards require that the firm establish policies and procedures to provide it with reasonable assurance that engagements are consistently performed in accordance with professional standards and regulatory and legal requirements.
One of the objectives of the human resources element quality control mandates that a public accounting firm should establish policies and procedures for recruitment processes which provide reasonable assurance that all personnel
Prepare working papers which are standardized in form and content.
Perform engagements in accordance with professional standards.
Will advance within the organization.
Develop specialties in specific areas of public accounting.
Perform engagements in accordance with professional standards.
This answer is correct because one of the quality control considerations for a firm of independent auditors is that the policies and procedures for professional development should be established to provide reasonable assurance that personnel have the knowledge required to enable them to perform in accordance with professional standards.
Quality control for a CPA firm, as referred to in Statements on Quality Control Standards, applies to
Auditing services only.
Auditing and management advisory services.
Auditing and tax services.
Auditing and accounting and review services.
Auditing and accounting and review services.
The standards explicitly limit application to auditing and accounting and review services. Although the quality control standards may be applied to other segments of a firm’s practice (e.g., management advisory services and tax), the standards do not require it.
A basic objective of a CPA firm is to provide professional services to conform with professional standards. Reasonable assurance of achieving this basic objective is provided through
Continuing professional education.
A system of quality control.
Compliance with Auditing Standards Board reporting requirements.
A system of peer review.
A system of quality control.
This answer is correct because a system of quality control is necessary to provide a CPA firm with reasonable assurance that it is conforming to generally accepted auditing standards.
In connection with the element of monitoring, a CPA firm’s system of quality control should ordinarily provide for the maintenance of:
A file of minutes of staff meetings.
Updated personnel files.
Documentation to demonstrate compliance with its policies and procedures.
Documentation to demonstrate compliance with peer review directives.
Documentation to demonstrate compliance with its policies and procedures.
This answer is correct because it provides for maintenance of documentation of the various quality control policies and procedures—it is all encompassing.
One of a CPA firm’s basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this basic objective is provided through
A system of quality control.
A system of peer review.
Continuing professional education.
Compliance with generally accepted accounting principles.
A system of quality control.
A system of quality control is designed to provide a CPA firm with reasonable assurance of meeting its responsibility to provide professional services that conform with professional standards.
