Quiz (September 1, 2023)

Question 1

The generally accepted auditing standards of field work include a requirement that the auditors obtain sufficient appropriate audit evidence. T or F?

Answer 1

TRUE

Question 2

A threat to independence that arises when an auditor audits his or her own work or the work of a colleague.

Answer 2

SELF-REVIEW

Question 3

An audit should be designed to provide reasonable assurance of detecting all illegal acts. T or F?

Answer 3

FALSE

Question 4

Usually, the auditor designs procedures to uncover fraud or error that could materially affect the financial statements. T or F?

Answer 4

TRUE

Question 5

Material misstatements may emanate from inadequacy of accounting records. T or F?

Answer 5

FALSE

Question 6

Partners in CPA firms usually have the responsibility for signing the audit report. T or F?

Answer 6

TRUE

Question 7

The responsibility for the detection and prevention of errors, fraud and noncompliance with laws and regulations rests with the external auditor. T or F?

Answer 7

FALSE

Question 8

If the misstatement is perpetrated by the management, it is considered as fraud but if it is committed by an employee, it is deemed an error. T or F?

Answer 8

FALSE

Question 9

It relates to embezzlement of receipts.

Answer 9

MISAPPROPRIATION

Question 10

It is usually equally difficult for the auditor to uncover errors or fraud. T or F?

Answer 10

FALSE

Question 11

If the auditors discover illegal acts by a client, they ordinarily must immediately resign from the engagement. T or F?

Answer 11

FALSE

Question 12

The management responsibility to detect and prevent fraud and error is accomplished by issuing a representation letter to the auditor. T or F?

Answer 12

FALSE

Question 13

A peer review in which the peer reviewers study and appraise a CPA firm’s system of quality control to perform accounting and auditing work.

Answer 13

SYSTEM REVIEW

Question 14

If the client refuses to accept an audit report that is qualified due to noncompliance with laws and regulations, the auditor should withdraw from the engagement and indicate the reasons to the SEC or other regulatory body in writing. T or F?

Answer 14

FALSE

Question 15

The auditors are primarily responsible for preparing the financial statements and expressing an opinion on whether they follow generally accepted auditing standards. T or F?

Answer 15

FALSE

Question 16

Fraudulent financial reporting is often called _______________________________.

Answer 16

MANAGEMENT FRAUD

Question 17

The pronouncements of the International Auditing Assurance Standards Board do not override the national auditing standards of its members, even when financial statements are issued by a multinational company. T or F?

Answer 17

TRUE

Question 18

An intentional act by one or more individuals among management, employees, or third parties, which results in misrepresentation of financial statements.

Answer 18

FRAUD

Question 19

Fraudulent financial reporting is most likely to be committed by line employees of the company. T or F?

Answer 19

FALSE

Question 20

An independence threat that arises if the auditor is too personally close to or familiar with employees, officers, or directors of the client company.

Answer 20

FAMILIARITY

Question 21

Core value of the Code of Ethics.

Answer 21

INTEGRITY

Question 22

In the auditing environment, failure to meet auditing standards is often an accepted practice. T or F?

Answer 22

FALSE