Quiz (September 1, 2023) Flashcards
The generally accepted auditing standards of field work include a requirement that the auditors obtain sufficient appropriate audit evidence. T or F?
TRUE
A threat to independence that arises when an auditor audits his or her own work or the work of a colleague.
SELF-REVIEW
An audit should be designed to provide reasonable assurance of detecting all illegal acts. T or F?
FALSE
Usually, the auditor designs procedures to uncover fraud or error that could materially affect the financial statements. T or F?
TRUE
Material misstatements may emanate from inadequacy of accounting records. T or F?
FALSE
Partners in CPA firms usually have the responsibility for signing the audit report. T or F?
TRUE
The responsibility for the detection and prevention of errors, fraud and noncompliance with laws and regulations rests with the external auditor. T or F?
FALSE
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?
FALSE
It relates to embezzlement of receipts.
MISAPPROPRIATION
It is usually equally difficult for the auditor to uncover errors or fraud. T or F?
FALSE
If the auditors discover illegal acts by a client, they ordinarily must immediately resign from the engagement. T or F?
FALSE
The management responsibility to detect and prevent fraud and error is accomplished by issuing a representation letter to the auditor. T or F?
FALSE
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.
SYSTEM REVIEW
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?
FALSE
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?
FALSE
Fraudulent financial reporting is often called _______________________________.
MANAGEMENT FRAUD
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?
TRUE
An intentional act by one or more individuals among management, employees, or third parties, which results in misrepresentation of financial statements.
FRAUD
Fraudulent financial reporting is most likely to be committed by line employees of the company. T or F?
FALSE
An independence threat that arises if the auditor is too personally close to or familiar with employees, officers, or directors of the client company.
FAMILIARITY
Core value of the Code of Ethics.
INTEGRITY
In the auditing environment, failure to meet auditing standards is often an accepted practice. T or F?
FALSE
