Sunday Quiz

Question 0

An internal auditor was assigned to confirm whether operating personnel had corrected several errors in transaction files that were discovered during a recent audit. What automated tool would the auditor be likely to use?

Answer 0

Online inquiry

Question 1

Section 11(A) of the Securities Act of 1933…

Answer 1

Shifts the burden of proof in a lawsuit from the investor to the
CPA who audited the financial statements

Question 2

The auditor is required to inform those charged with governance about…

Answer 2

Significant errors discovered by the auditor and subsequently
Corrected by management

Question 3

What should an accountant consider in determining needs for retention of engagement documents?

Answer 3

The nature of the engagement and the firm’s circumstances

Question 4

A misunderstanding concerning the nature of an audit, review or compilation would be a…

Answer 4

Reasonable basis for requesting a change from an audit/review to
A review/compilation

Question 5

An auditor most likely would limit substantive audit tests of sales transactions when control risk is assessed as low for the existence assertion concerning sales transactions, and the auditor has already gathered evidence supporting…

Answer 5

Cash receipts and accounts receivable

Question 6

A weakness in internal control over recording retirements of equipment may cause an auditor to…

Answer 6

Select certain items of equipment from the accounting records and locate them in the plant

Question 7

Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle?

Answer 7

Authorization of credit memos by personnel who receive cash may permit the missappropriation of cash

Question 8

Perpetrate

Answer 8

To be responsible for, to commit

Question 9

What is a control activity that most likely could help prevent employee payroll fraud?

Answer 9

The personnel department promptly sends employee termination notices to the payroll supervisor

Question 10

The audit work performed by each assistant should be reviewed to determine whether it was adequately performed and to evaluate whether the…

Answer 10

Results are consistent with the conclusions to be presented in the auditor’s report

Question 11

In an audit of financial statements, what would most likely be considered a known misstatement?

Answer 11

An unrecorded liability related to services rendered by a vendor
During the period under audit

Question 12

If the client refuses to disclose the newly discovered facts and their impact on the financial statements to persons known to be currently using IR likely to use the financial statements an accountant would not…

Answer 12

Notify the Better Business Bureau

Question 13

Management override of controls can occur in unpredictable ways. Due to this fact, the auditor should perform procedures, in addition to the procedures already performed to address identified risks of material misstatements due to fraud, that include which of the following?
1 examining journal entries and other adjustments for evidence of possible material misstatement due to fraud.

2 reviewing accounting estimates for biases that could result in material misstatement due to fraud.

3 evaluating the business rationale for significant unusual transactions.

Answer 13

1, 2 and 3

Question 14

An auditor is required to establish an understanding with a client regarding the services to be performed for each engagement. This understanding generally includes…

Answer 14

The auditor’s responsibility for ensuring that the audit committee
is aware of any significant deficiencies that come to the auditor’s attention

Question 15

Which of the following is an element of the new format under the Clarity Project?

Answer 15

Standard formatting techniques such as use of bullets for lists

Question 16

When qualifying an opinion because of an insufficiency of audit evidence, an auditor should refer to the situation in. Yes or no:
1 introduction paragraph
2 scope paragraph

Answer 16

No for intro

Yes for scope

Question 17

Which of the following statements best explains why the CPA profession has found it essential to promulgate ethical standards and to establish means for ensuring their observance?

Answer 17

A distinguishing Mark of a profession is its acceptance of

responsibility to the public

Question 18

What is an example of an appropriate heading for a Basis for Modification paragraph?

Answer 18

Basis for qualified opinion

Question 19

In an audit of a special purpose framework, the auditor is required to obtain agreement of management that it acknowledges and understands its reponsibility. Such information would not include…

Answer 19

Required GAAP disclosures

Question 20

What is not a major reason why an accounting audit trail should be maintained for a computer system?

Answer 20

Analytical procedures

Question 21

Other information would most likely be…

Answer 21

Separate financial information not contained in the financial
statements

Question 22

The authoritative body designated to promulgate standards concerning an accountant’s association with unaudited financial statements of an entity that is not required to file financial statements with an agency regulating the issuance of the entity’s securities is the…

Answer 22

Accounting and Review Services Committee

Question 23

Sound internal control procedures dictate that immediately upon receiving checks from customers by mail, a responsible employee should…

Answer 23

Prepare a duplicate listing of checks received

Question 24

If there are no non-compliance issues, but there is are explanations as to how a particular program materiality was determined, at a minimum, how many paragraphs would an auditor’s report on compliance contain?

Answer 24

Four

Question 25

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…

Answer 25

A system of quality control

Question 26

An auditor is reporting on cash basis financial statements. These statements are best referred to in his opinion by which of the following descriptions?

Answer 26

Assets and liabilities arising from cash transactions, and revenue collected and expenses paid

Question 27

As the acceptable level of detection risk decreases, an auditor may change the…

Answer 27

Nature of substantive tests from a less effective to a more effective procedure

Question 28

A CPA in public practice may not disclose confidential client information regarding auditing services without the client’s consent in response to which of the following situations?

Answer 28

A letter to the client from the IRS

Question 29

Management’s Responsibility for the Financial Statements is a…

Answer 29

Heading that should be in the auditor’s report

Question 30

An auditor may decide to increase the risk of incorrect rejection when…

Answer 30

The cost and effort of selecting additional sample items is low

Question 31

Which respect to special purpose financial statements, if such statements contain items for which GAAP would require disclosure, the financial statements may…

Answer 31

Provide the relevant disclosure that would be required for those
Items in a GAAP presentation

Question 32

According to the standards of the profession, which of the following will prevent a CPA performing audit engagements from being independent?

Answer 32

Employment of the CPA’s spouse as a client’s internal auditor

Question 33

Auditor’s who prefer statistical to judgmental sampling believe that the principal advantage of statistical sampling flows from its unique ability to…

Answer 33

Provide a mathematical measurement of uncertainty

Question 34

If a CPAS wishes to select a random sample which must have a 90% confidence level and an upper precision limit of 10%, the size of the sample he must select will decrease as his estimate of the…

Answer 34

Occurrence rate decreases

Question 35

The objective of a review of the interim financial information of a publicly held company is to…

Answer 35

Provide the accountant with a basis for reporting to the board
Of directors or stockholders

Question 36

What is a correct statement concerning prospective financial statements?

Answer 36

Any type of prospective financial statements would normally be appropriate for limited use

Question 37

According to the profession’s standards, which of the following would be considered consulting services?
1 advisory services
2 implementation services
3 product services

Answer 37

Advisory, implementation and product services are all consulting services

Question 38

An accountant has been asked to compile the financial statements of a Nonpublic company on a prescribed form that omits substantially all the disclosures required by GAAP. If the prescribed form is a standard preprinted form adopted by the company’s industry trade association, and is to be transmitted only to such association, the accountant…

Answer 38

Need not advise the industry trade association of the omission
Of all disclosures

Question 39

What factors would affect an auditor’s judgment about the nature and extent of the audit documentation?

Answer 39

Risk of material misstatement of the assertion, account or

transaction class

Question 40

The timing of the audit when compared to the entity’s fiscal year is not a factor that determines the…

Answer 40

Form and extent of document items related to risks identified and controls evaluated

Question 41

Which of the following procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity’s ability to continue as a going concern?

Answer 41

Inquiring of the entity’s legal counsel about litigation, claims and assessments

Question 42

An auditor reviews the reconciliation of payroll tax forms that a client is responsible for filing in order to…

Answer 42

Identify potential liabilities for unpaid payroll taxes

Question 43

In performing a count of negotiable securities, an auditor records the details of the count on a security count worksheet. What other information is usually included on this worksheet?

Answer 43

An acknowledgment by a client representative that the securities
were returned intact

Question 44

Which of the following factors would most likely be considered an inherent limitation to an entity’s internal control?

Answer 44

Human judgment in decision making process

Question 45

When a company’s stock record books are maintained by an outside registrar or transfer agent, the auditor should obtain confirmation from the registrar or transfer agent concerning the…

Answer 45

Number of shares issued and outstanding

Question 46

Name 3 elements that should be encompassed by the quality control policies and procedures of an auditing firm?

Answer 46

1 acceptance and continuance of client relationships and specific engagements
2 relevant ethical requirements
3 human resources

Question 47

Which of the following would be an appropriate title for a statement of revenue and expenses prepared using an other comprehensive basis of accounting (OCBOA)?

Answer 47

Statement of income- regulatory basis

Question 48

Guidance on the quantity, type and content of attest documentation for Attestation engagements requires that attest documentation for Attestation engagements indicate…

Answer 48

The work was adequately planned and supervised, indicating observance of the first standard of fieldwork