Question 1

In circumstances where the auditor is being asked to audit subjective types of information, typically, the auditor and the entities being audited should agree in writing about the criteria being audited after the audit starts.

Accepted Answer

A) True 
 B)False

Question 2

Section 404 of the Sarbanes-Oxley Act requires public companies to have an external auditor attest to their internal control over financial reporting.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following audits can be regarded as generally being a compliance audit?

Accepted Answer

A)   IRS agents' examinations of taxpayer returns
B)   GAO auditor's evaluation of the computer operations of governmental units
C)   an internal auditor's review of a company's payroll authorization procedures
D)   a CPA firm's audit of a public companyE) A) and B)
F) B) and C)

Question 4

Audits

Accepted Answer

A)   are an assurance service, but not an attestation service.
B)   are designed to provide absolute assurance that the financial statements are free of material misstatement.
C)   are required for publicly traded companies in the United States.
D)   do not require the auditor to express their opinion in a written report.E) All of the above
F) B) and D)

Question 5

Most public companies' audited financial statements are available on the SEC's EDGAR database.

Accepted Answer

A) True 
 B)False

Question 6

Financial statement users do not confuse auditing with accounting any longer.

Accepted Answer

A) True 
 B)False

Question 7

The primary purpose of a management consulting engagement is to generate a recommendation to management.

Accepted Answer

A) True 
 B)False

Question 8

Internal auditors

Accepted Answer

A)   must be independent of the entity that employs them.
B)   report to the accounting department.
C)   are employed by all types of organizations.
D)   must be CPAs.E) A) and C)
F) B) and C)

Question 9

Explain what is meant by information risk, and list the four causes of this risk.

Accepted Answer

Information risk reflects the possibilit...

Question 10

One criterion used by an external auditor to evaluate published financial statements is known as generally accepted auditing standards.

Accepted Answer

A) True 
 B)False

Question 11

In an audit of internal controls over financial reporting, the auditor may rely upon Internal Control - Integrated Framework issued by COSO.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following are required to have a written report regarding the assertion of another party?

Accepted Answer

A)   
B)   
C)   
D)   E) A) and D)
F) C) and D)

Question 13

Which of the following can be used as a criterion for evaluating information being audited?

Accepted Answer

A)   International Financial Reporting Standards (IFRS) 
B)   Generally Accepted Accounting Principles (GAAP) 
C)   Internal Revenue Code (IR
C)  
D)   all of the aboveE) C) and D)
F) None of the above

Question 14

Results of compliance audits are typically reported to the company's management rather than to a broad spectrum of outside users.

Accepted Answer

A) True 
 B)False

Question 15

Large businesses, especially, have the ability to reduce information risk. Which of the following is not a way for a large business to reduce information risk?

Accepted Answer

A)   Paying higher interest rates on loans.
B)   The user verifies the information they need by any possible means.
C)   The user of information shares information risk with management.
D)   Having an independent audit performed of the financial statements.E) None of the above
F) A) and D)

Question 16

One objective of an operational audit is to

Accepted Answer

A)   determine whether the financial statements fairly present the entity's operations.
B)   determine if the auditee is in compliance with GAAP.
C)   make recommendations for improving performance.
D)   report on the entity's relative success in attaining profit maximization.E) B) and C)
F) B) and D)

Question 17

Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called

Accepted Answer

A)   finance.
B)   auditing.
C)   accounting.
D)   economics.E) A) and C)
F) A) and B)

Question 18

CPA firms are never allowed to provide bookkeeping services for clients.

Accepted Answer

A) True 
 B)False

Question 19

The use of the Certified Public Accountant title is regulated by

Accepted Answer

A)   the federal government.
B)   state law through the licensing departments of each state.
C)   the American Institute of Certified Public Accountants through the licensing departments of the tax and auditing committees.
D)   the Securities and Exchange Commission.E) A) and D)
F) A) and C)

Question 20

The AICPA completed a significant revision of the CPA examination effective April 1, 2017. In total, the CPA Examination has four sections, and the total number of hours these four sections involve when taking the Examination is

Accepted Answer

A)   16 hours, 4 hours for each section.
B)   20 hours, 5 hours for each section.
C)   16 hours, 5 hours each for two of the sections, 3 hours for the other two sections.
D)   20 hours, 6 hours for two of the sections, 4 hours for the other two sections.E) A) and B)
F) B) and C)

Exam 1: The Demand for Audit and Other Assurance Services

Which of the following are required to have a written report regarding the assertion of another party?

Correct AnswerverifiedShow Answer

Audits

Correct AnswerverifiedShow Answer

Which of the following audits can be regarded as generally being a compliance audit?

Correct AnswerverifiedShow Answer

Large businesses, especially, have the ability to reduce information risk. Which of the following is not a way for a large business to reduce information risk?

Correct AnswerverifiedShow Answer

Most public companies' audited financial statements are available on the SEC's EDGAR database.

Correct AnswerverifiedShow Answer

One criterion used by an external auditor to evaluate published financial statements is known as generally accepted auditing standards.

Correct AnswerverifiedShow Answer

In circumstances where the auditor is being asked to audit subjective types of information, typically, the auditor and the entities being audited should agree in writing about the criteria being audited after the audit starts.

Correct AnswerverifiedShow Answer

The primary purpose of a management consulting engagement is to generate a recommendation to management.

Correct AnswerverifiedShow Answer

The AICPA completed a significant revision of the CPA examination effective April 1, 2017. In total, the CPA Examination has four sections, and the total number of hours these four sections involve when taking the Examination is

Correct AnswerverifiedShow Answer

Financial statement users do not confuse auditing with accounting any longer.

Correct AnswerverifiedShow Answer

Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called

Correct AnswerverifiedShow Answer

In an audit of internal controls over financial reporting, the auditor may rely upon Internal Control - Integrated Framework issued by COSO.

Correct AnswerverifiedShow Answer

CPA firms are never allowed to provide bookkeeping services for clients.

Correct AnswerverifiedShow Answer

The use of the Certified Public Accountant title is regulated by

Correct AnswerverifiedShow Answer

Results of compliance audits are typically reported to the company's management rather than to a broad spectrum of outside users.

Correct AnswerverifiedShow Answer

Which of the following can be used as a criterion for evaluating information being audited?

Correct AnswerverifiedShow Answer

Internal auditors

Correct AnswerverifiedShow Answer

One objective of an operational audit is to

Correct AnswerverifiedShow Answer

Explain what is meant by information risk, and list the four causes of this risk.

Correct AnswerverifiedInformation risk reflects the possibilit...View AnswerShow Answer

Section 404 of the Sarbanes-Oxley Act requires public companies to have an external auditor attest to their internal control over financial reporting.

Correct AnswerverifiedShow Answer

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Information risk reflects the possibilit...
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