Question 1

Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit:

Accepted Answer

A)   both private and public companies.
B)   public companies only.
C)   private companies, public companies, and nonprofit entities.
D)   private companies only.E) None of the above
F) B) and C)

Question 2

The organization that is responsible for providing oversight for auditors of public companies is called the ________.

Accepted Answer

A)   Auditing Standards Board
B)   American Institute of Certified Public Accountants
C)   Public Oversight Board
D)   Public Company Accounting Oversight BoardE) All of the above
F) A) and D)

Question 3

Professional skepticism must be maintained only if the auditor suspects fraud.

Accepted Answer

A) True 
 B)False

Question 4

Limited liability companies are structured and taxed like a general partnership,but their owners have limited personal liability similar to that of a general corporation.

Accepted Answer

A) True 
 B)False

Question 5

The "Principles Underlying an Audit in Accordance with Generally Accepted Auditing Principles" provides a framework to help auditors:

Accepted Answer

A)   understand the ten GAAS standards.
B)   obtain complete assurance that the financial statements are free from any error.
C)   report on the financial statements.
D)   prevent fraud.E) C) and D)
F) A) and B)

Question 6

Listed below are policies or procedures that the Crystal Cove audit firm has in place.For each identified policy or procedure state if it is a Generally Accepted Audit Standard (GAAS)or a Quality Control Standard.

Accepted Answer

1.a
2.b
3....

Question 7

Members of the Public Company Accounting Oversight Board are appointed and overseen by:

Accepted Answer

A)   the U.S. Congress.
B)   the American Institute of Certified Public Accountants.
C)   the Auditing Standards Board.
D)   the Securities and Exchange Commission.E) B) and C)
F) B) and D)

Question 8

An auditor need not abide by a particular auditing standard if the auditor believes that:

Accepted Answer

A)   the issue in question is immaterial in amount.
B)   more expertise is needed to fulfill the requirement.
C)   the requirement of the standard has not been addressed by the PCAOB.
D)   any of the above three are correct.E) B) and D)
F) A) and B)

Question 9

The legal right to perform audits is granted to a CPA firm by regulation of:

Accepted Answer

A)   each state.
B)   the Financial Accounting Standards Board (FAS
B)  .
C)   the American Institute of Certified Public Accountants (AICP
A)  .
D)   the Audit Standards Board.E) B) and C)
F) All of the above

Question 10

Sarbanes-Oxley and the Securities Exchange Commission restrict auditors from providing many consulting services to their publicly traded audit clients.

Accepted Answer

A) True 
 B)False

Question 11

Statements on Auditing Standards issued by the AICPA's Auditing Standards Board are:

Accepted Answer

A)   part of the generally accepted auditing standards under the AICPA Code of Professional Conduct.
B)   interpretations of generally accepted auditing standards and departures from such statements must be justified.
C)   interpretations of generally accepted auditing standards and such standards must be followed in every engagement.
D)   generally accepted auditing procedures that are not covered by the AICPA Code of Professional Conduct.E) A) and D)
F) B) and D)

Question 12

Which of the following is not one of the responsibilities of an auditor under the principles underlying an audit?

Accepted Answer

A)   Possess appropriate competence and capabilities
B)   Comply with ethical requirements
C)   Plan work and supervise assistants
D)   Maintain professional skepticism and exercise professional judgmentE) A) and D)
F) All of the above

Question 13

The following are definitions of terms that are listed on the right.Match the definition with its associated term.Each term can be used once,more than once or not at all.

Accepted Answer

1.i
2.o
3.n
4.a
5.b
...

Question 14

Which one of the following is not true regarding the American Institute of Certified Public Accountants peer review requirement?

Accepted Answer

A)   A CPA firm must develop and adhere to quality control standards.
B)   Peer reviews are mandatory.
C)   A CPA firm will lose AICPA eligibility if a peer review is not performed.
D)   Firms required to be registered with and inspected by the PCAOB are exempt.E) A) and D)
F) None of the above

Question 15

Which of the following are audit standards used in professional practice by audit firms?

Accepted Answer

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

Question 16

List and describe the six organizational structures available to CPA firms.

Accepted Answer

CPA firms can take one of six organizati...

Question 17

The Public Company Accounting Oversight Board (PCAOB)provides oversight to auditors of publicly traded and private companies.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not an essential component of quality control?

Accepted Answer

A)   Policies and procedures to ensure that firm personnel are actively engaged in marketing strategies
B)   Policies and procedures to ensure that the work performed by firm personnel meet applicable professional standards
C)   Policies to ensure that personnel maintain their independence in fact and in appearance
D)   Policies that ensure that monitoring activities are effectively appliedE) A) and D)
F) None of the above

Question 19

In order to properly plan and perform an audit,an important fact for both the auditor and the client to understand is that:

Accepted Answer

A)   the internal control policies and procedures are developed by the auditors.
B)   the purpose of an audit is to prevent fraud.
C)   management is responsible for the preparation of the financial statements.
D)   management can restrict the auditor's access to important information relevant to the financial statements.E) None of the above
F) A) and B)

Question 20

Membership in the AICPA is mandatory for all licensed practicing CPAs.

Accepted Answer

A) True 
 B)False

Exam 2: The Audit Standards Setting Process

Which of the following is not an essential component of quality control?

Correct AnswerverifiedShow Answer

Limited liability companies are structured and taxed like a general partnership,but their owners have limited personal liability similar to that of a general corporation.

Correct AnswerverifiedShow Answer

In order to properly plan and perform an audit,an important fact for both the auditor and the client to understand is that:

Correct AnswerverifiedShow Answer

Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit:

Correct AnswerverifiedShow Answer

Members of the Public Company Accounting Oversight Board are appointed and overseen by:

Correct AnswerverifiedShow Answer

Professional skepticism must be maintained only if the auditor suspects fraud.

Correct AnswerverifiedShow Answer

Which of the following are audit standards used in professional practice by audit firms?

Correct AnswerverifiedShow Answer

The following are definitions of terms that are listed on the right.Match the definition with its associated term.Each term can be used once,more than once or not at all.

Correct Answerverified1.i2.o3.n4.a5.b...View AnswerShow Answer

An auditor need not abide by a particular auditing standard if the auditor believes that:

Correct AnswerverifiedShow Answer

The "Principles Underlying an Audit in Accordance with Generally Accepted Auditing Principles" provides a framework to help auditors:

Correct AnswerverifiedShow Answer

The Public Company Accounting Oversight Board (PCAOB)provides oversight to auditors of publicly traded and private companies.

Correct AnswerverifiedShow Answer

The legal right to perform audits is granted to a CPA firm by regulation of:

Correct AnswerverifiedShow Answer

The organization that is responsible for providing oversight for auditors of public companies is called the ________.

Correct AnswerverifiedShow Answer

List and describe the six organizational structures available to CPA firms.

Correct AnswerverifiedCPA firms can take one of six organizati...View AnswerShow Answer

Sarbanes-Oxley and the Securities Exchange Commission restrict auditors from providing many consulting services to their publicly traded audit clients.

Correct AnswerverifiedShow Answer

Which one of the following is not true regarding the American Institute of Certified Public Accountants peer review requirement?

Correct AnswerverifiedShow Answer

Listed below are policies or procedures that the Crystal Cove audit firm has in place.For each identified policy or procedure state if it is a Generally Accepted Audit Standard (GAAS)or a Quality Control Standard.

Correct Answerverified1.a2.b3....View AnswerShow Answer

Which of the following is not one of the responsibilities of an auditor under the principles underlying an audit?

Correct AnswerverifiedShow Answer

Membership in the AICPA is mandatory for all licensed practicing CPAs.

Correct AnswerverifiedShow Answer

Statements on Auditing Standards issued by the AICPA's Auditing Standards Board are:

Correct AnswerverifiedShow Answer

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1.i
2.o
3.n
4.a
5.b
...
View Answer

Correct Answer
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CPA firms can take one of six organizati...
View Answer

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1.a
2.b
3....
View Answer

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