10 May WHICH OF THE FOLLOWING CONDITIONS SHOULD ALERT AN AUDITOR ABOUT THE INITIAL ASSESSMENT?
ACCT444 Week 1 Quiz Latest 2017 AugustQuestion 13 / 3 pts(TCO 3) The organization that is responsible for providing oversight for auditors of public companies is called the _____Auditing Standards Board.American Institution of Public Accountants.Accounting Oversight Board.Public Company Accounting Oversight Board.Question 23 / 3 pts(TCO 1) Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit _____both private and public companies.public companies only.private companies public companies and nonprofit entities.private companies only.Question 33 / 3 pts(TCO 1) Which of the following actions should a CPA firm take to comply with the AICPA’s quality control standards?Establish procedures that comply with the standards of the Sarbanes-Oxley Act.Use attributes sampling techniques in testing internal controls.Consider inherent risk and control risk before determining detection risk.Establish policies to ensure that the audit work meets applicable professional standards.Question 43 / 3 pts(TCO 1) Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n) _____accounting and bookkeeping service.attestation service.assurance service.tax service.Question 53 / 3 pts(TCO 1) Jackson & Company CPAs plan to audit the financial statements of Perigee Technologies an issuer as defined under the Sarbanes-Oxley Act of 2002. Which of the following situations would impair Jackson’s independence?Provision of personal tax services to Johnson the accounts payable manager of PerigeePreparation of Perigee’s routine annual tax return where Jackson’s fee will be calculated as a percentage of the tax refund obtainedAudit of Perigee’s internal control is performed contemporaneously with the annual financial statement auditDiscovering that Lowe the chief financial officer of Perigee started his accounting career 10 years earlier as a staff accountant for Jackson & Company and continues to maintain ties with current partners at the firmQuestion 63 / 3 pts(TCO 3) Burrow & Co. CPAs have provided annual audit and tax compliance services to Mare Corp. for several years. Mare has been unable to pay Burrow in full for services Burrow rendered 19 months ago. Burrow is ready to begin fieldwork for the current year’s audit. Under the ethical standards of the profession which of the following arrangements will permit Burrow to begin the fieldwork on Mare’s audit?Mare sets up a 2-year payment plan with Burrow to settle the unpaid fee balance.Mare commits to pay the past due fee in full before the audit report is issued.Mare gives Burrow an 18-month note payable for the full amount of the past due fees before Burrow begins the audit.Mare engages another firm to perform the fieldwork and Burrow is limited to reviewing the workpapers and issuing the audit report.Question 70 / 3 pts(TCO 3) Interpretations of Rule 101 prohibit covered members from owning any stock or other direct investment in audit clients. Covered members include all but which of the following?All partners in an office that have no responsibility for the engagementThe firm and its employee benefit plansIndividuals on the attest engagementAll of the above describe covered members.Question 83 / 3 pts(TCO 3) Several months after an unqualified audit report was issued the auditor discovered the financial statements were materially misstated. The client’s CEO agrees that there are misstatements but refuses to correct them. She claims that confidentiality prevents the CPA from informing anyone.The CEO is correct and the auditor must maintain confidentiality.The CEO is incorrect but because the audit report has been issued it is too late.The CEO is correct but to be ethically correct the auditor should violate the confidentiality rule and disclose the error.The CEO is incorrect and the auditor has an obligation to issue a revised audit report even if the CEO will not correct the financial statements.Question 93 / 3 pts(TCO 1) The phrase U.S. generally accepted accounting principles is an accounting term thatincludes broad guidelines of general application but not detailed practices and procedures.encompasses the conventions rules and procedures necessary to define U.S. accepted accounting practice at a particular time.provides a measure of conventions rules and procedures governed by the AICPA.is included in the audit report to indicate that the audit has been conducted in accordance with generally accepted auditing standards (GAAS).Question 103 / 3 pts(TCO 1) The auditor of an issuer may provide which of the following tax services?Services related to confidential tax transactionsTax services for officers of the issuerTax services for immediate family members of corporate officersTax planning servicesACCT444 Week 2 Quiz Latest 2017 AugustQuestion 13 / 3 pts(TCO 4) In connection with the audit of financial statements an independent auditor could be responsible for failure to detect a material fraud ifstatistical sampling techniques were not used on the audit engagement.the auditor planned the audit in a negligent manner.accountants performing important parts of the work failed to discover a close relationship between the treasurer and the cashier.the fraud was perpetrated by one employee who circumvented the existing internal controls.Question 23 / 3 pts(TCO 4) “Absence of reasonable care that can be expected of a person is a set of circumstances” definespecuniary negligence.gross negligence.extreme negligence.ordinary negligence.Question 33 / 3 pts(TCO 4) The prudent person concept establishes thatthe CPA firm is not expected to make only perfect judgments.an audit in accordance with GAAS is subject to limitations and cannot be relied upon for complete assurance that all errors and irregularities will be found.the courts do not require that the auditor become the insurer or guarantor of the accuracy of the statements.all three of the above are true.Question 43 / 3 pts(TCO 4) Tort actions against CPAs are more common than breach of contract actions becausethere are more torts than contracts.the burden of proof is on the auditor rather than on the person suing.the person suing need prove only negligence.the amounts recoverable are normally larger.Question 53 / 3 pts(TCO 4) If the auditor believes that the financial statements are not fairly stated or is unable to reach a conclusion because of insufficient evidence the auditorshould withdraw from the engagement.should request an increase in audit fees so that more resources can be used to conduct the audit.has the responsibility of notifying financial statement users through the auditor’s report.should notify regulators of the circumstances.Question 63 / 3 pts(TCO 3) Which of the following statements is most correct regarding errors and fraud?An error is unintentional whereas fraud is intentional.Frauds occur more often than errors in financial statements.Errors are always fraud and frauds are always errors.Auditors have more responsibility for finding fraud than errors.Question 73 / 3 pts(TCO 3) In the fraud triangle fraudulent financial reporting and misappropriation of assetsshare little in common.share most of the same risk factors.share the same three conditions.share most of the same conditions.Question 83 / 3 pts(TCO 3) Because of the risk of material misstatements due to fraud an audit of financial statements in accordance with generally accepted auditing standards should be performed with an attitude ofobjective judgment.impartial conservatism.independent integrity.professional skepticism.Question 93 / 3 pts(TCO 3) Which of the following statements describes circumstances that underlie employee incentives to misappropriate assets?Dissatisfied employees may steal from a sense of entitlement.Weak internal controls encourage employees to take chances.If management cheats customers and gets away with it then employees believe they can do the same to the company.Each of the above describes circumstances underlying employee incentives to misappropriate assets.Question 103 / 3 pts(TCO 3) Auditors may identify conclusions during fieldwork that change or support a judgment about the initial assessment of fraud risk. Missing or conflicting evidenceDiscrepancies in the accounting recordsUnusual relationships between the auditor and managementAll of the aboveACCT444 Week 3 Quiz Latest 2017 AugustQuestion 13 / 3 pts(TCO 6) Physical examination is the inspection or count by the auditor of items such ascash or inventory only.cash inventory canceled checks and sales documents.cash inventory canceled checks and tangible fixed assets.cash inventory securities notes receivable and tangible fixed assets.Question 20 / 3 pts(TCO 6) Analytical procedures arediagnostic tests of financial information that may not be classified as evidential matter.calculations of financial information made by a computer.substantive tests of financial information made by a study and comparison of relationships among data.statistical tests of financial information designed to identify areas requiring intensive investigation.Question 33 / 3 pts(TCO 6) The Auditing Standards Board has concluded that analytical procedures are so important that they are required duringplanning and testing phases.planning and completion phases.testing and completion phases.planning testing and completion phases.Question 43 / 3 pts(TCO 6) Traditionally confirmations are used to verifyindividual transactions between organizations such as sales transactions.bank balances and accounts receivables.fixed asset additions.All of the aboveQuestion 53 / 3 pts(TCO 7) Analytical procedures used in planning an audit should focus on identifyingmaterial weaknesses of internal control.the predictability of financial data from individual transactions.the various assertions that are embodied in the financial statements.areas that may represent specific risks relevant to the audit.Question 60 / 3 pts(TCO 7) When inherent risk is high there will need to bemore evidence accumulated.more experienced staff assigned to the work.either a or b but not both.both a and b.Question 73 / 3 pts(TCO 7) A successor auditor may perform which of the following for a new audit client?Speak to local attorneys banks and other businesses regarding the company’s reputationSpeak to the predecessor auditor about disagreements they had with managementInterview client personnel to better understand the business and associated risksAll of the aboveQuestion 83 / 3 pts(TCO 8) The preliminary judgment about materiality is the _____ amount by which the auditor believes the statements could be misstated and still not affect the decisions of reasonable users.minimummaximummean averagemedian averageQuestion 90 / 3 pts(TCO 8) In setting materiality guidelines for current assets the two standard setters FASB and the AICPA provide the following guidelines to practitionersBoth agree that materiality should be set at an amount greater than 10% of current assets.FASB’s guideline is greater than 10% but the AICPA’s is greater than 5%.Both agree that it should be greater than 5%.No specific materiality guidelines are provided by either of them.Question 100 / 3 pts(TCO 8) Which of the following elements ultimately determines the specific auditing procedures that are necessary in the circumstances to afford a reasonable basis for an opinion?Inherent riskMaterialityAuditor judgmentReasonable assuranceACCT444 Week 4 Quiz Latest 2017 AugustQuestion 13 / 3 pts(TCO 5) Which of the following is responsible for establishing a private company’s internal control?ManagementAuditorsManagement and auditorsCommittee of Sponsoring OrganizationsQuestion 23 / 3 pts(TCO 5) Which section of the Sarbanes-Oxley Act requires management to issue an internal control report?202203404408Question 33 / 3 pts(TCO 5) Which of management’s concerns with respect to implementing internal controls is the auditor primarily concerned?Efficiency of operationsReliability of financial reportingEffectiveness of operationsCompliance with applicable laws and regulationsQuestion 43 / 3 pts(TCO 5) Even with the most effectively designed internal control the auditor must obtain audit evidence beyond testing the controls for everytransaction.financial statement account.material financial statement account.financial statement account that will be relied upon by third parties.Question 53 / 3 pts(TCO 5) Which of the following is correct?A significant deficiency is always a material weakness.A reportable condition is always a material weakness.A material weakness is less significant that a control deficiency.A significant deficiency may be a material weakness.Question 63 / 3 pts(TCO 10) Which of the following is not a risk to IT systems?Need for IT experienceSeparation of IT dutiesImproved audit trailHardware and data vulnerabilityQuestion 73 / 3 pts(TCO 10) The extent to which IT duties are separated in an organization depends onthe organization’s size.the organization’s complexity.both A and B.neither A nor B.Question 83 / 3 pts(TCO 10) Which of the following is a category of general controls?Processing controlsOutput controlsPhysical and online securityInput controlsQuestion 93 / 3 pts(TCO 10) A control that relates to all parts of the IT system is called a(n)general control.systems control.universal control.applications control.Question 103 / 3 pts(TCO 10) Which of the following is not an example of an application control?An equipment failure causes system downtime.There is a preprocessing authorization of the sales transactions.There are reasonableness tests for the unit selling price of a sale.After processing all sales transactions are reviewed by the sales department.ACCT444 Week 5 Quiz Latest 2017 AugustQuestion 13 / 3 pts(TCO 6) The auditor looks for an indication on duplicate sales invoices to see whether the invoices have been verified. This is an example ofa test of details of balances.a test of control.a substantive test of transactions.both a test of control and a substantive test of transactions.Question 23 / 3 pts(TCO 6) Analytical procedures are defined in the auditing standards ascompliance tests.substantive tests.tests of controls.helpful procedures not possessing the validity of other tests available to the auditor.Question 33 / 3 pts(TCO 6) Which of the following audit tests is usually the most costly to perform?Analytical proceduresTests of controlsTests of balancesSubstantive tests of transactionsQuestion 43 / 3 pts(TCO 6) Which of the following represents an incorrect pairing of a type of audit test and evidence?Procedures to obtain an understanding of internal controls—documentationAnalytical procedures—ratio analysisSubstantive tests of transactions—confirmationTests of details of balances—physical examinationQuestion 53 / 3 pts(TCO 6) The purpose of tests of controls is to provide reasonable assurance that theaccounting treatment of transactions and balances is valid and proper.internal control procedures are functioning as intended.entity has complied with GAAP disclosure requirements.entity has complied with requirements of quality control.Question 63 / 3 pts(TCO 9) It is important that sales be billed and recorded in the journal as soon as possible afterthe order is received.the order is received and credit is approved.credit is approved and it is verified that there is enough inventory to fill the order.the shipment takes place.Question 73 / 3 pts(TCO 9) Which one of the following is not an auditor’s concern about a key authorization point in the sales or collection cycle?The receiving room must have authorization before releasing items to inventory control.Credit must be authorized before the sale.Goods must be shipped after the authorization.Prices must be authorized.Question 83 / 3 pts(TCO 9) To achieve good internal control which department should perform the activities of matching shipping documents with sales orders and preparing daily sales summaries?BillingShippingCreditPayablesQuestion 93 / 3 pts(TCO 9) When designing substantive tests of transactions for sales the auditor is concerned with the possibility of several types of misstatements. Which of the following is not one of the types of these misstatements?Sales being included in the journal for which no shipment was madeSales to related parties such as officers and subsidiariesSales recorded more than onceShipments being made to nonexistent customers and recorded as salesQuestion 103 / 3 pts(TCO 9) A key internal control in the sales and collection cycle is the separation of duties between cash handling and record keeping. The objective most directly associated with this control is to verify thatcash receipts recorded in the cash receipts journal are reasonable.cash receipts are properly classified.recorded cash receipts result from legitimate transactions.existing cash receipts are recorded.ACCT444 Week 6 Quiz Latest 2017 AugustQuestion 13 / 3 pts(TCO 9) The exception rate the auditor will permit in the population and still be willing to reduce the assessed level of control risk is called thetolerable exception rate.estimated population exception rate.acceptable risk of overreliance.sample exception rate.Question 23 / 3 pts(TCO 9) A sample in which every possible combination of items in the population has an equal chance of constituting the sample is arandom sample.statistical sample.judgment sample.representative sample.Question 33 / 3 pts(TCO 9) To determine if a sample is truly representative an auditor mustconduct multiple samples of the same population.never use sampling because of the expense involved.audit the entire population.perform none of the above.Question 43 / 3 pts(TCO 9) The most important aspect of evaluating the client’s method of obtaining a reliable cutoff is toperform extensive detailed testing of cutoff.evaluate the client’s control procedures around cutoff.confirm a sample of transactions near period end with customers.perform any of the above.Question 53 / 3 pts(TCO 9) The understatement of sales and accounts receivable is best uncovered byconfirming receivables.reviewing the aged trial balance.test of transactions for shipments made but not recorded.reconciling the accounts receivable general ledger account with the schedule of accounts receivable.Question 63 / 3 pts(TCO 9) For most audits inherent risk for accounts receivable is moderate or low except for which balance-related audit objectives?Timing and realizable valueCompleteness and existenceExistence and accuracyRealizable value and cutoffQuestion 73 / 3 pts(TCO 9) An auditor should perform alternative procedures to substantiate the existence of accounts receivable whenno reply to a positive confirmation request is received.no reply to a negative confirmation request is received.collectibility of receivables is in doubt.pledging of the receivables is probable.Question 83 / 3 pts(TCO 9) Which of the following does not have to be considered in determining the initial sample size of a test of details?Tolerable misstatementAcceptable risk of incorrect rejectionEstimate of misstatements in the populationEach of the above must be consideredQuestion 93 / 3 pts(TCO 9) Sampling risk maybe controlled byreducing down the sample size.using only random sampling.using the sample technique most appropriate for the population.using audit software.Question 103 / 3 pts(TCO 9) The acceptable risk of incorrect acceptance is most related toaudit efficiency.audit results.audit effectiveness.None of the aboveACCT444 Week 7 Quiz Latest 2017 AugustQuestion 13 / 3 pts(TCO 2) When a misstatement in the financial statements exists but is unlikely to affect the decisions of a reasonable user it would be appropriate to issuean unqualified opinion.a qualified opinion.an adverse opinion.a disclaimer of opinion.Question 20 / 3 pts(TCO 2) Under which of the following sets of circumstances should an auditor issue a qualified opinion?The financial statements contain a departure from generally accepted accounting principles the effect of which is material.The principal auditor decides to make reference to the report of another auditor who audited a subsidiary.There has been a material change between periods in the method of the application of accounting principles.There are significant uncertainties affecting the financial statements.Question 33 / 3 pts(TCO 2) An auditor who is unable to form an opinion on a new client’s opening inventory balances may issue an unmodified opinion on the current year’s:Income statement only.Statement of cash flows only.Balance sheet only.Statement of shareholders’ equity only.Question 43 / 3 pts(TCO 2) Comparative financial statements include the financial statements of the prior year that were audited by a predecessor auditor whose report is not presented. If the predecessor’s report was qualified the successor should:Indicate the substantive reasons for the qualification in the predecessor auditor’s opinion.Request the client to reissue the predecessor’s report on the prior year’s statements.Issue an updated comparative audit report indicating the division of responsibility.Express an opinion only on the current year’s statements and make no reference to the prior year’s statements.Question 53 / 3 pts(TCO 11) A principal purpose of a letter of representation from management is toserve as an introduction to company personnel and an authorization to examine the records.discharge the auditor from legal liability for the audit.remind management of its primary responsibility for financial statements.confirm in writing management’s approval of limitations on the scope of the audit.Question 63 / 3 pts(TCO 2) For an entity’s financial statements to be presented fairly in accordance with an applicable financial reporting framework the framework selected should:Be U.S. GAAP for all audits performed in the United States.Be approved by the Auditing Standards Board or the appropriate industry subcommittee.Include an adequate description of the framework in the financial statements.Match the reporting framework used by most other entities within the entity’s particular industry.Question 73 / 3 pts(TCO 2) In May Year 4 an auditor reissues the auditor’s report on the Year 2 financial statements at a continuing client’s request. The Year 2 financial statements are not restated and the auditor does not revise the wording of the report. The auditor should:Dual date the reissued report.Use the release date of the reissued report.Use the original report date on the reissued report.Use the current-period auditor’s report date on the reissued report.Question 83 / 3 pts(TCO 11) Which of the following items would ordinarily not be included in the standard letter of inquiry to the client’s attorney?A list prepared by management of pending threatened litigation of material amounts.A request that the attorney furnish information or comment about the likelihood of an unfavorage outcome of litigation.A request that the attorney furnish an estimate of the amount or range of the potential loss.A request that the attorney confirm the amount of outstanding fees which the client owes for legal services.Question 93 / 3 pts(TCO 2) In which type of report would you read the following statement: “We believe that our examination provides a reasonable basis for our opinion.”?ReviewAuditExaminationAgreed-upon proceduresQuestion 103 / 3 pts(TCO 2) Blue CPA has been asked to issue a written report on the application of the requirements of an applicable financial reporting framework to a specific transaction by an entity that is audited by another CPA. Blue may accept this engagement but should:Consult with the continuing CPA to obtain information relevant to the transaction.Report the engagement’s findings to the entity’s audit committee the continuing CPA and management.Disclaim any opinion that the hypothetical application of the applicable financial reporting framework conforms with generally accepted accounting principles.Notify the entity that the report is for the general use of all interested parties.
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