Audit Reports - CPA Auditing and Attestation (AUD)
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In auditing “professional skepticism” requires:
In auditing “professional skepticism” requires:
As stated in PCAOB; AS 1015: “Due professional care requires the auditor to exercise professional skepticism. Professional skepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence.”
As stated in PCAOB; AS 1015: “Due professional care requires the auditor to exercise professional skepticism. Professional skepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence.”
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Reasonable assurance is:
Reasonable assurance is:
Reasonable assurance is defined as a high level of assurance that the financial statements are free of material misstatement. This level of assurance is not absolute.
Reasonable assurance is defined as a high level of assurance that the financial statements are free of material misstatement. This level of assurance is not absolute.
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The six traits of professional skepticism include
The six traits of professional skepticism include
One of the six traits of professional skepticism requires maintaining an “open mind”. This is also commonly referred to as a “questioning mind”. The avoidance of prejudging outcomes is inherent in the qualitative factors of an “open mind”.
One of the six traits of professional skepticism requires maintaining an “open mind”. This is also commonly referred to as a “questioning mind”. The avoidance of prejudging outcomes is inherent in the qualitative factors of an “open mind”.
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A registered CPA auditing firm would be reasonably assured of meeting its responsibility to provide services that conform with professional standards by:
A registered CPA auditing firm would be reasonably assured of meeting its responsibility to provide services that conform with professional standards by:
Quality control standards relate to the conduct of a firm's audit practice. They set forth standards for establishing policies and procedures to provide reasonable assurance in conforming with standards.
Quality control standards relate to the conduct of a firm's audit practice. They set forth standards for establishing policies and procedures to provide reasonable assurance in conforming with standards.
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Of the following elements, which is not an element of a CPA firm's quality control policies and procedures?
Of the following elements, which is not an element of a CPA firm's quality control policies and procedures?
In addition to HR, leadership responsibilities and monitoring, Engagement Acceptance and Continuance, Performance of the Engagement, and Ethical requirements are included as quality control elements.
In addition to HR, leadership responsibilities and monitoring, Engagement Acceptance and Continuance, Performance of the Engagement, and Ethical requirements are included as quality control elements.
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In the process of evaluating whether or not an accounting change by a company is acceptable, an auditor should consider if:
In the process of evaluating whether or not an accounting change by a company is acceptable, an auditor should consider if:
If there is an accounting principle change by a company, it should be justifiable, for a reason, and it should obey any laws and reporting regulations.
If there is an accounting principle change by a company, it should be justifiable, for a reason, and it should obey any laws and reporting regulations.
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An auditor of a non-issuer must conduct the audit in accordance with A) ASB Standards B) PCAOB Standards
An auditor of a non-issuer must conduct the audit in accordance with A) ASB Standards B) PCAOB Standards
An auditor of a non-issuer must conduct the audit in accordance with ASB Standards.
An auditor of a non-issuer must conduct the audit in accordance with ASB Standards.
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Issuers of public company financial statements are governed by:
Issuers of public company financial statements are governed by:
Issuers of public company financial statements are governed by the Securities Exchange Commission under audit standards as promulgated by the PCAOB.
Issuers of public company financial statements are governed by the Securities Exchange Commission under audit standards as promulgated by the PCAOB.
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The following roles fall under the FROR:
The following roles fall under the FROR:
The Financial Reporting Oversight Role as defined by Rule 3501 of the PCAOB: “The term "financial reporting oversight role" means a role in which a person is in a position to or does exercise influence over the contents of the financial statements or anyone who prepares them, such as when the person is a member of the board of directors or similar management or governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.”
The Financial Reporting Oversight Role as defined by Rule 3501 of the PCAOB: “The term "financial reporting oversight role" means a role in which a person is in a position to or does exercise influence over the contents of the financial statements or anyone who prepares them, such as when the person is a member of the board of directors or similar management or governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.”
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John Rich is a CPA auditor with Biggs, CPA. Rich is an avid investor and has a rather larger portfolio. Rich has a 6% stake in Sigma Corp a public company client of Biggs. Rich is not on the Sigma account but notified the partners of his investment. Because of Rich’s investment:
John Rich is a CPA auditor with Biggs, CPA. Rich is an avid investor and has a rather larger portfolio. Rich has a 6% stake in Sigma Corp a public company client of Biggs. Rich is not on the Sigma account but notified the partners of his investment. Because of Rich’s investment:
Under this scenario, independence is impaired when according to PCAOB ET 101 “During the period of the professional engagement, a partner or professional employee of the firm, his or her immediate family, or any group of such persons acting together owned more than 5 percent of a client’s outstanding equity securities or other ownership interests.”
Under this scenario, independence is impaired when according to PCAOB ET 101 “During the period of the professional engagement, a partner or professional employee of the firm, his or her immediate family, or any group of such persons acting together owned more than 5 percent of a client’s outstanding equity securities or other ownership interests.”
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Of the following, which provides the most authoritative guidance for an audit of an issuer?
Of the following, which provides the most authoritative guidance for an audit of an issuer?
General guidance by the PCAOB is the most authoritative level of auditing guidance for audits of issuers.
General guidance by the PCAOB is the most authoritative level of auditing guidance for audits of issuers.
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An auditor has been prevented from conducting full due diligence and proper audit procedures for the engagement of a company. He does not feel that he has examined enough evidence and is deciding how to issue an opinion. Which should be his choice?
An auditor has been prevented from conducting full due diligence and proper audit procedures for the engagement of a company. He does not feel that he has examined enough evidence and is deciding how to issue an opinion. Which should be his choice?
The auditor cannot issue a positive or negative opinion, simply disclaiming the opinion since he was unable to determine anything about the company.
The auditor cannot issue a positive or negative opinion, simply disclaiming the opinion since he was unable to determine anything about the company.
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Issuers of public company financial statements are governed by:
Issuers of public company financial statements are governed by:
Issuers of public company financial statements are governed by the Securities Exchange Commission under audit standards as promulgated by the PCAOB.
Issuers of public company financial statements are governed by the Securities Exchange Commission under audit standards as promulgated by the PCAOB.
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The following roles fall under the FROR:
The following roles fall under the FROR:
The Financial Reporting Oversight Role as defined by Rule 3501 of the PCAOB: “The term "financial reporting oversight role" means a role in which a person is in a position to or does exercise influence over the contents of the financial statements or anyone who prepares them, such as when the person is a member of the board of directors or similar management or governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.”
The Financial Reporting Oversight Role as defined by Rule 3501 of the PCAOB: “The term "financial reporting oversight role" means a role in which a person is in a position to or does exercise influence over the contents of the financial statements or anyone who prepares them, such as when the person is a member of the board of directors or similar management or governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.”
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John Rich is a CPA auditor with Biggs, CPA. Rich is an avid investor and has a rather larger portfolio. Rich has a 6% stake in Sigma Corp a public company client of Biggs. Rich is not on the Sigma account but notified the partners of his investment. Because of Rich’s investment:
John Rich is a CPA auditor with Biggs, CPA. Rich is an avid investor and has a rather larger portfolio. Rich has a 6% stake in Sigma Corp a public company client of Biggs. Rich is not on the Sigma account but notified the partners of his investment. Because of Rich’s investment:
Under this scenario, independence is impaired when according to PCAOB ET 101 “During the period of the professional engagement, a partner or professional employee of the firm, his or her immediate family, or any group of such persons acting together owned more than 5 percent of a client’s outstanding equity securities or other ownership interests.”
Under this scenario, independence is impaired when according to PCAOB ET 101 “During the period of the professional engagement, a partner or professional employee of the firm, his or her immediate family, or any group of such persons acting together owned more than 5 percent of a client’s outstanding equity securities or other ownership interests.”
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An auditor of a non-issuer must conduct the audit in accordance with A) ASB Standards B) PCAOB Standards
An auditor of a non-issuer must conduct the audit in accordance with A) ASB Standards B) PCAOB Standards
An auditor of a non-issuer must conduct the audit in accordance with ASB Standards.
An auditor of a non-issuer must conduct the audit in accordance with ASB Standards.
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Of the following, which provides the most authoritative guidance for an audit of an issuer?
Of the following, which provides the most authoritative guidance for an audit of an issuer?
General guidance by the PCAOB is the most authoritative level of auditing guidance for audits of issuers.
General guidance by the PCAOB is the most authoritative level of auditing guidance for audits of issuers.
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An auditor has been prevented from conducting full due diligence and proper audit procedures for the engagement of a company. He does not feel that he has examined enough evidence and is deciding how to issue an opinion. Which should be his choice?
An auditor has been prevented from conducting full due diligence and proper audit procedures for the engagement of a company. He does not feel that he has examined enough evidence and is deciding how to issue an opinion. Which should be his choice?
The auditor cannot issue a positive or negative opinion, simply disclaiming the opinion since he was unable to determine anything about the company.
The auditor cannot issue a positive or negative opinion, simply disclaiming the opinion since he was unable to determine anything about the company.
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A “proof of cash”
A “proof of cash”
A proof of cash is an audit technique designed to roll forward each line of the bank reconciliation from one period to the next. The beginning balance of the bank is compared to the beginning balance of the book and the receipts and disbursements are traced to the ending balances.
A proof of cash is an audit technique designed to roll forward each line of the bank reconciliation from one period to the next. The beginning balance of the bank is compared to the beginning balance of the book and the receipts and disbursements are traced to the ending balances.
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When an auditor requires verification of material accounts receivable balances, they would most likely:
When an auditor requires verification of material accounts receivable balances, they would most likely:
A “positive confirmation” requires the recipient to respond affirmatively to the auditor regarding the account balance. The positive confirmation is used to confirm material amounts.
A “positive confirmation” requires the recipient to respond affirmatively to the auditor regarding the account balance. The positive confirmation is used to confirm material amounts.
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