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BUS 404- Audit Exam 1 Wiley Multiple Choice – Questions and Solutions
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BUS 404- Audit Exam 1 Wiley Multiple Choice – Questions and Solutions
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BUS 404- Audit Exam 1 WileyMultiple Choice – Questions and
Solutions
Generally Accepted Auditing Standard (GAAS) are - -Pronouncements issued
by the Auditing Standards Board
-Which of the following is MOST likely to be unique to the audit work of CPAs
as compared to work performed by practitioners of other professions? - -
Independence
-The PCAOB's standards require that due care is to be exercised in the
performance of an audit. This standard is ordinarily interpreted to require - -
Critical review of the judgement exercised at every level of supervision
-According to the standards of the profession, which of the following
circumstances will prevent a CPA performing audit engagements from being
independent? - -Employment of the CPA's spouse as a client's director of
internal audit.
-According to the ethical standards of the profession, which of the following
acts is generally prohibited? - -Retaining client records after and
engagement is terminated prior to completion and the client has demanded
their return
-According to the standards of he profession, which of the following
activities would most likely not impair a CPA's independence? - -Providing
advisory services for a client.
-According to the ethical standard's of the profession, which of the following
acts is generally prohibited? - -Accepting a commission for recommending a
product to an audit client.
-To exercise due professional care an auditor should - -critically review the
judgement exercised by those assisting the audit.
-Which of the following statements is correct regarding an accountant's
working papers? - -The accountant owns the working papers but generally
may not disclose them without the client's consent or a court order.
-As the acceptable level of detection risk decreases, an auditor may - -
postpone the planned timing of substantive tests from interim dates to the
year-end
, -The risk that an auditor will conclude, based on substantive tests, that a
material misstatement does not exist in an account balance, when, in fact,
such misstatement does exist is referred to as - -detection risk
-As the acceptable level of detection risk decreases, the assurance directly
provided from - -substantive tests should increase
-Which of the following audit risk components may be assessed in
nonquantitative terms - -Control risk- yes
detection risk-yes
inherent risk- yes
-Inherent risk and control risk differ from detection risk in that they - -exist
independently of the financial statement audit
-On the basis of the audit evidence gathered and evaluated, an auditor
decides to increase the assessed level of control risk from that originally
planned. To achieve an overall audit risk level that is substantially the same
as the planned audit risk level, the auditor would - -Decrease detection risk
-Relationship between control risk and detection risk is ordinarily - -Inverse
-Which of the following would an auditor most likely use in determining the
auditor's preliminary judgement about materiality. - -The entity's annualized
interim financial statements
-Which of the following statements is not correct about materiality - -An
auditor considers materiality for planning purposes in terms of the largest
aggregate level of misstatements that could be material to any one of the
financial statements
-Which of the following is a function of the risks of material misstatement
and detection risk? - -Audit risk
-Which of the following is correct concerning performance materiality on an
audit? - -It will ordinarily be less than financial statement materiality
-Which of the following would an auditor most likely use in determining the
auditor's preliminary judgement about materiality - -the entity's financial
statements of the prior year
-Holding other planning considerations equal, a decrease in the amount of
misstatements in a class of transactions that an auditor could tolerate most
likely would cause the auditor to - -Perform the planned auditing procedures
closer to the balance sheet date
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