AUDIT 75 CHAPTER 3 REVIEW QUESTIONS WITH ANSWERS|29 PAGES
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Course
AUDIT
Institution
AUDIT
Which of the following types of employee must be independent of an audit client?
a partner in the office that performs the engagement
a senior auditors assigned to the office that performs the audit
mangers assigned to an office that does not participate in the engagement
all firm prof...
Which of the following types of employee must be independent of an audit client?
a partner in the office that performs the engagement
a senior auditors assigned to the office that performs the audit
mangers assigned to an office that does not participate in the engagement
all firm professionals, regardless of their position - ✔ ✔ a partner in the office that performs the
engagement
While performing an audit of a public company, the auditors discovered material illegal acts and
resigned due to the client's refusal to disclose them. The auditors' reason for resignation should be
disclosed through:
CPA Direct Communication With Shareholders
The Process of Filing
A. Yes Yes
B. No Yes
C. Yes No
D. No No - ✔ ✔ B
While performing an audit of a public company, the auditors discovered material illegal acts and
resigned due to the client's refusal to disclose them. The auditors' reason for resignation should be
disclosed through:
,CPA Direct Communication With Shareholders
The Process of Filing
A. Yes Yes
B. No Yes
C. Yes No
D. No No - ✔ ✔ B
Wilson Company is audited by the Denver office of Anderson CPAs. Which of the following individuals
would be least likely to be considered as a "covered member" by the independence standards?
staff assistant on the audit
a staff assistant who prepared Wilson Company's tax returns
a tax partner in Denver who preforms no attest services for Wilson Company or for any other clients.
The partner in charge of Anderson CPAs (she does no work on the Wilson Company Audit). - ✔ ✔ a
staff assistant who prepared Wilson Company's tax returns
A public accounting firm would least likely be considered in violation of the AICPA Independence Rule in
which of the following instances?
A partner's checking account, which is fully insured by the Federal Deposit Insurance Corporation, is
held at a financial institution for which the public accounting firm performs attest services.
A manager of the firm donates services as vice president of a charitable organization that is an audit
client of the firm.
, An attest client owes the firm fees for this and last year's annual engagements.
A covered member's dependent son owns stock in an attest client. - ✔ ✔ A partner's checking
account, which is fully insured by the Federal Deposit Insurance Corporation, is held at a financial
institution for which the public accounting firm performs attest services.
A small CPA firm provides audit services to a large local company. Almost eighty percent of the CPA
firm's revenues come from this client. Which statement is most likely to be true?
Appearance of independence may be lacking.
The small CPA firm does not have the proficiency to perform a larger audit.
The situation is satisfactory if the auditor exercises due skeptical negative assurance care in the audit.
The auditor should provide an "emphasis of a matter paragraph" to his/her audit report adequately
disclosing this information and then it may issue an unqualified opinion. - ✔ ✔ Appearance of
independence may be lacking.
AICPA independence requirements suggest that a CPA should evaluate whether a particular threat to
independence would lead a reasonable person, aware of all the relevant facts, to conclude that:
A questioning mind reveals doubt as to independence.
An unacceptable risk of non-independence exists.
The accountant is definitely not independent.
There is substantial cause for a legal finding of non-independence. - ✔ ✔ An unacceptable risk of
non-independence exists.
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