Audit Chapter 2 Test Questions and
Revised Answers All Correct
The auditors' report for a nonpublic company should indicate:
A. That the audit was made in accordance with auditing standards generally accepted in
the United States of America.
B. Any weakness in internal control observed by the auditors.
C. That accounting principles have been consistently applied.
D. That no illegal acts have been identified. - Answer-A. That the audit was made in
accordance with auditing standards generally accepted in the United States of America.
The Auditing Standards Board's guidance on matters such as the purpose of an audit,
the premise of an audit, and auditor personal responsibilities is included in:
A. The 10 Generally Accepted Auditing Standards.
B. The Code of Professional Conduct.
C. Accounting Series Releases.
D. Principles Underlying an Audit Conducted in Accordance with GAAS. - Answer-D.
Principles Underlying an Audit Conducted in Accordance with GAAS
A requirement that working papers be reviewed by the supervisor, and any deficiencies
be discussed with the preparer is an example of a quality control procedure in the area
of:
A. Acceptance and continuance of client relationships and specific engagements.
B. Engagement performance.
C. Human resources.
D. Relevant ethical requirements. - Answer-B. Engagement performance
A requirement to design recruitment processes and procedures to help the firm select
individuals meeting minimum academic requirements established by the firm is an
example of a quality control procedure in the area of:
A. Acceptance and continuance of client relationships and specific engagements.
B. Engagement performance.
C. Human resources.
D. Relevant ethical requirements. - Answer-C. Human Resources
The body that issues international pronouncements providing auditing procedural and
reporting guidance is the:
A. International Federation of Auditors.
B. Multinational Reporting Commission.
C. International Auditing and Assurance Standards Board.
, D. AICPA Auditing Standards Board. - Answer-c. International Auditing and Assurance
Standards Board
To present fairly in conformity with generally accepted accounting principles the
financial statements must:
A. Be consistently applied.
B. Inform users of all matters that could materially affect a decision.
C. Reflect transactions and events within a range of reasonable limits.
D. Be considered preferable to the users of those financial statements. - Answer-C.
Reflect transactions and events within a range of reasonable limits
Which of the following is not included in the auditors' standard unmodified audit report?
A. The procedures selected by the auditor depend on the auditor's judgment.
B. An audit includes evaluating the appropriateness of accounting policies used.
C. An audit includes evaluating the overall presentation of the financial statements.
D. Accounting principles have been consistently applied. - Answer-D. Accounting
principles have been consistently applied
Audits of financial statements are designed to obtain reasonable assurance of detecting
misstatement due to: - Answer-Fraudulent Financial Reporting - Yes
Misappropriation of Assets - Yes
Financial statements are prepared following an - Answer-applicable financial reporting
framework
An attestation engagement - Answer-Includes a report on subject matter, or on
assertion about subject matter
An audit provides reasonable assurance of detecting which of the following types of
material illegal acts? - Answer-Direct Effect - Yes
Without a Direct Effect - No
Which of the following is NOT a type of auditors opinion? - Answer-Ordinary
Which of the following is one of the elements of AICPA quality control? - Answer-
Engagement performance
A procedure in which a quality control partner periodically tests the application of quality
control procedures is most directly related to which quality control element? - Answer-
Monitoring
Requirements for training, independence and due professional care are included in
which group of the generally accepted auditing standards of the PCAOB? - Answer-
General
Revised Answers All Correct
The auditors' report for a nonpublic company should indicate:
A. That the audit was made in accordance with auditing standards generally accepted in
the United States of America.
B. Any weakness in internal control observed by the auditors.
C. That accounting principles have been consistently applied.
D. That no illegal acts have been identified. - Answer-A. That the audit was made in
accordance with auditing standards generally accepted in the United States of America.
The Auditing Standards Board's guidance on matters such as the purpose of an audit,
the premise of an audit, and auditor personal responsibilities is included in:
A. The 10 Generally Accepted Auditing Standards.
B. The Code of Professional Conduct.
C. Accounting Series Releases.
D. Principles Underlying an Audit Conducted in Accordance with GAAS. - Answer-D.
Principles Underlying an Audit Conducted in Accordance with GAAS
A requirement that working papers be reviewed by the supervisor, and any deficiencies
be discussed with the preparer is an example of a quality control procedure in the area
of:
A. Acceptance and continuance of client relationships and specific engagements.
B. Engagement performance.
C. Human resources.
D. Relevant ethical requirements. - Answer-B. Engagement performance
A requirement to design recruitment processes and procedures to help the firm select
individuals meeting minimum academic requirements established by the firm is an
example of a quality control procedure in the area of:
A. Acceptance and continuance of client relationships and specific engagements.
B. Engagement performance.
C. Human resources.
D. Relevant ethical requirements. - Answer-C. Human Resources
The body that issues international pronouncements providing auditing procedural and
reporting guidance is the:
A. International Federation of Auditors.
B. Multinational Reporting Commission.
C. International Auditing and Assurance Standards Board.
, D. AICPA Auditing Standards Board. - Answer-c. International Auditing and Assurance
Standards Board
To present fairly in conformity with generally accepted accounting principles the
financial statements must:
A. Be consistently applied.
B. Inform users of all matters that could materially affect a decision.
C. Reflect transactions and events within a range of reasonable limits.
D. Be considered preferable to the users of those financial statements. - Answer-C.
Reflect transactions and events within a range of reasonable limits
Which of the following is not included in the auditors' standard unmodified audit report?
A. The procedures selected by the auditor depend on the auditor's judgment.
B. An audit includes evaluating the appropriateness of accounting policies used.
C. An audit includes evaluating the overall presentation of the financial statements.
D. Accounting principles have been consistently applied. - Answer-D. Accounting
principles have been consistently applied
Audits of financial statements are designed to obtain reasonable assurance of detecting
misstatement due to: - Answer-Fraudulent Financial Reporting - Yes
Misappropriation of Assets - Yes
Financial statements are prepared following an - Answer-applicable financial reporting
framework
An attestation engagement - Answer-Includes a report on subject matter, or on
assertion about subject matter
An audit provides reasonable assurance of detecting which of the following types of
material illegal acts? - Answer-Direct Effect - Yes
Without a Direct Effect - No
Which of the following is NOT a type of auditors opinion? - Answer-Ordinary
Which of the following is one of the elements of AICPA quality control? - Answer-
Engagement performance
A procedure in which a quality control partner periodically tests the application of quality
control procedures is most directly related to which quality control element? - Answer-
Monitoring
Requirements for training, independence and due professional care are included in
which group of the generally accepted auditing standards of the PCAOB? - Answer-
General
