Audit CPA Prep 2022
1. An audit firm has a responsibility to adopt a system of quality control and establish policies and
procedures to provide reasonable assurance that personnel comply with ______________. ans: B). A
firm of independent auditors has a responsibility to adopt a system of quality control in conducting an
audit practice. Thus, a firm should establish quality control procedures to provide it with reasonable
assurance that its personnel comply with generally accepted auditing standards (GAAS) in its audit
engagements.
2. An audit firm has a responsibility to _______________ in accordance with the applicable legal and
regulatory requirements. ans: A), B), and C). A firm of independent auditors has a responsibility to adopt
a system of quality control in conducting an audit practice. Thus, a firm should establish quality control
procedures to provide it with reasonable assurance that its personnel comply with generally accepted
auditing standards in its audit engagements. AU-C 250 states that "the auditor should remain alert to
the possibility that other audit procedures applied may bring instances of noncompliance or suspected
noncompliance with laws and regulations to the auditor's attention." Also, AU-C 220 states that, "within
the context of the firm's system of quality control, engagement teams have a responsibility to
implement quality control procedures that are applicable to the audit engagement."
3. Quality control for a CPA firm applies to all ____________ services. ans: C) and D). Quality control for
a CPA firm does not explicitly apply to consulting and tax services, but quality control does apply to all
review and compilation services.
4. Quality control policies and procedures applicable to a CPA firm should encompass the element(s) of
________________. ans: A) and B). The quality control policies and procedures applicable to a firm's
accounting and auditing practice encompass the following elements: •Independence, integrity, and
objectivity
•Personnel management
•Acceptance and continuance of clients and engagements
•Engagement performance
•Monitoring
5. A CPA firm must appropriately document _______ to properly administer a quality control system.
ans: A), C), and D). QC 10 states that the firm should establish policies and procedures requiring (a)
appropriate documentation to provide evidence of the operation of each element of its system of
quality control, (b) retention of documentation for a period of time sufficient to permit those performing
monitoring procedures and peer review of the firm to evaluate the firm's compliance with its system of
quality control or for a longer period if required by law or regulation, and (c) documentation of
complaints and allegations and responses to them.
6. The form and content of documentation evidencing the operation of each of the elements of the
system of quality control depend on factors such as __________________. ans: A), B), and C). QC 10
states, "The form and content of documentation evidencing the operation of each of the elements of
the system of quality control is a matter of judgment and depends on a number of factors, including the
following: •The size of the firm and the number of offices
, •The nature and complexity of the firm's practices and organization."
7. Public accounting firms establish a monitoring process involving _____________ to provide
reasonable assurance that policies relating to the system of quality control are relevant, adequate, and
operating effectively. ans: B) and C). QC 10 indicates that the firm should establish a monitoring process
to provide reasonable assurance that policies relating to the system of quality control are relevant,
adequate, and operating effectively. This process should include an ongoing consideration and
evaluation of the firm's system of quality control, including inspection or a periodic review of
engagement documentation, reports, and clients' financial statements for a selection of completed
engagements.
8. An effective system of quality control provides reasonable assurance that the firm and personnel
follow policies and procedures pertaining to _________________. ans: A), B), and C). QC 10 indicates
that the firm must establish and maintain a system of quality control, which should include policies and
procedures addressing each of the following elements:a.Leadership responsibilities for quality within the
firm (the tone at the top)
b.Relevant ethical requirements
c.Acceptance and continuance of client relationships and specific engagements
d.Human resources
e.Engagement performance
f.Monitoring
9. An effective system of quality control provides reasonable assurance that the firm and personnel
comply with the AICPA Code of Professional Conduct's fundamental principles of professional ethics.
These principles include _________________. ans: A), D), and E). QC 10 states, "The AICPA Code of
Professional Conduct establishes the fundamental principles of professional ethics, which include the
following:•Responsibilities
•The public interest
•Integrity
•Objectivity and independence
•Due care
•Scope and nature of services."
10. The timing of periodic inspections to evaluate quality control over the audits of public companies by
a CPA firm is dependent upon factors such as ___________________. ans: A), B), and C). According to
QC 10, •The need for, and extent of, inspection procedures depends, in part, on the existence and
effectiveness of other monitoring procedures. The nature of inspection procedures varies based on the
firm's quality control policies and procedures and the effectiveness and results of other monitoring
procedures.
•The inspection of a selection of completed engagements may be performed on a cyclical basis. For
example, engagements selected for inspection may include at least one engagement for each
engagement partner over an inspection cycle that spans 3 years. The manner in which the inspection
cycle is organized, including the timing of selection of individual engagements, depends on many factors,
such as the following:◾The size of the firm
◾The number and geographical location of offices
◾The results of previous monitoring procedures
◾The degree of authority of both personnel and office
◾The nature and complexity of the firm's practice and organization
1. An audit firm has a responsibility to adopt a system of quality control and establish policies and
procedures to provide reasonable assurance that personnel comply with ______________. ans: B). A
firm of independent auditors has a responsibility to adopt a system of quality control in conducting an
audit practice. Thus, a firm should establish quality control procedures to provide it with reasonable
assurance that its personnel comply with generally accepted auditing standards (GAAS) in its audit
engagements.
2. An audit firm has a responsibility to _______________ in accordance with the applicable legal and
regulatory requirements. ans: A), B), and C). A firm of independent auditors has a responsibility to adopt
a system of quality control in conducting an audit practice. Thus, a firm should establish quality control
procedures to provide it with reasonable assurance that its personnel comply with generally accepted
auditing standards in its audit engagements. AU-C 250 states that "the auditor should remain alert to
the possibility that other audit procedures applied may bring instances of noncompliance or suspected
noncompliance with laws and regulations to the auditor's attention." Also, AU-C 220 states that, "within
the context of the firm's system of quality control, engagement teams have a responsibility to
implement quality control procedures that are applicable to the audit engagement."
3. Quality control for a CPA firm applies to all ____________ services. ans: C) and D). Quality control for
a CPA firm does not explicitly apply to consulting and tax services, but quality control does apply to all
review and compilation services.
4. Quality control policies and procedures applicable to a CPA firm should encompass the element(s) of
________________. ans: A) and B). The quality control policies and procedures applicable to a firm's
accounting and auditing practice encompass the following elements: •Independence, integrity, and
objectivity
•Personnel management
•Acceptance and continuance of clients and engagements
•Engagement performance
•Monitoring
5. A CPA firm must appropriately document _______ to properly administer a quality control system.
ans: A), C), and D). QC 10 states that the firm should establish policies and procedures requiring (a)
appropriate documentation to provide evidence of the operation of each element of its system of
quality control, (b) retention of documentation for a period of time sufficient to permit those performing
monitoring procedures and peer review of the firm to evaluate the firm's compliance with its system of
quality control or for a longer period if required by law or regulation, and (c) documentation of
complaints and allegations and responses to them.
6. The form and content of documentation evidencing the operation of each of the elements of the
system of quality control depend on factors such as __________________. ans: A), B), and C). QC 10
states, "The form and content of documentation evidencing the operation of each of the elements of
the system of quality control is a matter of judgment and depends on a number of factors, including the
following: •The size of the firm and the number of offices
, •The nature and complexity of the firm's practices and organization."
7. Public accounting firms establish a monitoring process involving _____________ to provide
reasonable assurance that policies relating to the system of quality control are relevant, adequate, and
operating effectively. ans: B) and C). QC 10 indicates that the firm should establish a monitoring process
to provide reasonable assurance that policies relating to the system of quality control are relevant,
adequate, and operating effectively. This process should include an ongoing consideration and
evaluation of the firm's system of quality control, including inspection or a periodic review of
engagement documentation, reports, and clients' financial statements for a selection of completed
engagements.
8. An effective system of quality control provides reasonable assurance that the firm and personnel
follow policies and procedures pertaining to _________________. ans: A), B), and C). QC 10 indicates
that the firm must establish and maintain a system of quality control, which should include policies and
procedures addressing each of the following elements:a.Leadership responsibilities for quality within the
firm (the tone at the top)
b.Relevant ethical requirements
c.Acceptance and continuance of client relationships and specific engagements
d.Human resources
e.Engagement performance
f.Monitoring
9. An effective system of quality control provides reasonable assurance that the firm and personnel
comply with the AICPA Code of Professional Conduct's fundamental principles of professional ethics.
These principles include _________________. ans: A), D), and E). QC 10 states, "The AICPA Code of
Professional Conduct establishes the fundamental principles of professional ethics, which include the
following:•Responsibilities
•The public interest
•Integrity
•Objectivity and independence
•Due care
•Scope and nature of services."
10. The timing of periodic inspections to evaluate quality control over the audits of public companies by
a CPA firm is dependent upon factors such as ___________________. ans: A), B), and C). According to
QC 10, •The need for, and extent of, inspection procedures depends, in part, on the existence and
effectiveness of other monitoring procedures. The nature of inspection procedures varies based on the
firm's quality control policies and procedures and the effectiveness and results of other monitoring
procedures.
•The inspection of a selection of completed engagements may be performed on a cyclical basis. For
example, engagements selected for inspection may include at least one engagement for each
engagement partner over an inspection cycle that spans 3 years. The manner in which the inspection
cycle is organized, including the timing of selection of individual engagements, depends on many factors,
such as the following:◾The size of the firm
◾The number and geographical location of offices
◾The results of previous monitoring procedures
◾The degree of authority of both personnel and office
◾The nature and complexity of the firm's practice and organization
