Which of the following information discovered during an audit most likely would raise a
question concerning possible noncompliance with laws and regulations? - Answer-The
entity prepared several large checks payable to cash during the year
/.Which of the following circumstanced would most likely cause and auditor to suspect
that material misstatements arising from fraud exist in a client's FS? - Answer-
Significantly fewer responses to confirmation requests are received than expected
/.An auditor assesses control risk because it: - Answer-Affects the level of detection risk
that the auditor may accept
/.Accountants consideration of fraud/noncompliance with laws and regulations in
compilation and review engagements - Answer-The accountant is NOT required to
perform procedures designed to detect material misstatements due to fraud or
noncompliance with laws and regulations
/.Employees in the same department most likely would approve purchase orders and
also: - Answer-Negotiate terms with vendors
/.Management's written representation to the auditor in connection with a governmental
audit would most likely include - Answer-Identification of management's interpretation of
compliance requirements that are subject to different interpretations
/.When applying analytical procedures during an audit, which of the following is the best
approach for developing expectations? - Answer-Identify reasonable explanations for
unexpected differences before talking to client management
/.Which of the following is a management assertion regarding account balances at the
period end? - Answer-The entity holds or controls the rights to assets and liabilities are
obligations of the entity
/.Which of the following statements is true regarding analytical procedures in a review
engagement? - Answer-Analytical procedures involve comparison of both financial and
relevant non financial information
/.Which of the following best describes the auditor's responsibility with respect to fair
values - Answer-The auditor should obtain sufficient and appropriate audit evidence to
provide reasonable assurance that fair value measurements and disclosures are in
conformity with GAAP
/.In auditing long-term bonds payable, an auditor most likely would - Answer-Compare
interest expense with the bond payable amount for reasonableness
, /.In an audit of financial statements in accordance with generally accepted auditing
standards, an auditor is required to - Answer-Document the auditor's understanding of
the entity's internal control
/.Which of the following statements is a basis element of the auditor's report under US
auditing standards - Answer-An audit includes evaluating significant estimates made by
management
/.Which of the following statements is correct concerning statistical sampling in test of
controls? - Answer-Deviations from specific control activities at a given rate ordinarily
result in misstatements at a lower rate
/.Which of the following is true about the auditor's use of an internal auditor and a
specialist - Answer-The auditor must assess the competency of both the internal auditor
and the specialist
/.A violation of the professions ethical standards most likely would have occurred when
a CPA: - Answer-Issued an unqualified opinion on the year 2 financial statements when
sees for the year 1 audit were unpaid
/.When auditing related party transactions, an auditor places primary emphasis on; -
Answer-Evaluating the disclosure of the related party transactions
/.Which of the following most likely would be detected by an auditor's review of a client's
sales cut-off? - Answer-Unrecorded sales at year-end
/.When an auditor concludes there is substantial doubt about a continuing audit client's
ability to continue as a going concern for a reasonable period of time, the auditor's
responsibility is to - Answer-Consider the adequacy of disclosure about the client's
possible inability to continue as a going concern
/.The standard report issues by an accountant after reviewing the financial statements
of a nonissuer should state that - Answer-A review includes primarily applying analytical
procedures to management's financial data and making inquiries of company
management
/.A scope limitation sufficient to preclude an unmodified opinion always will result when
management: - Answer-Refuses to acknowledge its responsibility for the fair
presentation of the financial statements in conformity with GAAP
/.An accountant's compilation report on the unaudited financial statements of a
nonissuer should - Answer-Disclaim an opinion on the financial statements
question concerning possible noncompliance with laws and regulations? - Answer-The
entity prepared several large checks payable to cash during the year
/.Which of the following circumstanced would most likely cause and auditor to suspect
that material misstatements arising from fraud exist in a client's FS? - Answer-
Significantly fewer responses to confirmation requests are received than expected
/.An auditor assesses control risk because it: - Answer-Affects the level of detection risk
that the auditor may accept
/.Accountants consideration of fraud/noncompliance with laws and regulations in
compilation and review engagements - Answer-The accountant is NOT required to
perform procedures designed to detect material misstatements due to fraud or
noncompliance with laws and regulations
/.Employees in the same department most likely would approve purchase orders and
also: - Answer-Negotiate terms with vendors
/.Management's written representation to the auditor in connection with a governmental
audit would most likely include - Answer-Identification of management's interpretation of
compliance requirements that are subject to different interpretations
/.When applying analytical procedures during an audit, which of the following is the best
approach for developing expectations? - Answer-Identify reasonable explanations for
unexpected differences before talking to client management
/.Which of the following is a management assertion regarding account balances at the
period end? - Answer-The entity holds or controls the rights to assets and liabilities are
obligations of the entity
/.Which of the following statements is true regarding analytical procedures in a review
engagement? - Answer-Analytical procedures involve comparison of both financial and
relevant non financial information
/.Which of the following best describes the auditor's responsibility with respect to fair
values - Answer-The auditor should obtain sufficient and appropriate audit evidence to
provide reasonable assurance that fair value measurements and disclosures are in
conformity with GAAP
/.In auditing long-term bonds payable, an auditor most likely would - Answer-Compare
interest expense with the bond payable amount for reasonableness
, /.In an audit of financial statements in accordance with generally accepted auditing
standards, an auditor is required to - Answer-Document the auditor's understanding of
the entity's internal control
/.Which of the following statements is a basis element of the auditor's report under US
auditing standards - Answer-An audit includes evaluating significant estimates made by
management
/.Which of the following statements is correct concerning statistical sampling in test of
controls? - Answer-Deviations from specific control activities at a given rate ordinarily
result in misstatements at a lower rate
/.Which of the following is true about the auditor's use of an internal auditor and a
specialist - Answer-The auditor must assess the competency of both the internal auditor
and the specialist
/.A violation of the professions ethical standards most likely would have occurred when
a CPA: - Answer-Issued an unqualified opinion on the year 2 financial statements when
sees for the year 1 audit were unpaid
/.When auditing related party transactions, an auditor places primary emphasis on; -
Answer-Evaluating the disclosure of the related party transactions
/.Which of the following most likely would be detected by an auditor's review of a client's
sales cut-off? - Answer-Unrecorded sales at year-end
/.When an auditor concludes there is substantial doubt about a continuing audit client's
ability to continue as a going concern for a reasonable period of time, the auditor's
responsibility is to - Answer-Consider the adequacy of disclosure about the client's
possible inability to continue as a going concern
/.The standard report issues by an accountant after reviewing the financial statements
of a nonissuer should state that - Answer-A review includes primarily applying analytical
procedures to management's financial data and making inquiries of company
management
/.A scope limitation sufficient to preclude an unmodified opinion always will result when
management: - Answer-Refuses to acknowledge its responsibility for the fair
presentation of the financial statements in conformity with GAAP
/.An accountant's compilation report on the unaudited financial statements of a
nonissuer should - Answer-Disclaim an opinion on the financial statements
