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Gleim’s CPA Test Prep Auditing Complete
100 Questions And Correct Detailed Answers
(Verified Answers) |Already Graded A+
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
______________. - . . ANSWER ✔ ✔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. - . . ANSWER ✔ ✔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
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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. - . . ANSWER ✔ ✔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
________________. - . . ANSWER ✔ ✔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
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•Monitoring
5. A CPA firm must appropriately document _______ to
properly administer a quality control system. - . .
ANSWER ✔ ✔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
__________________. - . . ANSWER ✔ ✔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
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•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. - .
. ANSWER ✔ ✔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
_________________. - . . ANSWER ✔ ✔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
Gleim’s CPA Test Prep Auditing Complete
100 Questions And Correct Detailed Answers
(Verified Answers) |Already Graded A+
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
______________. - . . ANSWER ✔ ✔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. - . . ANSWER ✔ ✔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
,2|Page
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. - . . ANSWER ✔ ✔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
________________. - . . ANSWER ✔ ✔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
,3|Page
•Monitoring
5. A CPA firm must appropriately document _______ to
properly administer a quality control system. - . .
ANSWER ✔ ✔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
__________________. - . . ANSWER ✔ ✔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
, 4|Page
•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. - .
. ANSWER ✔ ✔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
_________________. - . . ANSWER ✔ ✔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
