Auditing Quiz

__________ is a systematic examination of the books and records or a business.

• Accounting

• Auditing

• Management

• Vouching

An accountant

• must possess expertise in the accumulation of audit evidence

• must decide the number and types of items to test.

• must have an understanding of the principles and rules that provide the basis for preparing the accounting information.

• must be a CPA.

Which of the following is not a SysTrust Services principle as defined by the AICPA?

• Online privacy

• Availability

• Processing integrity

• Operational integrity

The four categories for describing the size of audit firms include: the Big Four international firms; national firms; regional and local firms; and small firms. Which of the following is not a characteristic of a small firm?

• They do not audit publicly traded companies

• Most have fewer than 25 professionals

• They perform audits on small and not-for-profit businesses.

• Tax services are more important to their practice than auditing

Which of the following statements is true as it relates to limited liability partnerships?

• Only senior partners are liable for the partnership's debts.

• Partners have no liability in a limited liability partnership arrangement

• Partners are personally liable for the acts of those under their supervision

• All partners must be AICPA members

The Public Company Accounting Oversight Board:

• establishes auditing standards that must be followed by CPAs on all audits.

• oversees auditors of private companies.

• performs any of the above functions.

• performs inspections of the quality controls of audit firms that audit public companies

The form that must be completed and filed with the Securities and Exchange Commission whenever a company experiences a significant event that is of interest to public investors is the:

• Form S-1

• Form 8-K

• Form 10-K

• Form 10-Q

A company has changed its method of inventory valuation from an unacceptable one to one in conformity with generally accepted accounting principles. The auditor's report on the financial statements of the year of the change should include:

• no reference to consistency.

• a reference to a prior period adjustment in the opinion paragraph.

• an explanatory paragraph that justifies the change and explains the impact of the change on reported net income

• an explanatory paragraph explaining the change

In which situation would the auditor be choosing between "except for" qualified opinion and an adverse opinion?

• The auditor lacks independence

• A client-imposed scope limitation

• Lack of full disclosure within the footnotes

• A circumstance imposed scope limitation

If an auditor of a public company cannot find guidance issued by the PCAOB on a particular audit matter, the auditor should generally seek guidance from which of the following sources?

• Statements on Auditing Standards

• Statements on Standards for Accounting and Review Services

• Regulations issued by the Securities and Exchange Commission

• The AICPA Code of Professional Conduct