Quiz about Chuong so Ba Ke hoach kiem toan,...

Question 1

2) In assessing whether to accept a client for an audit engagement, a CPA should consider:

Accepted Answer

D) All of these choices are correct.

Answer

A) the current financial health of the prospective client.

Answer

B) the integrity of management.

Answer

C) the CPA's overall engagement risk.

Question 2

3) Evaluating a prospective client requires which of the following steps?

Accepted Answer

A) communicate with the predecessor auditor

Answer

B) preplan the audit

Answer

C) establish the terms of the engagement

Answer

D) none of these

Question 3

4) An auditor inspects a document for proper authorization of a transaction and verifies a transaction amount that is stated within the document. The auditor has performed a(n)

Accepted Answer

D) dual-purpose test

Answer

A) test of details.

Answer

B) substantive analytical procedure.

Answer

C) test of controls.

Question 4

5) Which of the following should an auditor obtain from the predecessor auditor prior to accepting an audit engagement?

Accepted Answer

D) facts that might bear on management integrity

Answer

A) analysis of balance sheet accounts

Answer

B) analysis of income statement accounts

Answer

C) all matters of continuing accounting significance

Question 5

9) Evaluating a prospective client requires which of the following steps?

Accepted Answer

C) determine if the firm is independent of the client

Answer

A) communicate with the SEC

Answer

B) preplan the audit

Answer

D) communicate with the AICPA

Question 6

10) Which of the following factors most likely would lead a CPA to conclude that a potential audit engagement should be rejected?

Accepted Answer

C) It is unlikely that sufficient appropriate evidence is available to support an opinion on the financial statements.

Answer

A) The details of most recorded transactions are not available after a specified period of time.

Answer

B) Internal control activities requiring segregation of duties are subject to management override.

Answer

D) Management has a reputation for consulting with several accounting firms about significant accounting issues.

Question 7

13) Which of the following situations would most likely require special audit planning?

Accepted Answer

D) Inventory is comprised of precious stones.

Answer

A) Some items of factory and office equipment do not bear identification numbers.

Answer

B) Depreciation methods used on the client's tax return differ from those used on the books

Answer

C) Assets costing less than $500 are expensed even though the expected life exceeds one year

Question 8

17) Engagement letters include all of the following except:

Accepted Answer

B) a list of adjusting journal entries.

Answer

A) a list of additional services, if any, that will be provided.

Answer

C) information about the audit fee.

Answer

D) arrangements involving the use of specialists.

Question 9

19) To provide for the greatest degree of independence in performing internal audit activities, the internal audit function most likely should report to the:

Accepted Answer

C) audit committee of the board of directors.

Answer

A) vice-president - finance.

Answer

B) corporate controller.

Answer

D) corporate stockholders.

Question 10

20) All of the following refer to the competence of the internal audit function except:

Accepted Answer

A) the party in the entity to which the internal audit function reports.

Answer

B) the quality of internal audit documents and reports.

Answer

C) professional certifications held by the internal auditors.

Answer

D) supervision and review of internal audit activities.

Question 11

21) An independent auditor might consider the procedures performed by the internal audit function because:

Accepted Answer

B) they are employees whose work might be relied upon.

Answer

A) they are employees whose work must be reviewed during substantive testing.

Answer

C) their work impacts the cost/benefit tradeoff in evaluating inherent limitations.

Answer

D) their degree of independence may be inferred by the nature of their work.

Question 12

25) Which of the following is an example of a related party transaction?

Accepted Answer

D) A nonmonetary exchange occurs whereby Company A exchanges property for similar property owned by Company B, an unconsolidated subsidiary of Company A.

Answer

A) An action is taken by the directors of Company A to provide additional compensation for vice presidents in charge of the principal business functions of Company A.

Answer

B) A long-term agreement is made by Company A to provide merchandise or services to Company B, a long-time, friendly competitor.

Answer

C) A short-term loan is granted to Company A by a bank that has a depositor who is a member of the board of directors of Company A.

Question 13

26) An independent auditor finds that Holdaway Corporation occupies office space, at no charge, in an office building owned by a shareholder. This finding likely indicates the existence of:

Accepted Answer

B) related party transactions.

Answer

A) management fraud.

Answer

C) window dressing.

Answer

D) weak internal control.

Question 14

28) The existence of a related party transaction may be indicated when another entity:

Accepted Answer

B) absorbs expenses of the corporation under audit.

Answer

A) sells real estate to the corporation at a price that is comparable to its appraised value.

Answer

C) borrows from the corporation at a rate of interest which equals the current market rate.

Answer

D) lends to the corporation at a rate of interest which equals the current market rate.

Question 15

29) In the context of an audit of financial statements, substantive procedures are audit procedures that:

Accepted Answer

C) may be either tests of details of transactions, tests of details of account balances, or analytical procedures.

Answer

A) may be eliminated under certain conditions.

Answer

B) are primarily designed to discover significant subsequent events

Answer

D) will increase proportionately with an increase in the auditor's reliance on internal control.

Question 16

30) Which of the following is not an audit procedure that is commonly used in performing tests of controls?

Accepted Answer

C) confirming

Answer

A) inquiring

Answer

B) observing

Answer

D) inspecting

Question 17

31) Tolerable misstatement (also referred to as performance materiality) is:

Accepted Answer

D) materiality allocated to a specific account.

Answer

A) materiality allocated to an assertion.

Answer

B) materiality for the balance sheet as a whole.

Answer

C) materiality for the income statement as a whole.

Question 18

39) A dual-purpose test:

Accepted Answer

D) is both a substantive test of transactions and a test of controls.

Answer

A) simultaneously tests debits and credits.

Answer

B) is a procedure completed by both the internal and external auditors.

Answer

C) is useful to both the entity and the auditor.

Question 19

43) An entity's financial statements were misstated over a period of years due to large amounts of revenue being recorded in journal entries that involved debits and credits to an illogical combination of accounts. The auditor could most likely have been alerted to this fraud by:

Accepted Answer

A) scanning the general journal for unusual entries.

Answer

B) performing a revenue cutoff test at year-end.

Answer

C) tracing a sample of journal entries to the general ledger.

Answer

D) examining documentary evidence of sales returns and allowances recorded after year end.

Question 20

44) Under the Sarbanes-Oxley Act, the audit committee of a public company has the following requirement(s):

Accepted Answer

D) All of these.

Answer

A) each member of the committee must be a board member and shall be independent.

Answer

B) the audit committee must preapprove all audit and nonaudit services.

Answer

C) the audit committee must establish and maintain procedures to handle issues that relate to accounting, internal control, and auditing.

Question 21

45) Which of the following is a general type of audit procedure?

Accepted Answer

B) tests of controls

Answer

A) fee assessment procedures

Answer

C) preparation of corporate tax returns

Answer

D) active testing procedures

Question 22

46 Which of the following arranges the general types of audit procedures in the order they are normally performed in an audit?

Accepted Answer

C) risk assessment procedures, tests of controls, and substantive procedures

Answer

A) substantive procedures, tests of controls, and risk assessment procedures

Answer

B) substantive procedures, risk assessment procedures, and tests of controls

Answer

D) risk assessment procedures, substantive procedures, and tests of controls

Question 23

48) Which of the following is the most important qualitative factor that auditors should consider when making materiality judgments?

Accepted Answer

C) The misstatement will cause the client to fail to meet an earnings forecast.

Answer

A) A misstatement exceeded five percent of net income.

Answer

B) The auditor also provides consulting services to the audit client.

Answer

D) The audit committee is not well-educated about the accounting principle in question.

Question 24

49) Which element(s) is/are pervasive to the application of the Principles Underlying an Audit Conducted in Accordance with GAAS particularly the Performance and Reporting sections?

Accepted Answer

A) the elements of materiality and audit risk

Answer

B) the element of internal control

Answer

C) the element of corroborating evidence

Answer

D) the element of reasonable assurance

Question 25

50) An auditor uses data visualization software to discover anomalies that may represent risk and require further testing. Which of the following best describes the procedure being performed by the auditor?

Accepted Answer

C) audit data analytics

Answer

A) tests of controls

Answer

B) inspection of client data

Answer

D) review of client data with auditor reperformance

Question 26

61 The first phase of audit planning is risk assessment.

Accepted Answer

False

Answer

True

Question 27

When the prospective client has previously been audited, auditing standards require that the successor auditor make certain inquiries of the predecessor auditor before accepting the engagement.

Accepted Answer

True

Answer

False

Question 28

If the prospective client refuses to allow the predecessor auditor to communicate with the successor auditor, the successor auditor should have reservations about accepting the client

Accepted Answer

True

Answer

False

Question 29

65) In order to properly preplan the audit, the auditor must determine the engagement team requirements and ensure the independence of the audit team and audit firm.

Accepted Answer

True

Answer

False

Question 30

66) If the internal audit function is competent and objective, the auditor may generally rely on the work of an internal audit function in certain areas to reduce the amount of external audit work in these areas.

Accepted Answer

True

Answer

False

Question 31

67) All companies must have an audit committee.

Accepted Answer

False

Answer

True

Question 32

68 The audit committee is directly responsible for the appointment, compensation, and oversight of the work of any accounting firm employed by a public company

Accepted Answer

True

Answer

False

Question 33

69) The external auditor is required to make a number of important communications to the audit committee during or at the end of the audit engagement.

Accepted Answer

True

Answer

False

Question 34

70 The engagement partner is typically responsible for doing the detailed audit testing.

Accepted Answer

False

Answer

True

Question 35

71 There are five general types of audit procedures.

Accepted Answer

False

Answer

True

Question 36

73) Materiality is based only on a quantitative analysis of the financial statements

Accepted Answer

False

Answer

True

Question 37

3-17 Before accepting an engagement to audit a new client, an auditor is required to:

Accepted Answer

D. Understanding as to the reasons for the change of auditors.

Answer

A. Awareness of the consistency in the application of generally accepted accounting principles between periods.

Answer

B. Evaluation of all matters of continuing accounting significance.

Answer

C. Opinion of any subsequent events occurring since the predecessor's audit report was issued.

Question 38

3-18 A written understanding between the auditor and the entity concerning the auditor's responsibility for the discovery of illegal acts is usually set forth in a(n)...

Accepted Answer

D. Engagement letter.

Answer

A. Letter of audit inquiry.

Answer

B. Internal control letter.

Answer

C. Management letter.

Question 39

3-19 If the independent auditors decide that it is efficient to consider how the work performed by the internal auditors may affect the nature, timing, and extent of audit procedures, they should assess the internal auditors'

Accepted Answer

a. competence and objectivity

Answer

b. efficienty and experience

Answer

c. independence and review skills

Answer

d. training and supervisory skills

Question 40

3-20 During the initial planning phase of an audit, a CPA most likely would

Accepted Answer

C. Discuss the timing of the audit procedures with the entity's management.

Answer

A. Identify specific internal control activities that are likely to prevent fraud.

Answer

B. Inquire of the entity's attorney if it is probable that any unrecorded claims will be asserted.

Answer

D. Evaluate the reasonableness of the entity's accounting estimates.

Question 41

3-21 As generally conceived, the audit committee of a publicly held company should be made up of

Accepted Answer

d. members of the board of directors who are not officers or employees

Answer

a. representatives of the major equity interests (preferred stock, common stock).

Answer

b. the audit partner, the chief financial officer, the legal counsel, and at least one outsider

Answer

c. representatives from the entity's management, investors, suppliers, and customers

Question 42

3-22 When planning an audit, an auditor should

Accepted Answer

b. determine overall materiality for audit purposes

Answer

a. consider whether the extent of substantive procedures may be reduced based on the results of tests of controls

Answer

c. conclude whether changes in compliance with prescribed internal controls justify reliance on them

Answer

d. evaluate detected misstatements

Question 43

3-23 Which of these statements concerning illegal acts by clients is correct?

Accepted Answer

A. An audit in accordance with generally accepted auditing standards normally includes audit procedures specifically designed to detect illegal acts that have an indirect but material effect on the financial statements.

Answer

B. An auditor has no responsibility to detect illegal acts by clients that have an indirect effect on the financial statements.

Answer

C. An auditor considers illegal acts from the perspective of the reliability of management's representations rather than their relation to audit objectives derived from financial statement assertions.

Answer

D. An auditor's responsibility to detect illegal acts that have a direct and material effect on the financial statements is the same as that for errors and fraud.

Question 44

3-24 The engagement partner and manager review the work of engagement team members to evaluate which of the following?

Accepted Answer

D. All of the above are correct.

Answer

A. The work was performed and documented.

Answer

B. The results of the work support the conclusions reached.

Answer

C. The objectives of the procedures were achieved.

Question 45

3-25 Tolerable misstatement is

Accepted Answer

d. materiality used to establish a scope for the audit procedures for the individual account balance or disclosures

Answer

a. the amount of misstatement that management is willing to tolerate in the financial statements

Answer

b. materiality for the balance sheet as a whole

Answer

c. materiality for the income statement as a while

Question 46

3-26 Which of the following would an auditor most likely use in determining overall materiality when planning an audit?

Accepted Answer

b. the entity's income before taxes for the period-to-date (e.g., 6 months)

Answer

a. the anticipated sample size of the planned substantive tests

Answer

c. the results of tests of controls

Answer

d. the contents of the engagement letter

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