Chpt 21

A restricted used, broad based report issued by a practitioner in conjunction with a TrustServices engagement is an SOC ______ 1. Multiple choice question. 2 3 1

2

Trust Services are built on the principles of ______. Multiple select question. materiality security availability confidentiality

security availability confidentiality

SOC 1 engagements are typically performed by CPAs referred to as ________ __________ auditors.

service organization

The Code of Professional Conduct ______ permit an accountant to perform a compilation engagement when he or she is not independent. Multiple choice question. may or may not does does not

does

The IIA offers the ____ _____ _____ general certification

Certified Internal Auditor

True or false: An examination of a non-public entity's ICFR is performed under an AICPA attestation standard. True false question.

F

True or false: Internal auditors are generally not involved in law, rule and regulation compliance issues. True false question.TrueFalse

F

Which of the following is correct? Multiple choice question. Internal auditors generally audit periodic financial statements prepared by the entity. Financial auditing performed by internal auditors involves many of the same concepts used by external auditors. Reports prepared by internal auditors tend to be standardized just like those prepared by external auditors.

Financial auditing performed by internal auditors involves many of the same concepts used by external auditors.

Which of the following can be made available for general use if an accountant's report is involved? Multiple choice question. Financial projection only Neither a financial forecast nor a financial projection Both a financial forecast and a financial projection Financial forecast only

Financial forecast only

The Code of Professional Conduct prohibits accountants from performing compilation engagements when he or she is not independent. If an accountant elects to disclose a description about the reason independence is impaired, all reasons must be completely and accurately included. If an accountant is not independent when performing a compilation, he or she must disclose a description about the reasons the lack of independence.

If an accountant elects to disclose a description about the reason independence is impaired, all reasons must be completely and accurately included.

Which of the following statements are correct? Multiple select question. The level of materiality is generally the same for both internal and external auditors. The external auditor must evaluate management's objectivity before relying on the internal auditor's work. Internal auditors assist management in evaluating and managing risk. Some of the work performed by internal auditors is relevant to the work of the external auditor.

Internal auditors assist management in evaluating and managing risk. Some of the work performed by internal auditors is relevant to the work of the external auditor.

Which of the following is true regarding an engagement to examine internal control at a privately-held company? Multiple select question. It must be integrated with an audit of the entity's financial statements. The practitioner's objective is to express an opinion of the effectiveness of internal controls based on the control criteria. It is conducted very differently than an audit of internal controls required for public companies.

It must be integrated with an audit of the entity's financial statements. The practitioner's objective is to express an opinion of the effectiveness of internal controls based on the control criteria

Services related to historical financial statements that are less extensive than a financial statement audit are covered by: Multiple choice question. Statements on Standards for Accounting and Review Services (SSARS) Financial Reporting Standards for Nonpublic Companies (FRSNC) Statements of Financial Accounting Standards (SFAS)

Statements on Standards for Accounting and Review Services (SSARS)

Assurance regarding data integrity, security, privacy, and reliability relates to ______. Multiple choice question. electronic commerce information system reliability risk assessment business performance measurement

electronic commerce

True or false: Attestation examination agreements contain requirements regarding materiality, tests of controls, analytical procedures, estimates, sampling and fraud.

T

True or false: The only appropriate basis for general-use prospective financial statements is the expected results.

T

Which of the following statements are correct? Multiple select question. The level of materiality is generally different for internal and external auditors. External auditors focus on detailed financial audits of areas requiring particular attention. The external auditor must evaluate the internal auditor's objectivity and competence before relying on his or her work. Internal auditors assist management with assessing compliance with laws and regulations.

The level of materiality is generally different for internal and external auditors. Internal auditors assist management with assessing compliance with laws and regulations. The external auditor must evaluate the internal auditor's objectivity and competence before relying on his or her work.

An internal audit function is "co-sourced" when ______. Multiple choice question. the internal audit function is staffed entirely using in-house auditors the entity's external auditors provide internal auditing services in conjunction with the entity's own internal auditors there is no chief audit executive (CAE) a public accounting firm is hired to provide internal audit services in conjunction with the entity's own internal auditors

a public accounting firm is hired to provide internal audit services in conjunction with the entity's own internal auditors

An internal audit function is "co-sourced" when ______. Multiple choice question. there is no chief audit executive (CAE) the entity's external auditors provide internal auditing services in conjunction with the entity's own internal auditors a public accounting firm is hired to provide internal audit services in conjunction with the entity's own internal auditors the internal audit function is staffed entirely using in-house auditors

a public accounting firm is hired to provide internal audit services in conjunction with the entity's own internal auditors

An accountant can perform agreed-upon procedures attestation engagement for prospective financial statements provided ______. Multiple select question. the practitioner is able to take responsibility for the sufficiency of the agreed-upon procedures in regards to the purpose of the engagement an appropriate party takes responsibility for the subject matter applied procedures are expected to result in reasonably consistent findings using the criteria any applicable materiality limits for reporting purposes are agreed on

an appropriate party takes responsibility for the subject matter applied procedures are expected to result in reasonably consistent findings using the criteria any applicable materiality limits for reporting purposes are agreed on

When performing a compilation, the accountant must have knowledge about the ______. Multiple select question. nature of the entity's assets, liabilities, revenues, and expenses accounting principles and practices used by the entity's industry entity's operating characteristics tax return filing status of the entity entity's internal control structure

accounting principles and practices used by the entity's industry nature of the entity's assets, liabilities, revenues, and expenses entity's operating characteristics

The IIA's definition of internal auditing includes the terms ______. Multiple select question. according to rigorous standards add value and improve an organization's operations specialties in government accounting and financial services independent, objective assurance and consulting activity

add value and improve an organization's operations independent, objective assurance and consulting activity

Findings are summarized, but no opinion is included in a(n) ______ report. Multiple choice question. assurance services review examination agreed-upon procedures

agreed-upon procedures

A standard review report assumes ______. Multiple select question. the financial statements are in accordance with GAAP or another financial reporting framework internal control over financial reporting is adequate to prevent and detect fraud and misstatements all necessary disclosures are included with the financial statements

all necessary disclosures are included with the financial statements the financial statements are in accordance with GAAP or another financial reporting framework

The report always be limited to specific users in ______. Multiple choice question. an agreed-upon procedures engagement an audit all attestation services engagements all assurance service engagements

an agreed-upon procedures engagement

An SOC 2 report ______. Multiple select question. are issued in conjunction with a Trust Services engagement can be issued as type 2 reports only is for restricted use only covers both design and operating effectiveness of controls

are issued in conjunction with a Trust Services engagement

An SOC 2 report ______. Multiple select question. is for restricted use only are issued in conjunction with a Trust Services engagement can be issued as type 2 reports only covers both design and operating effectiveness of controls

are issued in conjunction with a Trust Services engagement is for restricted use only covers both design and operating effectiveness of controls

In an attestation, "Carol's Coffee maintains effective internal control over financial reporting" is an example of a(n) ________ regarding the subject matter.

assertion

Independent professional services that improve the quality of information of its context for decision makers is the definition of __ services. Multiple choice question. assurance auditing attest

assurance

Independent professional services that improve the quality of information of its context for decision makers is the definition of _____ services.

assurance

The definition of _______ services focuses on decision making.

assurance

The internal auditor's objective assessment of evidence to provide an independent opinion or conclusions regarding a process, system or other subject matter is known as a(n) _____ service.

assurance

There are generally three parties involved when internal auditors provide ______ services. Multiple choice question. assurance consulting both assurance and consulting

assurance

The International Standards for the Professional Practice of Internal Auditing are divided into the three categories of _____ standards, ______ standards and ______ standards.

attribute, performance, implementation

Ideally internal auditors should report to the ______. Multiple select question. external auditor upper management public audit committee board of directors

audit committee board of directors

Consulting services generally involve the ______. Multiple select question. internal auditor process owner user engagement client

engagement client internal auditor

To issue an examination report on prospective financial statements, the accountant must ______. Multiple select question. be independent. obtain sufficient evidence have adequate technical training and proficiency not work as an external auditor

be independent. obtain sufficient evidence have adequate technical training and proficiency

A Type 1 SOC 1 report ______. Multiple select question. can be used by the auditors of of several different clients covers both the design and operating effectiveness of controls at a service organization is a report on the financial controls at a service organization

can be used by the auditors of of several different clients is a report on the financial controls at a service organization

When a compilation is done using a financial statement framework that differs from GAAP, the compilation report should ______. Multiple select question. clearly indicate that a framework other than GAAP was followed make reference to the accountant's responsibility for determining that the framework used is appropriate describe the purpose for which the financial statements were prepared

clearly indicate that a framework other than GAAP was followed describe the purpose for which the financial statements were prepared

Presenting information through financial statements that represents management or the owners without taking the steps to express assurance on the statements is defined as a(n)

compilation

A review report should be dated as of the ______. Multiple choice question. date that the accountant files the review report date of the entity's audited financial statements completion of the accountant's inquiry and analytical procedures

completion of the accountant's inquiry and analytical procedures

Principles of the IIA Code of Ethics include ______. Multiple select question. confidentiality performance responsibility competency

confidentiality competency

Services provided by internal auditors that are advisory in nature and generally performed at the specific request of an engagement client are called ______ services.

consulting

According to the IIA's definition, internal auditing helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of ______. Multiple select question. sales and marketing policies control risk management governance processes

control risk management governance processes

Internal auditors contribute to effective ______ ______ within an organization, which includes all management-administered policies and procedures to control risk and oversee operations within a company.

corporate governance

Internal auditors contribute to effective ________ __________within an organization, which includes all management-administered policies and procedures to control risk and oversee operations within a company.

corporate governance

The IIA and other influential organizations identify the internal audit function as one of the cornerstones of effective

corporate governance

Management is required to describe how the entity identifies its information assets and the key security policies and processes in place to protect them against identified risks as part of a SOC for ____________ engagement

cybersecurity

Attestation risk model is composed _____ of risk, ______ risk and ______ risk.

inherent, control, detection

Principles of the IIA Code of Ethics include ______. Multiple select question. accuracy integrity objectivity independence

integrity objectivity

An attestation engagement typically involves ______. Multiple select question. party responsible for the assertion a CPA a bank, regulator, or other recipient of the report users of information

party responsible for the assertion a CPA users of information

An assurance services engagement can ______. Multiple select question. result in changing an audit opinion increase confidence in the reliability of information enhance information usefulness improve information context

increase confidence in the reliability of information enhance information usefulness improve information context

A modification of a compilation or review report is required when the accountant becomes aware of a ______. Multiple select question. significant deficiency in internal control departure from GAAP going concern uncertainty

departure from GAAP going concern uncertainty

The Preface to Statement on Standards for Attestation Engagements No. 18, Attestation Standards: Clarification and Recodification states that the practitioner's report is intended to ______. Multiple choice question. enhance the degree of confidence intended users can place in the subject matter issue a clean, modified or adverse opinion about the subject matter provide assurance that the information provided about the subject matter is relevant

enhance the degree of confidence intended users can place in the subject matter

Operational audits are primarily conducted to ______. Multiple select question. enhance the efficiency of operations express an opinion on the financial statements identify the causes of problems

enhance the efficiency of operations identify the causes of problems

If an entity requests that the accountant compile financial statements without adding all the necessary disclosures, the ______. Multiple select question. entity is probably trying to minimize the cost of the engagement omission must be clearly indicated in the compilation report accountant is prohibited from compiling the financial statements and issuing a report

entity is probably trying to minimize the cost of the engagement omission must be clearly indicated in the compilation report

Positive assurance, similar to an audit report, is provided by an attestation

examination

Question Mode Multiple Choice Question The highest level of assurance on an assertion is provided by a(n) ______. Multiple choice question. agreed-upon procedure examination review

examination

Attestation engagements include ______. Multiple select question. compilation examination agreed-upon procedures review

examination agreed-upon procedures review

Fill in the blank question. Attestation standards generally provide for three types of engagements: , and agreed-upon procedures.

examination, review

The practitioner should use an attestation risk model to meet the standards of ______ in an attestation engagement.

fieldwork

An offering statement containing prospective financial information for an entity's debt or equity securities is an example of ______ use of the prospective information.

general

An offering statement containing prospective financial information for an entity's debt or equity securities is an example of _________ use of the prospective information.

general

Use of prospective financial statements by persons with whom the responsible party is not negotiating directly is referred to as _______ use of the statements.

general

The IIA offers specialty certifications in ______. Multiple select question. operational controls government accounting financial services education and training

government accounting financial services

In an attestation review engagement, the level of assurance and required procedures are ______ those required for an examination. Multiple choice question. very similar to greatly reduced from greatly increased from

greatly reduced from

Internal auditors often focus on financial areas that external auditors would consider ______ to the financial statements taken as a whole. Multiple choice question. material immaterial

immaterial

Detailed IIA standards that provide guidance applicable to assurance or consulting services are known as ______ standards.

implementation

An SOC for Cybersecurity report ______. Multiple select question. is a general-use report includes management assertions regarding the effectiveness cybersecurity controls includes the auditor's description of the entity's cybersecurity risk management program is similar to an SOC 1 report

includes management assertions regarding the effectiveness cybersecurity controls is a general-use report

The major difference between a SOC 2 engagement/report and a SOC 3 engagement/report is ______. Multiple choice question. the intended audience an SOC 3 report provides much more detailed information only SOC 2 engagements evaluates the effectiveness of controls the type of auditor providing the service

intended audience

Compliance with relevant laws and regulations ______. Multiple choice question. is rarely a concern in most industries is an area in which internal auditors play an important role generally is not within the scope of the internal audit function

is an area in which internal auditors play an important role

In performing a preparation of financial statements or information, the accountant ______. Multiple select question. is not required to be independent must disclosure any departures from the framework being used offers limited assurance on the information being provided verifies the accuracy of the information

is not required to be independent must disclosure any departures from the framework being used

A SOC 3 report ______. Multiple select question. is similar to an SOC 1 report is ordinarily intended for general use provides a high-level overview of information

is ordinarily intended for general use provides a high-level overview of information

A compilation engagement ______. Multiple select question. is similar to a preparation engagement requires the practitioner to be independent requires a report to be issued

is similar to a preparation engagement requires a report to be issued

Prospective financial statements issued to negotiate for a bank loan or for submission to a regulatory agency are issued for _____ use

limited

Use of prospective financial statements by the responsible party alone or by the responsible party and third parties with whom the responsible party is directly negotiating is referred to as ______ use.

limited

If while performing a review, the accountant becomes aware of information that is incorrect or misleading. additional procedures should be performed to provide _____ ______ that no material modifications to the financial statements are required

limited assurance

A review is the performance of inquiry and analytical procedures to provide the accountant with a reasonable basis for expressing ________ ________ that no _______ modifications should be make to the statements in order to them to conform to the applicable financial reporting framework.

limited assurance, Material

The IIA's categories of authoritative guidance are ______ guidance. Multiple choice question. suggested and recommended suggested and optional mandatory and optional mandatory and recommended

mandatory and recommended

The IIA's categories of authoritative guidance are _______ guidance and ________ guidance.

mandatory, recommended

If an entity is trying to minimize the cost of the compilation engagement, the entity ______. Multiple choice question. may request a compilation without all the disclosures can select an accountant who is not independent should request that the accountant perform inquiry and analytical procedures

may request a compilation without all the disclosures

Compilation standards require that the accountant ______. Multiple select question. obtain revised information if there is reason to believe the information supplied by the client is inaccurate or incomplete perform procedures to verify or corroborate the financial statement information provided by the client have a general understanding of the nature of the client's business address significant questions that arise in the course of the engagement

obtain revised information if there is reason to believe the information supplied by the client is inaccurate or incomplete have a general understanding of the nature of the client's business address significant questions that arise in the course of the engagement

In a compilation, if the accountant has reason to believe the information supplied by the client is inaccurate, incomplete, or otherwise unsatisfactory, the accountant is required to ______. Multiple choice question. issue a qualified or adverse opinion obtain revised or corrected information before issuing a report withdraw from the engagement and report this to the Board of Directors or appropriate level of management

obtain revised or corrected information before issuing a report

The term internal auditing is often incorrectly used interchangeably with the term ______ auditing

operational

The major difference between a standard examination report for a forecast and one for a projection is the ______. Multiple choice question. scope limitation that must be included on a forecast, but not on a projection paragraph limiting distribution of the projection to specified users scope limitation that must be included on a projection, but not on a forecast paragraph limiting distribution of the forecast to specified users

paragraph limiting distribution of the projection to specified users

A review engagement does not require the auditor to ______. Multiple select question. perform detailed tests of accounting records obtain a representation letter from management corroborate inquiries obtain an understanding of internal control perform analytical procedures

perform detailed tests of accounting records corroborate inquiries obtain an understanding of internal control

To assist a client in organizing financial information based on a selected financial reporting framework, while providing no assurance, an accountant performs a(n) ______ of financial statements. Multiple choice question. review preparation compilation

preparation

Statements on Standards for Accounting and Review Services (SSARS) provides guidance for ______ of financial statements. Multiple select question. preparation compilation examination review

preparation compilation review

Financial forecasts ______. Multiple select question. present expected results of operations are based on courses of action the responsible party expect to take uses assumptions that may not reflect the most likely conditions

present expected results of operations responsible party expect to take

When performing a compilations, the accountant must have knowledge about the accounting ___ and _____ of the industry in which the entity operates

principles, practices

Trust Services are built on the principles of ______. Multiple select question. privacy verifiability reasonable assurance processing integrity

processing integrity privacy

The work done on a preparation ______. Multiple select question. does not require the accountant to issue any kind of report requires the accountant to be independent provides no assurance

provides no assurance does not require the accountant to issue any kind of report

An accountant's work in conducting a review includes ______. Multiple select question. asking the entity's personnel about important matters obtaining an understanding of the entity's internal controls reading financial statements to determine if they conform to the applicable financial reporting framework obtaining an understanding of the entity's accounting principles and practices

reading financial statements to determine if they conform to the applicable financial reporting framework obtaining an understanding of the entity's accounting principles and practices asking the entity's personnel about important matters

The definition of assurance services ______. Multiple select question. reflects professional judgment relates to improving information quality encompasses dependence focuses on decision making

reflects professional judgment focuses on decision making relates to improving information quality

As part of conducting a review, the accountant obtains a(n) _______ _______ from management that is generally signed by the CEO and CFO.

representation letter

In an attestation engagement, the same person is sometimes both the ______. Multiple choice question. CPA and the responsible party user and the CPA responsible party and the user

responsible party and the user

In both attestation examination and ______ engagements, the distribution of the report can be either general or limited. Multiple choice question. agreed-upon procedures summary review

review

Limited assurance that no material modifications should be made to the financial statements is provided by a(n)

review

General categories of assurance services include ______. Multiple select question. electronic commerce internal auditing risk assessment PrimePlus

risk assessment electronic commerce PrimePlus

IIA Standard 2120 requires internal auditors to evaluate an entity's ________ _________ process

risk management

A disclaimer of opinion for prospective financial statements may be issued in the case of a severe

scope limitation

When a compilation is done using a special purpose framework, the compilation report ______. Multiple choice question. cannot be issued on the financial statements must contain a qualified opinion because GAAP is not being followed should be modified if the statements do not clearly state the framework and how it differs from GAAP

should be modified if the statements do not clearly state the framework and how it differs from GAAP

The primary purposes of Statement on Standards for Attestation Engagements No. 18, Attestation Standards: Clarification and Recodification was to ______. Multiple select question. work towards convergence with standards released by the IAASB simplify and clarify existing attestation standards address issues related to reviews of historical financial data

simplify and clarify existing attestation standards work towards convergence with standards released by the IAASB

Internal auditors can provide an accurate assessment of risks due to their ______. Multiple choice question. understanding of general industry risks specific experience within the organization training and continuing professional education

specific experience within the organization

When the entity presents a set of financial statements that contain all necessary financial disclosures required by generally accepted accounting principles or another financial reporting framework, a(n) _________ compilation report can be issued.

standard

In the definition of an attest engagement, the ______ ______ may take various forms, including historical or prospective performance information, systems and processes, or behavior or actions.

subject matter

In the definition of an attest engagement, the ______ _______ may take various forms, including historical or prospective performance information, systems and processes, or behavior or actions.

subject matter

A Type 1 SOC 1 report covers ______ effectiveness of the controls of the service organization. Multiple choice question. both the design and operating the design the operating

the design

An accountant can perform agreed-upon procedures attestation engagement for prospective financial statements provided ______. Multiple select question. prospective financial statements include a summary of significant accounting policies the specific subject matter to which the procedures are to be applied is subject to reasonably consistent measurement. criteria to be used in the determination of the finding are agreed upon between the practitioner and the specified parties

the specific subject matter to which the procedures are to be applied is subject to reasonably consistent measurement. criteria to be used in the determination of the finding are agreed upon between the practitioner and the specified parties

When conducting a compilation or review, if the accountant becomes aware of a going concern uncertainty, ______. Multiple choice question. the accountant must withdraw from the engagement a report cannot be issued an adverse opinion must be issued the standard report must be modified

the standard report must be modified

Circumstances that may require a departure from a standard examination report for prospective financial statements include ______ Multiple select question. unreasonable assumptions a presentation that goes beyond prospective financial information a severe scope limitation

unreasonable assumptions a severe scope limitation

Financial projections ______. Multiple select question. are based on the course of action the responsible party expects to take may be prepared to present one or more possible courses of actions for evaluation are based on assumptions the responsible party expects to exist use assumptions that may not reflect the most likely conditions.

use assumptions that may not reflect the most likely conditions. may be prepared to present one or more possible courses of actions for evaluation

An accountant can perform agreed-upon procedures attestation engagement for prospective financial statements provided ______. Multiple select question. use of the report is restricted to the specified parties. the practitioner is the entity's external auditor the practitioner and specified parties agree upon the procedures to be performed by the practitioner relevant evidence is expected to exist that mirror evidence required for an audit opinion on the fairness of the statements

use of the report is restricted to the specified parties. the practitioner and specified parties agree upon the procedures to be performed by the practitione