ACC 403 CH 1

It is always a good idea for auditors to begin an audit with the professional skepticism characterized by the assumption that a. A potential conflict of interest always existed between the auditor and the management of the enterprise under audit b. In audits of financial statements, the auditor acts exclusively in the capacity of an auditor. c. The professional status of the independent auditor imposes commensurate professional obligations. d. Financial statements and financial data are verifiable

a. A potential conflict of interest always existed between the auditor and the management of the enterprise under audit

According to the AICPA, the purpose of an audit of finical statements is to a. Enhance the degree of confidence that intended users can place in the financial statements b. Express an opinion on the fairness with which they present financial position, results of operations and cash flows in conformity with accounting standards promulgated by the FASB c. Express an option on the fairness with which they present financial position, results of operations and has flows in conformity with accounting standards promulgated by the US Securities Exchange Commission d. Obtain systematic and objective evidence about financial assertions and report he results to interested users

a. Enhance the degree of confidence that intended users can place in the financial statements

Performance audits usually include (two answers) a. Financial audits b. Economy and efficiency audits c. Compliance audits d. program audits

b. Economy and efficiency audits d. program audits

Independent auditors of financial statements perform audits that reduce a. Business risk faced by investors b. Information risk faced by investors c. Complexity of financial statements d. Timeliness of financial statements

b. Information risk faced by investors

In an attestation engagement, a CPA practitioner is engaged to a. Compile a company financial forecast based on management assumptions without expressing any form of assurance b. Prepare a written report containing a conclusion about the reliability of a management assertion c. Prepare a tax return using information the CPA has not audited or reviewed d. Give expert testimony in court on particular facts in a corporate income tax controversy.

b. Prepare a written report containing a conclusion about the reliability of a management assertion

The primary difference between operational auditing and finical auditing is that in operational auditing a. The operational auditor is not concerned with whether the audited activity is generating information in compliance with financial accounting standards b. The operational auditor is seeking to help management use resources in the most effective manner possible c. The operational auditor starts with the financial statements of an activity being audited and works backward to the basic processes involved in producing them d. The operational auditor can use analytical skills and tools that are not necessary in financial auditing

b. The operational auditor is seeking to help management use resources in the most effective manner possible

The objective in an auditors review of credit ratings of a clients customers is to obtain evidence related to management assertion about a. completeness b. existence c. valuation and allocation d. rights and obligations e. occurrence

c. valuation and allocation

The SOX act of 2002 prohibits public accounting firms from providing which of the following service to an audit client a. Bookkeeping services b. Internal Auditing services c. Valuation services d. All of the above

d. All of the above

What requirements are usually necessary to become licensed as a certified public accountant? a. Successful completion of the Uniform CPA Examination b. Experience in the accounting field c. Education d. All of the above

d. All of the above

The primary objective of compliance auditing is to a. Give an opinion on financial statements b. Develop a basis for a report on internal control c. Perfomr a study of effective and efficient use of resources d. Determine whether client personnel are following laws, rules, regulations ,and policies

d. Determine whether client personnel are following laws, rules, regulations ,and policies

The organization primarily responsible for ensuring that public officials are using public funds efficiently economically and effectively is the a. GIAA b. CIA c. SEC d. GAO

d. GAO - Government Accountability Office

A determination of cost savings obtained by outsourcing cafeteria services is most likely to be an objective of a. Environmental auditing b. Financial auditing c. Compliance auditing d. Operational Auditing

d. Operational Auditing

Bankers who are processing loan applications from companies seeking large loans will probably ask for financial statements audited by an independent CPA because a. Financial statements are too complex for the bankers to analyze themselves b. they are too far away from the company headquarters to perform accounting c. The consequences of making a bad loan are very undesirable d. They generally see a potential conflict of interest between company managers who want to get loans and the banks needs for reliable financial statements

d. They generally see a potential conflict of interest between company managers who want to get loans and the banks needs for reliable financial statements

Which of the following would be considered an assurance engagement? a. Giving an opinion on a prize promoter's claim about the amount of sweepstakes prizes awarded in the past. b. Giving an opinion on the conformity of the financial statements of a university with generally accepted accounting principles c.Giving an opinion on the fair presentation of a newspaper's circulation data. d. Giving assurance about the average drive length achieved by golfers with a clients golf balls. e. All of the above.

e. All of the above.