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Homeworkarena

ACCT444 Quiz Answers

Homeworkarena

ACCT444 Quiz Answers

http://www.homeworkarena.com/acct444-acct-444-wk-1-5-quiz

 

ACCT 444 Week 1 Quiz

(TCO 3) Prior to the passage of the Sarbanes-Oxley Act, which of the following was responsible for establishing auditing standards? (Points: 3)

Public Company Accounting Oversight Board

Securities and Exchange Commission

National Association of Accounting

Auditing Standards Board

Chapter 2

 

(TCO 1) Which one of the following is not one of the three general standards? (Points: 3)

Proper planning and supervision

Due professional care

Adequate training and proficiency

Independence of mental attitude

Chapter 2

 

(TCO 1) An independent auditor must have which of the following? (Points: 3)

A pre-existing and well-informed point of view with respect to the audit

Technical training that is adequate to meet the requirements of a professional

Experience in taxation that is sufficient to comply with generally accepted auditing standards

A background in many different disciplines

 

 

(TCO 1) Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n) _____ (Points: 3)

assurance service.

attestation service.

tax service.

accounting and bookkeeping service.

Chapter 1

 

(TCO 1) Which of the following statements is incorrect regarding the SEC’s partner rotation rules? (Points: 3)

The lead and concurring partners are subject to a 5-year time out period.

All audit partners must rotate off the audit engagement after 5 years.

Other audit partners are subject to a 2-year time out period.

Small firms may be exempted from the partner rotation requirement.

 

 

(TCO 3) Burrow & Co., CPAs, have provided annual audit and tax compliance services to Mare Corp. for several years. Mare has been unable to pay Burrow in full for services Burrow rendered 19 months ago. Burrow is ready to begin fieldwork for the current year’s audit. Under the ethical standards of the profession, which of the following arrangements will permit Burrow to begin the fieldwork on Mare’s audit? (Points: 3)

Mare engages another firm to perform the fieldwork, and Burrow is limited to reviewing the workpapers and issuing the audit report.

Mare sets up a 2-year payment plan with Burrow to settle the unpaid fee balance.

Mare gives Burrow an 18-month note payable for the full amount of the past due fees before Burrow begins the audit.

Mare commits to pay the past due fee in full before the audit report is issued.

Chapter 2

 

(TCO 3) Independence in auditing means (Points: 3)

remaining aloof from a client.

taking an unbaised and objective viewpoint.

not being financially dependent on a client.

being an advocate for a client.

Chapter 4

 

(TCO 3) The financial interests of which of the following parties would not be included as a direct financial interest of the CPA? (Points: 3)

Dependent child

Relative supported by the CPA

Spouse

Sibling living in the same city as the CPA

Chapter 4

 

(TCO 1) The phrase U.S. generally accepted accounting principles is an accounting term that (Points: 3)

encompasses the conventions, rules, and procedures necessary to define U.S. accepted accounting practice at a particular time.

provides a measure of conventions, rules, and procedures governed by the AICPA.

is included in the audit report to indicate that the audit has been conducted in accordance with generally accepted auditing standards (GAAS).

includes broad guidelines of general application but not detailed practices and procedures.

Chapter 1

 

(TCO 1) Which of the following statements best describes the ethical standard of the profession pertaining to advertising and solicitation? (Points: 3)

A CPA may advertise in any manner that is not false, misleading, or deceptive.

There are no prohibitions regarding the manner in which CPAs may solicit new business.

All forms of advertising and solicitation are prohibited.

A CPA may only solicit new clients through mass mailings.

 

 

(TCO 3) The Sarbanes-Oxley Act applies to which of the following companies? (Points : 3)

Privately held companies

All companies

All public companies and privately held companies with assets greater than $500 million

Public companies

Chapter 1

 

Question 4. 4. (TCO 1) An operational audit has as one of its objectives to (Points : 3)

make recommendations for improving performance.

determine whether the financial statements fairly present the entity’s operations.

evaluate the feasibility of attaining the entity’s operational objectives.

report on the entity’s relative success in attaining profit maximization.

Chapter 1

 

Question 5. 5. (TCO 1) Which of the following services do not need to be preapproved by the audit committee of an issuer? (Points : 3)

Nonaudit services related to internal control over financial reporting

Tax services

Nonaudit services that are less than 5 % of total revenues from the audit client

Services provided by the auditor on a recurring basis

 

 

 

Question 8. 8. (TCO 3) Several months after an unqualified audit report was issued, the auditor discovered the financial statements were materially misstated. The client’s CEO agrees that there are misstatements, but refuses to correct them. She claims that confidentiality prevents the CPA from informing anyone. (Points : 3)

The CEO is incorrect, but because the audit report has been issued, it is too late.

The CEO is correct and the auditor must maintain confidentiality.

The CEO is correct, but to be ethically correct the auditor should violate the confidentiality rule and disclose the error.

The CEO is incorrect, and the auditor has an obligation to issue a revised audit report, even if the CEO will not correct the financial statements.

Chapter 4

 

Question 9. 9. (TCO 1) Which of the following terms identifies a requirement for audit evidence? (Points : 3)

Adequate

Disconfirming

Reasonable

Appropriate

Chapter 1

 

Question 10. 10. (TCO 1) The auditor of an issuer may provide which of the following tax services? (Points : 3)

Tax services for immediate family members of corporate officers

Tax planning services

Tax services for officers of the issuer

Services related to confidential tax transactions

(TCO 1) Jackson & Company, CPAs, plan to audit the financial statements of Perigee Technologies, an issuer as defined under the Sarbanes-Oxley Act of 2002. Which of the following situations would impair Jackson’s independence? (Points : 3)

Discovering that Lowe, the chief financial officer of Perigee, started his accounting career 10 years earlier as a staff accountant for Jackson & Company and continues to maintain ties with current partners at the firm

Provision of personal tax services to Johnson, the accounts payable manager of Perigee

Audit of Perigee’s internal control is performed contemporaneously with the annual financial statement audit

Preparation of Perigee’s routine annual tax return, where Jackson’s fee will be calculated as a percentage of the tax refund obtained

 

 

ACCT 444 Week 2 Quiz

Week 2 : Auditor Legal Liability, Fraud, & Audit Objectives – Quiz

 

Question 1. 1. (TCO 4) To succeed in an action against the auditor, the client must be able to show that (Points : 3)

the auditor was fraudulent.

the auditor was grossly negligent.

there was a written contract.

there is a close causal connection between the auditor’s behavior and the damages suffered by the client.

Chapter 5, 6 & 7

 

(TCO 4) In connection with the audit of financial statements, an independent auditor could be responsible for failure to detect a material fraud if (Points : 3)

statistical sampling techniques were not used on the audit engagement.

the auditor planned the audit in a negligent manner.

accountants performing important parts of the work failed to discover a close relationship between the treasurer and the cashier.

the fraud was perpetrated by one employee who circumvented the existing internal controls.

 

Question 2. 2. (TCO 4) The principal issue to be resolved in cases involving alleged negligence is usually (Points : 3)

the amount of the damages suffered by plaintiff.

whether to impose punitive damages on the defendant.

the level of care exercised by the CPA.

whether defendant was involved in fraud.

Chapter 5, 6 & 7

 

(TCO 4) The principal issue to be resolved in cases involving alleged negligence is usually (Points : 3)

the amount of the damages suffered by plaintiff.

whether to impose punitive damages on the defendant.

the level of care exercised by the CPA.

whether defendant was involved in fraud.

 

 

 

Question 3. 3. (TCO 4) While performing services for their clients, professionals have a duty to provide a level of care that is (Points : 3)

free from judgment errors.

superior.

greater than average.

reasonable.

Chapter 5

 

(TCO 4) A third-party beneficiary is one that (Points : 3)

has failed to establish legal standing before the court.

does not have privity of contract and is unknown to the contracting parties.

does not have privity of contract, but is known to the contracting parties and intended to benefit under the contract.

may establish legal standing before the court after a contract has been consummated.

Chapter 5

 

Question 4. 4. (TCO 4) Tort actions against CPAs are more common than breach of contract actions because (Points : 3)

there are more torts than contracts.

the burden of proof is on the auditor rather than on the person suing.

the person suing need prove only negligence.

the amounts recoverable are normally larger.

Chapter 5

 

Question 5. 5. (TCO 4) The responsibility for adopting sound accounting policies and maintaining adequate internal control rests with the (Points : 3)

board of directors.

company management.

financial statement auditor.

company’s internal audit department.

Chapter 6

 

Question 6. 6. (TCO 3) Which of the following is not one of the reasons that auditors provide only reasonable assurance on the financial statements? (Points : 3)

The auditor commonly examines a sample, rather than the entire population of transactions.

Accounting presentations contain complex estimates, which involve uncertainty.

Fraudulently prepared financial statements are often difficult to detect.

Auditors believe that reasonable assurance is sufficient in the vast majority of cases.

Chapter 6

 

(TCO 3) Which of the following statements is most correct regarding errors and fraud? (Points : 3)

An error is unintentional, whereas fraud is intentional.

Frauds occur more often than errors in financial statements.

Errors are always fraud and frauds are always errors.

Auditors have more responsibility for finding fraud than errors.

 

Question 7. 7. (TCO 3) Which of the following is not one of the factors of the fraud triangle? (Points : 3)

Incentives/pressures

Attitudes/rationalization

Opportunities

Psychological make-up

Chapter 5 or 11

 

(TCO 3) In the fraud triangle, fraudulent financial reporting and misappropriation of assets (Points : 3)

 

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