179) Computer-assisted audit techniques (CAATs) could not be used for which of the following audit tasks?A. Accounting estimates are not considered sufficient and appropriate documentation.C. the applicable financial reporting framework (i.e., GAAP in the United States).B. 167) Which of the following matters does an auditor usually include in the engagement letter?A. Inventory is properly stated at cost on the balance sheet.C. Auditors fail to document their assessment of control risk following their study of internal control. The auditor is discovered to own a financial interest in the entity. there is an ability to control and modify the program to meet an auditors need.D. of firms with broker-dealer clients. guidelines for the general conduct of audit engagements. Select the last few shipping advices used before the physical count and determine whether the shipments were recorded as sales.C. If youre saying to yourself that those varied tasks seem like an awful lot for a single organization to handle, youre right. Standards of the PCAOB: Scope only; GAAP: Opinion onlyB. The preparation of a budget identifying the costs of resources neededC. A background in many different disciplines, Technical training that is adequate to meet the requirements of a professional. 0000002034 00000 n Comparing the financial statements to anticipated resultsB. How often must each firm undergo a PCAOB inspection?A. Sufficient and appropriate documentation should include evidence that the audit working papers have been reviewed.D. standards that guide the conduct of an audit examination. Confidence in public company financial reporting is essential to the strength and vitality of U.S. securities markets. record of the procedures performed. 0000007403 00000 n The chair of Mondays board of directors, 73) Which element of a system of quality control strives to provide the firm with reasonable assurance that its policies and procedures are operating effectively?A. obtain market quotations from The Wall Street Journal or another independent source.C. inspect the stock certificates evidencing the investment. Compare financial information with nonfinancial operating data.B. 0000056618 00000 n Identify audit evidence relevant to the verification of assertions management makes in its unaudited financial statements and notes.B. The opinion assesses the financial statements against an applicable financial reporting framework.C. correlation of detection risk and inherent risk.D. Inspections do not involve a review of all aspects of a firm's quality control system. PCAOB inspections are conducted by partners of other CPA firms.D. 175) When a firm decides to withdraw from an engagement, it should document all of the following exceptA. b. the probability that a material misstatement could occur and not be detected by auditors' procedures. Aside from the shadow of the PCAOB itself looming over the auditor like a shadow, firms also have extensive review processes in place, where a committee looks over every filing prior to issuance to look for consistency across the entire firm. Auditing standards for both public and private entities must be formally approved by the Securities and Exchange Commission. to determine the nature, timing, and extent of further audit procedures.D. This corresponds with a lower scoping materiality as well. As such, a PCAOB audit will have two opinions, one for financial statements and the other, ICFR, regarding your control environment and effectiveness. C. PCAOB inspections are conducted by partners of other CPA firms. The process aims to drive improvement in the quality of audit services through a focus on effective prevention, The more effective the clients internal control, the more assurance it provides about the accounting data and financial statements. Prior to the Sarbanes-Oxley Act, the Auditing Standards Board issued auditing standards for the audits of both public and private entities.D. maintain public confidence in the profession. Examination of individual transactions to certify as to their validity D. Determination of whether the clients financial statement assertions are fairly stated, Determination of whether the clients financial statement assertions are fairly stated. Inventory is properly valued.B. consider the policies that prohibit the internal auditors from auditing areas where they were recently assigned.B. Experience in taxation that is sufficient to comply with generally accepted auditing standardsC. 120) The auditors judgment concerning the overall fairness of the presentation of financial position, results of operations, and cash flows is applied within the framework ofA. Which of your employees is a fraudster? Make inquiries of the clients lawyer concerning pending litigation.C. Confirming accounts payable balances with known vendors and suppliers who have zero balances at year-endC. To be reliable, audit evidence must be either valid or relevant, but need not be both.C. 88) Auditors try to achieve independence in appearance in order toA. 0000027259 00000 n Standards issued by the Auditing Standards Board after 2003 apply to the audits of both public and private entities.B. ensure a clear contractual understanding of the services to be provided by the CPA.D. Receiving confirmation from third parties as to the existence of securities is more reliable than the auditors personal inspection of those securities.C. 0000043320 00000 n Download this guide to learn more about the PCAOBs inspection program andto find answers to these questions: Corporate decision-making: Why choose a CPA for your ESG assurance needs?04.28.23, Audit Quality Reports Analysis: A Year in Review03.22.23, The Role of the Auditor in Climate-Related Information03.09.23, The Center for Audit Quality and EVERFI Create Limitless Opportunities in the Accounting Field03.23.23, Audit Committee Composition Changing Amid Expanded Scope and Emerging Risks, According to New Report from Deloitte and the Center for Audit Quality (CAQ)01.13.23, Leading Accounting Organizations Partner to Diversify the Accounting Profession01.05.23. engage financial experts familiar with the nature of the industry.B. 55) Which of the following would be evaluated during the PCAOB inspection process? Assessment of inherent risk, no; assessment of control risk, yesD. 83) Which of the following statements describes an appropriate relationship with respect to the reliability of audit evidence?A. 0000002440 00000 n Standards of the PCAOB: Introductory only; GAAP: Scope and opinion, Standards of the PCAOB: Scope only; GAAP: Opinion only. 136) Which of the following is a correct statement regarding the nature and timing of communications between an accounting firm performing an initial audit of an issuer and the issuers audit committee?A. Company management, audit committees, and internal and external auditors all play important roles in providing investors with reliable financial reports. 84) Which of the following is an important consideration during the planning of the audit?incorrect Considering the independence of members of the audit team Considering the impact of tests of controls on the overall assessment of control riskincorrect Considering the ability and expertise of the audit team with respect to accounting and auditing issues in the clients industry Performing some of the audit procedures prior to the end of the year under audit, 87) Which of the following use of computer-assisted audit techniques (CAATs) would most likely be considered a search for fraudulent activities?A. The ownership of a financial interest in a client by the auditor, The auditors objectivity and ability to act impartially toward the client. Governmental Auditing Standards for the audits of governmental entities.C. Please select a current browser such as Chrome, Edge, or Firefox. current employees of another public accounting firm selected by the PCAOB. firms performing audits of more than 100 public entities The PCAOB can impose sanctions and penalties on ______. standards used by entities in deciding whether to engage or retain the services of auditors.D. Similarly, PCAOB involves a far more in-depth, evasive role for the concurring partner along with the possibility of an audit review from the PCAOB. A review of material from prior auditsD. As a guide to the evaluation of evidenceB. Objectives of an Inspection PcAob inspections focus on how a firm conducted selected audits and on the effectiveness of the firm's quality control policies and procedures. 105) The pre-engagement activities of an audit engagement for a public accounting firm do not includeA. financial statements to the potentially unrecorded items. The auditor must determine and apply an appropriate materiality level throughout the audit. software packages are always inexpensive. a. true b. false, Auditors . Obtaining reliable documentary evidence, 181) An independent auditor must have which of the following?A. an assessment of fraud risk factors likely to cause material misstatements.B. transactions are numerous and complex. 128) The four basic requirements for becoming a CPA in most states areA. Considering the pattern of several unusual changes without trying to explain what caused themB. An indication that all necessary disclosures have been presentedC. The independent auditors direct personal knowledge, obtained through observation and inspection, is of higher quality than information obtained indirectly.B. give an opinion on the fair presentation of Camdens financial statements in conformity with the applicable financial reporting framework (e.g., GAAP, IFRS).C. Auditors perform the engagement with the performance level expected of prudent auditors, but not expert auditors.D. analytical review.B. In 2018, the Public Company Accounting Oversight Board ("PCAOB" or "the Board") conducted an inspection of the registered public accounting firm Baker Tilly US, LLP ("the Firm") pursuant to the Sarbanes-Oxley Act of 2002 ("the Act"). transactions that affect all accounts in that particular group.C. hbspt.cta._relativeUrls=true;hbspt.cta.load(2102630, '72bcbc91-c14c-41eb-8991-37eef27c9dda', {"useNewLoader":"true","region":"na1"}); Therefore, the focus of a PCAOB audit has a distinct bent towards a companys stakeholders and providing the investing public with clarity, accuracy, and accountability. Read sales contracts for evidence of customers rights of return or price allowance terms.D. Verbal statements made by client personnelB. 77) When assessing internal auditors objectivity, an independent auditor shouldA. Firm A will be inspected annually and firm B will be inspected every three years.D. Credit salesB. independent inquiries of the public accounting profession made by the SEC.D. Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted forD. Economic and efficient use of resourcesB. Browse over 1 million classes created by top students, professors, publishers, and experts. Given the dynamic nature of industry, PCAOB adopts a forward-looking perspective to keep pace with changes in the financial environment, helping to ensure ongoing investor protection. b. 0000000016 00000 n <<6AAA20DA525C6C41918AD95C5FFC5644>]/Prev 554991/XRefStm 2034>> Assessing the allowance for uncollectible accounts for reasonablenessD. provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed. Copyright 2023 Center For Audit Quality. The group has a diverse set of responsibilities that range in everything from preparing and grading the CPA examination and public financial education programs to -- the topic du jour -- setting audit standards for every size of company along with non-profits and government entities. Testing calculations and making computationsD. Facts known to the predecessor auditor that might bear on the integrity of managementD. A. they are not aware of any false or misleading statements (or any key omitted disclosures).C. random errors are more likely in a batch system than in an online system.D. education, the CPA Examination, experience, and a state certificate. another public accounting firm selected by the firm being inspected.B. Assessment of inherent risk, yes; assessment of control risk, noC. reduce the level of required tests of controls to a relatively small amount.B. The client provides financial support to a number of charitable causes that also receive support from the accounting firm.D. Unmodified opinion or adverse opinion, 125) The Public Company Accounting Oversight Board was established by which of the following?A. Information obtained indirectly from outside sources is the most reliable form of audit evidence.D. Susceptibility of the account balance to misstatement, Yes or No? maintain public confidence in the profession.C. the CPA Examination, experience, continuing professional education, and a state certificate.D. All of these are ASB presentation and disclosure assertions about inventory.D. The perceptions of individuals who rely on the financial statements and auditors opinion on the financial statementsD. continuing professional education, the CPA Examination, experience, and an AICPA certificate. 78) Which of the following provides the best method of obtaining an understanding of a continuing clients business for planning an audit?A. 112) The relevant ethical requirements relating to due care, professional skepticism, and professional judgment are responsibilities of the auditor at which stage(s) of the audit?Risk assessment, Yes or no? MonitoringC. The PCAOB is an acronym for the Public Company Accounting Oversight Board. ACCT450- Chapter2. Gaining experience through hands-on practiceB. 54) PCAOB inspections are conducted byA. electronic databases as well as printed reports.C. Corporate decision-making: Why choose a CPA for your ESG assurance needs? continuous monitoring of a clients internal control system. Inquiring of the clients legal counsel concerning pending litigationD. 0000002228 00000 n 36) Managements responsibility in a computer system would not includeA. Internet Explorer is no longer supported. 30) Which of the following is not a PCAOB assertion about inventory related to presentation and disclosure? Auditors direct personal knowledge, obtained through observation and inspection, is of higher quality than information obtained indirectly from independent outside sources.B. relevance as well as the reliability of information.D. |Privacy Policy and Terms of Use| Sitemap. PCAOB inspection teams review work performed on audits by making selections of completed audits through the following process: Select Audits for Review: The inspection team selects the audits and the audit areas that it will review. The entity has rights to the inventory.C. peer review of member firms of the Private Companies Practice Section.B. transaction trails in a batch system are available for only a limited period of time.C. 29) Which of the following factors most likely would cause an auditor not to accept a new audit engagement?A. 81) Which of the following audit procedures probably would provide the most reliable evidence concerning the entitys assertion of rights and obligations related to inventories?A. Qualified opinion or adverse opinionD. a scandal involving embezzlement that was not detected during an audit engagement. 0000023704 00000 n Review proxy and other materials filed with the SEC.D. assessing the risk that errors and fraud may cause the financial statements to contain material misstatements. 53) When testing the completeness assertion for a liability account, an auditor ordinarily works from theA. 17) To satisfy the valuation assertion when auditing an investment in another company that is publicly and actively traded, an auditor most likely would seek toA. ten basic standards underlying an audit.B. nonfinancial information as well as traditional financial statements.B. The report provides a detailed listing of major auditing procedures performed during the examination.D. A bank confirmation received directly by the auditor is more reliable than a bank confirmation initially received by the client and forwarded to the auditor.D. The PCAOB is board comprised of five members appointed by the SEC. an understanding of the prospective clients industry and business. 134) The accounting, auditing, and investigating agency of the U.S. Congress, headed by the U.S. Comptroller General, is known asA. 11) What type of evidence would provide the highest level of assurance in an attestation engagement? design special substantive tests to compensate for the lack of industry expertise. 58) Which of the following is not true with respect to the auditors report for a public entity?A. The auditor must express an opinion in accordance with the auditors findings. Compare financial information with nonfinancial operating data. the probability that a material misstatement could occur and not be detected by auditors procedures.D. Standards issued by the Auditing Standards Board after 2003 apply to the audits of both public and private entities. standards that guide the conduct of an audit examination. 110) In order to be considered as external auditors with respect to government agencies, GAO auditors must beA. The PCAOB's oversight mission is accomplished, in part, through its inspection of audits conducted by registered public accounting firms. Public Company Accounting Oversight Board (, Standards and Emerging Issues Advisory Group, Technology Innovation Alliance Working Group, Implementation Resources for PCAOB Standards and Rules, Inspections-Related Board Reports and Statements, Updated PCAOB Staff Considerations on Recommending the Identification of Issuers and/or Broker-Dealers in Settled Enforcement Orders, PCAOB Cooperative Arrangements with Non-U.S. Regulators, Board Determinations Under the Holding Foreign Companies Accountable Act, The International Forum of Independent Audit Regulators and Other International Organizations, Information for Auditors of Broker-Dealers, Conference on Auditing and Capital Markets, PCAOB International Institute on Audit Regulation. Select more effective substantive tests.B. Percentage-of-completion revenue to be recordedD. The PCAOB is a regulatory board that oversees the audits of public companies. review the internal auditors reports to determine that their conclusions are consistent with the work performed.D. Audit teams should evaluate all transactions and components of an account balance or class of transactions.D. possible effects on the entitys financial statements. Financial decisions that are important to investors and usersE. implicitly represented in the auditors standard report.incorrect explicitly represented in the opinion paragraph of the auditors standard report. The inability to perform preliminary analytical procedures before assessing control riskD. Assessment of inherent risk, yes; assessment of control risk, yesB. 90) A primary advantage of using computer-assisted audit techniques (CAATs) packages to audit the financial statements of a client that uses computerized information systems is that the auditor mayA. 129) Which of the following is least related to the concept of independence in appearance?A. This required consultation only exists for PCAOB audits, not AICPA. Scanning accounts receivable balances for amounts over the credit limit, Comparing a list of vendor addresses to employee address files. 143) The idea of the cycle approach is to group accounts together byA. Recognize the financial assertions made in managements financial statements and footnotes. 117) Which of the following would a successor auditor ask the predecessor auditor to provide after accepting an audit engagement?A. The clients Chief Executive Officer graduated from the same university as the partner in charge of the accounting firm. comply with the responsibilities principle.D. 21) When testing the completeness assertion for a liability account, an auditor ordinarily works from theA. organizationally independent.D. issue, or does issue, a report on subject matter or an assertion about the subject matter that is the responsibility of another party.C. Obviously, along with inherently higher standards, a PCAOB audit is more stringent, meticulous, and casts a wider net due to the lower materiality, all with an accelerated timeline. Another role is to write those rules. 0000035225 00000 n 80) The standard auditors report refers to standards of the PCAOB and GAAP in which paragraph?A. Mondays controller or CFOC. Both firm A and firm B will be inspected every other year.B. the Federal Bureau of Investigation (FBI). The Financial Accounting Standards BoardB. The PCAOB staff has prepared this practice alert to emphasize that improperly altering audit documentation in connection with a PCAOB inspection or investigation violates PCAOB rules requiring cooperation with the Board's oversight activities and can result in disciplinary actions with severe consequences. 111) A practitioner is engaged to express an opinion on managements assertion that the square footage of a warehouse offered for sale is 150,000 square feet. hbspt.cta._relativeUrls=true;hbspt.cta.load(2102630, 'b1b917f6-dc13-461e-8941-9c7a6c2d6734', {"useNewLoader":"true","region":"na1"}); Embark isnt so bold to say that audits are nothing to sweat. 0000006410 00000 n Compliance with company policiesD. The names of the financial statements audited, An indication that all necessary disclosures have been presented, 139) When applying analytical procedures during an audit, which of the following is the best approach for developing expectations?A. 151) Which of the following statements is true with respect to the quality of audit evidence?A. maintaining a system of transaction processing that includes an audit trail.B. 0 verify that the internal auditors assessment of control risk is comparable to the independent auditors assessment.C. ensure a clear contractual understanding of the services to be provided by the CPA. specific assertions under audit.C. access information stored on computer files even with a limited understanding of the clients hardware and software features. Inspection of prenumbered client shipping documents, Inspection of bank statements obtained directly from the clients financial institution, 155) In the preparation of an audit plan, which of the following items is not essential?A. 71) Which of the following statements is most accurate regarding sufficient and appropriate documentation?A. 123) Which of the following is not included in the auditors standard report representing an unmodified opinion?A. Under these circumstances, the auditor would be most concerned about theA. a high potential for unauthorized access to data.D. In evaluating quality, sufficiency of evidence is of greater importance than appropriateness of evidence.C. Inquiries of the clients accounting staff held in privateB. 0000026488 00000 n seek the SECs permission to accept the engagement if Blakeney is publicly owned.C. 104-2018-111) The PCAOB has responsibility for overseeing the auditors of public companies, which includes performing regular inspections of public company audits and audit firm quality control systems. 113) The basic auditing application of the personal computer as an audit tool would not includeA. We also believe this information may help investors and other stakeholders become more fully informed about the matters we find in our inspections. Attesting to the fairness of the financial statements, Attesting to the fairness of the financial statements. issue, or does issue, a report on subject matter or an assertion about the subject matter that is the responsibility of another party. Auditing Standards for the audits of public entities.B. 0000005957 00000 n All rights reserved. a scandal involving embezzlement that was not detected during an audit engagement. 41) Firm A performs audits of 60 public entities, while firm B performs audits of 120 public entities. paid vouchers to disbursements. Securities and Exchange Commission.C. Trace test counts noted during the physical count of inventory to the summarization of quantities.B. requests by companies for greater assurance with respect to the auditors ability to detect financial statement misstatements.C. B. PCAOB inspections are conducted by partners of other CPA firms. The firms quality control policies have evolved through the performance of audit procedures but are not formally developed or communicated to staff members.D. conducting reviews of engagement documentation.C. individuals selected by the PCAOB who are not current employees of public accounting firms.D. Compare the invoiced prices on prenumbered sales invoices to the entitys authorized price list.B. due care. ~>```1ixP$d %bPWpq6F?0L`q rYko~~( L4jajp). ~AN,BYOGLpr9%%a1I(xZ@CF7wEJz3u039TOpZ(9EAOfkq@Y954,8nJ)CBt.*:X|A:ZT|2O0Br%q -l z3@R9XydL. Copyright 2003-2023 Public Company Accounting Oversight Board. Selecting customers accounts receivable for confirmationC. prepare spreadsheets.C. 146) An auditor traces the serial numbers on equipment to a nonissuers sub-ledger. They play a critical role in the industry and create balance and trust within our financial systems. Auditing Standards Board.B. 168) During which stages of an audit examination are auditors required to exhibit the appropriate use of professional judgment? Request a list of related parties from management. An AICPA audit has a comparatively longer timeline and substantially lower in risk, where the PCAOB has absolutely no jurisdiction over the process. Evidence obtained from independent sources, C. Evidence secured solely from within the entity, D. Evidence obtained from multiple internal inquiries, Evidence obtained from independent sources, 12) Which of the following is not a way in which auditors use the concept of overall materiality?A. A brief indication of the responsibility of auditors and management for the financial statementsC. Audit Evidence, Yes or no? Risk assessment, yes or no? users lack professional skepticism.B. Interpretive publications are issued by the AICPA to provide guidance on the application of generally accepted auditing standards in specific circumstances.B. firms only firms and individual CPAs consists of documents that are produced, used, and stored within the clients information system. Reading specialized industry journalsB. 92) Which of the following would normally be considered earliest in the audit examination?A. to identify and detect fraud and irregularities perpetrated by client personnel.B. independence. obtain knowledge of matters that relate to the nature of the entitys business.C. Independent professional services that report on specific written management assertions, Independent professional services that improve the quality of information for decision makers. : Firms System of Quality control, Yes or No? The audit is performed, with limited exception, in accordance with generally accepted auditing standards. effectiveness of the entitys internal control activities.B. An understanding of controls established by management, The preparation of a budget identifying the costs of resources needed.
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