1) Materiality at the account balance level is stated in planning an audit, because

A. the opinion on the fairness of the financial statements extends to the individual account balances.

B. Some users make decisions based on individual account balances.

C. Official pronouncements have specified different levels of materiality for various financial statement items.

D. The auditor verifies account balances in reaching an overall conclusion on the fairness of the financial statements.

2) The Foreign Corrupt Practices Act is administered by the

A. Central Intelligence Agency

B. IRS.

C. National Commission on Fraudulent Financial Reporting.

D. SEC.

3) Which of the following requires managing public companies to assess the adequacy of internal controls over financial reporting and further requires auditors to audit management’s assessment of internal controls over financial reporting and the actual effectiveness of the system of internal controls?

A. SAS 55

B. Foreign Corrupt Practices Act

C. Securities Exchange Act of 1934

D. Section 404 of Sarbanes-Oxley

4) “A significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected” is the definition of a

A. Control deficiency.

B. Material weakness.

C. Significant deficiency.

D. Material misstatement.

5) Which of the following tests of controls would be most effective in testing controls designed to prevent checks from being issued or recorded for the wrong amount?

A. Computer-assisted audit techniques, such as test data to test computer application control

B. Observing bank reconciliations

C. Observing segregation of duties

D. Observing documents being marked or cancelled as paid

Answer rating: 100% (QA)

1 A The opinion on the fairness of the f... View the full answer