Question: The following questions address CPA firms and entities that regulate

The following questions address CPA firms and entities that regulate them. Choose the best response:
a. Which of the following statements accurately describes U.S. CPA firms that are not sole proprietorships?
(1) Most derive the majority of their revenues from tax services.
(2) The most common organizational structure is the limited liability partnership structure.
(3) The firm will be subject to an annual peer review.
(4) The number of other professionals within a firm generally equals the number of partners in the firm.

b. You have been engaged to audit the final statements of a U.S. public company. Which of the following statements is correct?
(1) Your firm must be registered with the PCAOB.
(2) Your firm will be subject to auditing and quality control standards issued by the Securities and Exchange Commission.
(3) Your firm must be either a National or Big Four CPA firm.
(4) You will be engaged to audit both the quarterly and annual financial statements of your client.

The following questions deal with auditing standards. Choose the best response.
c. Which of the following best describes what is meant by U.S. auditing standards?
(1) Acts to be performed by the auditor.
(2) Measures of the quality of the auditor’s performance.
(3) Procedures to be used to gather evidence to support financial statements.
(4) Audit objectives generally determined on audit engagements.

d. The Responsibilities principle underlying AICPA auditing standards includes a requirement that
(1) Field work be adequately planned and supervised.
(2) The auditor’s report state whether or not the financial statements conform to generally accepted accounting principles.
(3) Professional judgment be exercised by the auditor.
(4) Informative disclosures in the financial statements be reasonably adequate.

e. What is the general character of the responsibilities characterized by the Performance principles?
(1) The competence, independence, and professional care of persons performing the audit.
(2) Criteria for the content of the auditor’s report on financial statements and related footnote disclosures.
(3) The criteria of audit planning and evidence gathering.
(4) The need to maintain an independence in mental attitude in all matters pertaining to the audit.

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