Wiley CPA Excel Exam Review Study Guide Auditing And Attestation 2015 14th Edition O. Ray Whittington - Solutions

Which of the following statements is a standard applicable to financial statement audits in accordance with Government Auditing Standards (the “Yellow Book”)?a. An auditor should report on the scope of the auditor’s testing of compliance with laws and regulations.b. An auditor should assess
When auditing an entity’s financial statements in accordance with Government Auditing Standards (the “Yellow Book”), an auditor is required to report on I. Recommendations for actions to improve operations.II. The scope of the auditor’s tests of compliance with laws and regulations.a. I
When auditing an entity’s financial statements in accordance with Government Auditing Standards (the “Yellow Book”), an auditor is required to report on I. Noteworthy accomplishments of the program.II. The scope of the auditor’s testing of internal controls.a. I only.b. II only.c. Both I
A governmental audit may extend beyond an examination leading to the expression of an opinion on the fairness of financial presentation to include Program results Compliance Economy and efficiencya. Yes Yes Nob. Yes Yes Yesc. No Yes Yesd. Yes No Yes
Hill, CPA, is auditing the financial statements of Helping Hand, a not-for-profit organization that receives financial assistance from governmental agencies. To detect misstatements in Helping Hand’s financial statements resulting from violations of laws and regulations, Hill should focus on
In auditing a not-for-profit entity that receives governmental financial assistance, the auditor has a responsibility toa. Issue a separate report that describes the expected benefits and related costs of the auditor’s suggested changes to the entity’s internal control.b. Assess whether
When reporting on an examination of a company’s compliance with requirements of specified laws, the practitioner has identified an instance of material noncompliance.Management has agreed to include this instance in its written assertion. The examination report should includea. No modification
A CPA’s report on agreed-upon procedures related to an entity’s compliance with specified requirements should containa. A statement of limitations on the use of the report.b. An opinion about whether management’s assertion is fairly stated.c. Negative assurance that control risk has not been
Mill, CPA, was engaged by a group of royalty recipients to apply agreed-upon procedures to financial data supplied by Modern Co. regarding Modern’s written assertion about its compliance with contractual requirements to pay royalties. Mill’s report on these agreed-upon procedures should contain
Which of the following types of engagements is not permitted under the professional standards for reporting on an entity’s compliance?a. Agreed-upon procedures on compliance with the specified requirements of a law.b. Agreed-upon procedures on the effectiveness of internal control over compliance
When an examination has been performed on the effectiveness of entity’s internal control over financial reporting and a material weakness has been noted, the practitioner’s report should express an opinion ona. The assertion.b. The subject matter to which the assertion relates.c. Neither of the
When an independent auditor reports on internal control based on criteria established by governmental agencies, the report shoulda. Not include the agency’s name in the report.b. Indicate matters covered by the study and whether the auditor’s study included tests of controls with the procedures
In reporting on an entity’s internal control over financial reporting, a practitioner should include a paragraph that describes thea. Documentary evidence regarding the control environment factors.b. Changes in internal control since the prior report.c. Potential benefits from the
Which of the following is not included in a standard unqualified opinion on internal control over financial reporting performed under PCAOB requirements?a. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements.b. In our opinion, [company
Which of the following is correct when applying a top-down approach to identify controls to test in an integrated audit?a. For certain assertions, strong entity-level controls may allow the auditor to omit additional testing beyond those controls.b. Starting at the top—controls over specific
In an integrated audit, which must the auditor communicate in writing to management?a. Only material weaknesses.b. Material weaknesses and significant deficiencies.c. Material weaknesses, significant deficiencies and other control deficiencies.d. Material weaknesses, significant deficiencies, other
Which is correct concerning the external auditors’ use of the work of others in an audit of internal control performed for a public company?a. It is not allowed.b. The work of internal auditors may be used, but only when those internal auditors report directly to the audit committee.c. Ordinarily
In which manner are significant deficiencies communicated by the auditors to the audit committee under Public Company Accounting Oversight Board Standard 5?a. The communication may either be orally or in written form.b. The communication must be oral, and not in written form.c. The communication
In an integrated audit, what must the auditor communicate to the audit committee?Known material weaknesses All control deficienciesa. Yes Yesb. Yes Noc. No Yesd. No No
In an integrated audit, which of the following lead(s) to an adverse opinion on internal control?Material weaknesses Significant deficienciesa. Yes Yesb. Yes Noc. No Yesd. No No
An auditor identified a material weakness in December.The client was informed and corrected it shortly after the“as of date” (December 31); the auditor agrees that the correction eliminates the material weakness as of January 31.The appropriate report under a PCAOB Standard 5 audit of internal
Which of the following is most likely to indicate a significant deficiency relating to a client’s antifraud programs?a. A broad scope of internal audit activities.b. A “whistle-blower” program that encourages anonymous submissions.c. Audit committee passivity when conducting oversight
Inability to evaluate internal control due to a circumstance-caused scope limitation relating to a significant account in a Sarbanes-Oxley 404 internal control audit is most likely to result in a(n)a. Adverse opinion.b. Qualified opinion.c. Unqualified opinion with explanatory language.d. All of
Which of the following is most likely to be considered a material weakness in internal control for purposes of an internal control audit of an issuer (public) company?a. An ineffective oversight of financial reporting by the audit committee.b. Restatement of previously issued financial statements
A control deficiency that is more than a significant deficiency is most likely to result in what form of audit opinion relating to internal control?a. Adverse.b. Qualified.c. Unqualified.d. Unqualified with explanatory language.
For purposes of an audit of internal control performed under Public Company Accounting Oversight Board requirements, an account is significant if there is more than aa. Reasonably possible likelihood that it could contain immaterial or material misstatements.b. Reasonably possible likelihood that
How large must the actual loss identified by the auditor be for a control deficiency to possibly be considered a material weakness?Immaterial Materiala. Yes Yesb. Yes Noc. No Yesd. No No
Which is most likely to be a question asked of employee personnel during a walk-through in an audit of the internal control of an issuer (public) company?a. Have you ever been asked to override the process?b. Do you believe that you are underpaid?c. What do you do when you find a fraudulent
For an issuer (public) company audit of internal control, walkthroughs provide the auditor with primary evidence to Evaluate the effectiveness of the design of controls Confirm whether controls have been implementeda. Yes Yesb. Yes Noc. No Yesd. No No
Consider an issuer (public) company whose purchases are made through the Internet and by telephone. Which of the following is correct?a. These types of purchases represent control objectives for the audit of internal control.b. These purchases are the assertions related to the purchase class of
For purposes of an audit of internal control performed under Public Company Accounting Oversight Board standards, the “as of date” is ordinarilya. The first day of the year.b. The last day of the fiscal period.c. The last day of the auditor’s fieldwork.d. The average date for the entire
A procedure that involves tracing a transaction from its origination through the company’s information systems until it is reected in the company’s financial report is referred to as a(n)a. Analytical analysis.b. Substantive procedure.c. Test of a control.d. Walk-through.
How do the scope, procedures, and purpose of an examination of internal control compare to those for obtaining an understanding of internal control and assessing control risk as part of an audit?Scope Procedures Purposea. Similar Different Similarb. Different Similar Similarc. Different Different
According to Public Company Accounting Oversight Board Standard 5, what type of transaction involves establishing a loan loss reserve?a. Substantive transaction.b. Routine transaction.c. Nonroutine transaction.d. Estimation transaction.
Assume that a company has a control deficiency regarding the processing of cash receipts. Reconciliation of cash accounts by a competent individual otherwise independent of the cash function might make the likelihood of a significant misstatement due to the control deficiency remote.In this
The minimum likelihood of loss involved in the consideration of a control deficiency isa. Remote.b. More than remote.c. Probable.d. Not explicitly considered.
A material weakness is a significant deficiency (or combination of significant deficiencies) that results in a reasonable possibility that a misstatement of at least what amount will not be prevented or detected?a. An amount greater than zero.b. An amount greater than zero, but at least
In an integrated audit, which of the following is defined as a weakness in internal control that is less severe than a material weakness but important enough to warrant attention by those responsible for oversight of the financial reporting function?a. Control deficiency.b. Unusual weakness.c.
Which of the following is an accurate statement about internal control weaknesses?a. Material weaknesses are also control deficiencies.b. Significant deficiencies are also material weaknesses.c. Control deficiencies are also material weaknesses.d. All control deficiencies must be communicated to
Which of the following need not be included in management’s report on internal control under Section 404a of the Sarbanes-Oxley Act of 2002?a. A statement that the company’s auditor has issued an attestation report on management’s assertion.b. Identification of the framework for evaluating
Which of the following is correct concerning the level of assistance auditors may provide in assisting management with its assessment of internal control?a. No assistance of any type may be provided.b. No limitations on assistance exist.c. Only very limited assistance may be provided.d. As less
An engagement to examine internal control will generallya. Require procedures that duplicate those already applied in assessing control risk during a financial statement audit.b. Increase the reliability of the financial statements that have already been audited.c. Be more extensive in scope than
Which of the following best describes a CPA’s engagement to report on an entity’s internal control over financial reporting?a. An attestation engagement to form an opinion on the effectiveness of its internal control.b. An audit engagement to provide negative assurance on the entity’s
The framework most likely to be used by management in its internal control assessment under requirements of the Sarbanes-Oxley Act of 2002 is thea. COSO internal framework.b. COSO enterprise risk management framework.c. FASB 37 internal control definitional framework.d. AICPA internal control
The internal control provisions of the Sarbanes-Oxley Act of 2002 apply to which companies in the United States?a. All companies.b. SEC registrants.c. All issuer (public) companies and nonissuer(nonpublic) companies with more than $100,000,000 of net worth.d. All nonissuer companies.
The AICPA has outlined auditor reports based on three services that may be provided on service organization controls(SOC). The type most likely to result in a restricted use report on controls at a service organization related to security, availability, processing integrity, confidentiality, and/or
The type of service organization control (SOC) report that is for general use isa. SOC 1.b. SOC 2.c. SOC 3.d. SOC 4.
Which of the following is correct relating to service organization control (SOC) reports referred to as “SOC 2” reports?a. They are primarily to assist financial statement auditors when processing services have been outsourced to a service provider.b. They are generally available to anyone.c.
Lake, CPA, is auditing the financial statements of Gill Co. Gill uses the EDP Service Center, Inc. to process its payroll transactions. EDP’s financial statements are audited by Cope, CPA, who recently issued a report on EDP’s internal control. Lake is considering Cope’s report on EDP’s
Computer Services Company (CSC) processes payroll transactions for schools. Drake, CPA, is engaged to report on CSC’s policies and procedures implemented as of a specific date. These policies and procedures are relevant to the schools’internal control, so Drake’s report will be useful in
The auditor who audits the processing of transactions by a service organization may issue a report on controls Implemented Operating effectivenessa. Yes Yesb. Yes Noc. No Yesd. No No
Payroll Data Co. (PDC) processes payroll transactions for a retailer. Cook, CPA, is engaged to express an opinion on a description of PDC’s internal controls implemented as of a specific date. These controls are relevant to the retailer’s internal control, so Cook’s report may be useful in
Dunn, CPA, is auditing the financial statements of Taft Co. Taft uses Quick Service Center (QSC) to process its payroll. Price, CPA, is expressing an opinion on a description of the controls implemented at QSC regarding the processing of its customers’ payroll transactions. Dunn expects to
A client’s refusal to provide a written assertion in a Trust Services engagement is most likely to result in which of the following types of opinions?a. Adverse.b. Disclaimer.c. Qualified.d. Unmodified with explanatory language.G.3.g. Service Organizations
An engagement in which a CPA considers security, availability, processing integrity, online privacy, and/or confidentiality over any type of defined electronic system is most likely to considered which of the following types of engagements?a. Internal control over financial reporting.b. SysTrust.c.
A CPA’s examination report relating to a WebTrust engagement is most likely to includea. An opinion on whether the site is “hackproof.”b. An opinion on whether the site meets the WebTrust criteria.c. Negative assurance on whether the site is electronically secure.d. No opinion or other
The WebTrust seal of assurance relates most directly toa. Financial statements maintained on the Internet.b. Health care facilities.c. Risk assurance procedures.d. Websites.
Trust Service engagements are performed under the provisions ofa. Statements on Assurance Standards.b. Statements on Standards for Attestation Engagements.c. Statements on Standards for Trust Engagementsd. Statements on Auditing Standards.
Which of the following statements is correct relating to an auditor’s review engagements on an entity’s management discussion and analysis (MD&A)?a. A review consists principally of applying analytical procedures and search and verification procedures.b. The review report of a public entity
Which of the following is an assertion embodied in management’s discussion and analysis (MD&A)?a. Valuation.b. Reliability.c. Consistency with the financial statements.d. Rights and obligations.
Which of the following is not an objective of a CPA’s examination of a client’s management discussion and analysis(MD&A) prepared pursuant to Securities and Exchange Commission rules and regulations?a. The historical amounts have been accurately derived, in all material respects, from the
An accountant’s report on a review of pro forma financial information should include aa. Statement that the entity’s internal control was not relied on in the review.b. Disclaimer of opinion on the financial statements from which the pro forma financial information is derived.c. Caveat that it
Given one or more hypothetical assumptions, a responsible party may prepare, to the best of its knowledge and belief, an entity’s expected financial position, results of operations, and changes in financial position. Such prospective financial statements are known asa. Pro forma financial
When an accountant examines a financial forecast that fails to disclose several significant assumptions used to prepare the forecast, the accountant should describe the assumptions in the accountant’s report and issue a(n)a. “Except for” qualified opinion.b. “Subject to” qualified
Which of the following is not included in a compilation report on prospective financial statements?a. A statement that the practitioner assumes no responsibility to update the report for events and circumstances occurring after the date of the report.b. A caveat that the prospective results may not
Which of the following is a prospective financial statement for general use upon which an accountant may appropriately report?a. Financial projection.b. Partial presentation.c. Pro forma financial statement.d. Financial forecast.
An accountant’s compilation report on a financial forecast should include a statement that thea. Compilation does not include evaluation of the support of the assumptions underlying the forecast.b. Hypothetical assumptions used in the forecast are reasonable.c. Range of assumptions selected is
A CPA in public practice is required to comply with the provisions of the Statements on Standards for Attestation Engagements(SSAE) when Testifying as an expert witness in accounting and auditing matters given stipulated facts Compiling a client’s financial projection that presents a hypothetical
Accepting an engagement to examine an entity’s financial projection most likely would be appropriate if the projection were to be distributed toa. All employees who work for the entity.b. Potential stockholders who request a prospectus or a registration statement.c. A bank with which the entity
An accountant’s compilation report on a financial forecast should include a statement thata. The forecast should be read only in conjunction with the audited historical financial statements.b. The accountant expresses only limited assurance on the forecasted statements and their assumptions.c.
An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided thata. Use of the report is restricted to the specified parties.b. The prospective financial statements are also examined.c. Responsibility for the adequacy of the procedures
When an accountant examines projected financial statements, the accountant’s report should include a separate paragraph thata. Describes the limitations on the usefulness of the presentation.b. Provides an explanation of the differences between an examination and an audit.c. States that the
Which of the following is not correct concerning “specified parties” of an agreed-upon procedures report under either the auditing or attestation standards?a. They must agree on the procedures to be performed.b. They must take responsibility for the adequacy of the procedures performed.c. They
A summary of findings rather than assurance is most likely to be included ina. Agreed-upon procedures report.b. Compilation report.c. Examination report.d. Review report.G.3.b. Agreed-Upon Procedures Engagements
Which of the following is least likely to be included in an agreed-upon procedures attestation engagement report?a. The specified party takes responsibility for the sufficiency of procedures.b. Use of the report is restricted.c. Limited assurance on the information presented.d. A summary of
Which of the following is least likely to result in a restricted use attest report?a. Criteria suitable only for a limited number of parties.b. Subject matter available only to specified parties.c. A written assertion has not been obtained.d. Criteria developed by an industry association.
Suitable criteria in an attestation engagement may be available Publicly In CPA’s reporta. Yes Yesb. Yes Noc. No Yesd. No No
When performing an attestation engagement, which of the following is least likely to be present?a. Practitioner’s written assertion.b. Responsible party.c. Subject matter.d. Suitable criteria.
Conditions exist that result in a material deviation from the criteria against which the subject matter was evaluated during an examination. The CPA’s conclusion may be on Subject matter Written assertiona. Yes Yesb. Yes Noc. No Yesd. No No
A practitioner is issuing a standard unmodified examination report under the attestation standards. The CPA’s conclusion may be on Subject matter Management’s written assertiona. Yes Yesb. Yes Noc. No Yesd. No No
An unmodified attestation report ordinarily may refer toa. Only the assertion.b. Only the subject matter to which the assertion relates.c. Either the assertion or the subject matter to which the assertion relates.d. Neither the assertion nor the subject matter to which the assertion relates.
Which of the following services would be most likely to be structured as an attest engagement?a. Advocating a client’s position in tax matter.b. A consulting engagement to develop a new database system for the revenue cycle.c. An engagement to issue a report addressing an entity’s compliance
Which of the following statements is not included in an accountant’s report on the application of accounting principles?a. The engagement was performed following standards established by the American Institute of Certified Public Accountants.b. The report is based on a hypothetical transaction
Blue, CPA, has been asked to render an opinion on the application of accounting principles to a specific transaction by an entity that is audited by another CPA. Blue, who previously has provided no services to the entity, may accept this engagement, but shoulda. Consult with the continuing CPA to
In connection with a proposal to obtain a new client, an accountant in public practice is asked to prepare a written report on the application of accounting principles to a specific transaction. The accountant’s report should include a statement thata. Any difference in the facts, circumstances,
In connection with a proposal to obtain a new audit client, a CPA in public practice is asked to prepare a report on the application of accounting principles to a specific transaction. The CPA’s report should include a statement thata. The engagement was performed in accordance with Statements on
When unaudited financial statements are presented in comparative form with audited financial statements in a document filed with the Securities and Exchange Commission, such statements should be Marked as“unaudited”Withheld until audited Referred to in the auditor’s reporta. Yes No Nob. Yes
Which of the following matters is covered in a typical comfort letter?a. Negative assurance concerning whether the entity’s internal control procedures operated as designed during the period being audited.b. An opinion regarding whether the entity complied with laws and regulations under
When an independent audit report is incorporated by reference in a SEC registration statement, a prospectus that includes a statement about the independent accountant’s involvement should refer to the independent accountant asa. Auditor of the financial reports.b. Management’s designate before
When an accountant issues to an underwriter a comfort letter containing comments on data that have not been audited, the underwriter most likely will receivea. Negative assurance on capsule information.b. Positive assurance on supplementary disclosures.c. A limited opinion on pro forma financial
Comfort letters ordinarily are addressed toa. Creditor financial institutions.b. The client’s audit committee.c. The Securities and Exchange Commission.d. Underwriters of securities.
Comfort letters ordinarily are signed by the client’sa. Independent auditor.b. Underwriter of securities.c. Audit committee.d. Senior management.
Which of the following statements is correct concerning letters for underwriters, commonly referred to as comfort letters?a. Letters for underwriters are required by the Securities Act of 1933 for the initial public sale of registered securities.b. Letters for underwriters typically give negative
A registration statement filed with the SEC contains the reports of two independent auditors on their audits of financial statements for different periods. The predecessor auditor who audited the prior period financial statements generally should obtain a letter of representation from thea.
An auditor is engaged to report on selected financial data that are included in a document containing audited financial statements. Under these circumstances, the report on the selected data shoulda. Be limited to data derived from the audited financial statements.b. Be distributed only to senior
An auditor may report on summary financial statements that are derived from complete financial statements if thea. Summary financial statements are distributed to stockholders along with the complete financial statements.b. Auditor described the additional procedures performed on the summary
An accountant’s review report on interim financial information of a public entity is most likely to include aa. Statement that the interim financial information was examined in accordance with standards of the Public Company Accounting Oversight Board.b. Statement that the interim financial
Which of the following is least likely to be a procedure included in an accountant’s review of interim financial information of a public entity?a. Compare disaggregated revenue data by month to that of the previous interim period.b. Read available minutes of meetings of stockholders.c. Observe
Which of the following procedures ordinarily should be applied when an independent accountant conducts a review of interim financial information of a publicly held entity?a. Verify changes in key account balances.b. Read the minutes of the board of directors’ meetings.c. Inspect the open purchase
A modification of the CPA’s report on a review of the interim financial statements of a publicly held company would be necessitated by which of the following?a. An uncertainty.b. Lack of consistency.c. Reference to another accountant.d. Inadequate disclosure.

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Wiley CPA Excel Exam Review Study Guide Auditing And Attestation 2015 14th Edition O. Ray Whittington - Solutions

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