New Semester Started Get 50% OFF Study Help! --h --m --s Claim Now

Question Answers

Textbooks

Find textbooks, questions and answers

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Study Help
Tutors
AI Study Planner NEW
Sell Books

Search
Sign In
Register

study help
business
model based testing for embedded systems

Wiley CPA Exam Review Problems And Solutions Vol 2 2011-2012 38th Edition O. Ray Whittington, Patrick R. Delaney - Solutions

Which of the following sets of standards does the Public Company Accounting Oversight Board not have the authority to establish for audits of public companies?a. Auditing standards.b. Quality control standards.c. Accounting standards.d. Independence standards.
Which of the following is correct concerning PCAOB guidance that uses the term “should”?a. The auditor must fulfill the responsibilities.b. The auditor must comply with requirements unless s/he demonstrates that alternative actions were sufficient to achieve the objectives of the standard.c.
One of a CPA firm’s basic objectives is to provide professional services that conform with professional standards.Reasonable assurance of achieving this basic objective is provided througha. A system of quality control.b. A system of peer review.c. Continuing professional education.d. Compliance
Quality control for a CPA firm, as referred to in Statements on Quality Control Standards, applies toa. Auditing services only.b. Auditing and management advisory services.c. Auditing and tax services.d. Auditing and accounting and review services.
Which of the following is not an element of quality control?a. Acceptance and continuance of client relationships and specific engagements.b. Human resources.c. Internal control.d. Monitoring.
A CPA firm may communicate its quality control policies and procedures to its personnel in which manner(s):Orally Writtena. No Nob. No Yesc. Yes Nod. Yes Yes
The nature and extent of a CPA firm’s quality control policies and procedures depend on The nature The CPA of the CPA Cost-benefit firm’s size firm’s practice considerationsa. Yes Yes Yesb. Yes Yes Noc. Yes No Yesd. No Yes Yes
An examination of a financial forecast is a professional service that involvesa. Compiling or assembling a financial forecast that is based on management’s assumptions.b. Limiting the distribution of the accountant’s report to management and the board of directors.c. Assuming responsibility to
The auditor with final responsibility for an engagement and one of the assistants have a difference of opinion about the results of an auditing procedure. If the assistant believes it is necessary to be disassociated from the matter’s resolution, the CPA firm’s procedures should enable the
In an audit of a nonissuer (nonpublic) company, the auditors identify significant risks. These risks oftena. Involve routine, high-volume transactions.b. Do not require special audit attention.c. Involve items with lower levels of inherent risk.d. Involve judgmental matters.
Which of the following is least likely to be considered a risk assessment procedure?a. Analytical procedures.b. Confirmation of ending accounts receivable.c. Inspection of documents.d. Observation of the performance of certain accounting procedures.
Which of the following are considered further audit procedures that may be designed after assessing the risks of material misstatement?Substantive tests of details Risk assessment proceduresa. Yes Yesb. Yes Noc. No Yesd. No No
While assessing the risks of material misstatement auditors identify risks, relate risk to what could go wrong, consider the magnitude of risks anda. Assess the risk of misstatements due to illegal acts.b. Consider the complexity of the transactions involved.c. Consider the likelihood that the
The audit work performed by each assistant should be reviewed to determine whether it was adequately performed and to evaluate whether thea. Auditor’s system of quality control has been maintained at a high level.b. Results are consistent with the conclusions to be presented in the auditor’s
The in-charge auditor most likely would have a supervisory responsibility to explain to the staff assistantsa. That immaterial fraud is not to be reported to the client’s audit committee.b. How the results of various auditing procedures performed by the assistants should be evaluated.c. What
Which of the following nonfinancial information would an auditor most likely consider in performing analytical procedures during the planning phase of an audit?a. Turnover of personnel in the accounting department.b. Objectivity of audit committee members.c. Square footage of selling space.d.
The objective of performing analytical procedures in planning an audit is to identify the existence ofa. Unusual transactions and events.b. Illegal acts that went undetected because of internal control weaknesses.c. Related-party transactions.d. Recorded transactions that were not properly
Analytical procedures used in planning an audit should focus ona. Reducing the scope of tests of controls and substantive tests.b. Providing assurance that potential material misstatements will be identified.c. Enhancing the auditor’s understanding of the client’s business.d. Assessing the
Which of the following procedures would an auditor most likely perform in planning a financial statement audit?a. Inquiring of the client’s legal counsel concerning pending litigation.b. Comparing the financial statements to anticipated results.c. Examining computer generated exception reports to
A successor auditor should request the new client to authorize the predecessor auditor to allow a review of the predecessor’s Engagement letter Working papersa. Yes Yesb. Yes Noc. No Yesd. No No
In auditing the financial statements of Star Corp., Land discovered information leading Land to believe that Star’s prior year’s financial statements, which were audited by Tell, require substantial revisions. Under these circumstances, Land shoulda. Notify Star’s audit committee and
Ordinarily, the predecessor auditor permits the successor auditor to review the predecessor’s working paper analyses relating to Contingencies Balance sheet accountsa. Yes Yesb. Yes Noc. No Yesd. No No
Which of the following procedures would an auditor least likely perform while obtaining an understanding of a client in a financial statement audit?a. Coordinating the assistance of entity personnel in data preparation.b. Discussing matters that may affect the audit with firm personnel responsible
An auditor obtains knowledge about a new client’s business and its industry toa. Make constructive suggestions concerning improvements to the client’s internal control.b. Develop an attitude of professional skepticism concerning management’s financial statement assertions.c. Evaluate whether
On an audit engagement performed by a CPA firm with one office, at the minimum, knowledge of the relevant professional accounting and auditing standards should be held bya. The auditor with final responsibility for the audit.b. All professionals working upon the audit.c. All professionals working
To obtain an understanding of a continuing client’s business, an auditor most likely woulda. Perform tests of details of transactions and balances.b. Review prior year working papers and the permanent file for the client.c. Read current issues of specialized industry journals.d. Reevaluate the
The element of the audit planning process most likely to be agreed upon with the client before implementation of the audit strategy is the determination of thea. Evidence to be gathered to provide a sufficient basis for the auditor’s opinion.b. Procedures to be undertaken to discover litigation,
With respect to planning an audit, which of the following statements is always true?a. It is acceptable to perform a portion of the audit of a continuing audit client at interim dates.b. An engagement should not be accepted after the client’s year-end.c. An inventory count must be observed at
In designing written audit programs, an auditor should establish specific audit objectives that relate primarily to thea. Timing of audit procedures.b. Cost-benefit of gathering evidence.c. Selected audit techniques.d. Financial statement assertions.
Audit programs should be designed so thata. Most of the required procedures can be performed as interim work.b. Inherent risk is assessed at a sufficiently low level.c. The auditor can make constructive suggestions to management.d. The audit evidence gathered supports the auditor’s conclusions.
The audit program usually cannot be finalized until thea. Consideration of the entity’s internal control has been completed.b. Engagement letter has been signed by the auditor and the client.c. Reportable conditions have been communicated to the audit committee of the board of directors.d. Search
An auditor should design the written audit program so thata. All material transactions will be selected for substantive testing.b. Substantive tests prior to the balance sheet date will be minimized.c. The audit procedures selected will achieve specific audit objectives.d. Each account balance will
A CPA wishes to determine how various publicly held companies have complied with the disclosure requirements of a new financial accounting standard. Which of the following information sources would the CPA most likely consult for information?a. AICPA Codification of Statements on Auditing
Which of the following is most likely to require special planning considerations related to asset valuation?a. Inventory is comprised of diamond rings.b. The client has recently purchased an expensive copy machine.c. Assets costing less than $250 are expensed even when the expected life exceeds one
Which of the following factors most likely would influence an auditor’s determination of the auditability of an entity’s financial statements?a. The complexity of the accounting system.b. The existence of related-party transactions.c. The adequacy of the accounting records.d. The operating
The auditor should document the understanding established with a client through a(n)a. Oral communication with the client.b. Written communication with the client.c. Written or oral communication with the client.d. Completely detailed audit plan.
Arrangements concerning which of the following are least likely to be included in engagement letter?a. A predecessor auditor.b. Fees and billing.c. CPA investment in client securities.d. Other services to be provided in addition to the audit.
An engagement letter should ordinarily include information on the objectives of the engagement and CPA Client Limitation of responsibilities responsibilities engagementa. Yes Yes Yesb. Yes No Yesc. Yes No Nod. No No No
Which of the following documentation is not required for an audit in accordance with generally accepted auditing standards?a. A written audit plan setting forth the procedures necessary to accomplish the audit’s objectives.b. An indication that the accounting records agree or reconcile with the
Which of the following statements would least likely appear in an auditor’s engagement letter?a. Fees for our services are based on our regular per diem rates, plus travel and other out-of-pocket expenses.b. During the course of our audit we may observe opportunities for economy in, or improved
During the initial planning phase of an audit, a CPA most likely woulda. Identify specific internal control activities that are likely to prevent fraud.b. Evaluate the reasonableness of the client’s accounting estimates.c. Discuss the timing of the audit procedures with the client’s
Which of the following matters is generally included in an auditor’s engagement letter?a. Management’s responsibility for the entity’s compliance with laws and regulations.b. The factors to be considered in setting preliminary judgments about materiality.c. Management’s vicarious liability
An auditor is required to establish an understanding with a client regarding the services to be performed for each engagement. This understanding generally includesa. Management’s responsibility for errors and the illegal activities of employees that may cause material misstatement.b. The
Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor’sa. Opinion of any subsequent events occurring since the predecessor’s audit report was issued.b. Understanding as to the reasons for the change of
Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regardinga. Disagreements the predecessor had with the client concerning auditing procedures and accounting principles.b. The predecessor’s evaluation of matters of continuing
Before accepting an engagement to audit a new client, a CPA is required to obtaina. An understanding of the prospective client’s industry and business.b. The prospective client’s signature to the engagement letter.c. A preliminary understanding of the prospective client’s control
Which of the following factors would most likely cause a CPA to decide not to accept a new audit engagement?a. The CPA’s lack of understanding of the prospective client’s internal auditor’s computer-assisted audit techniques.b. Management’s disregard of its responsibility to maintain an
Which of the following would be least likely to be considered an audit planning procedure?a. Use an engagement letter.b. Develop the overall audit strategy.c. Perform risk assessment.d. Develop the audit plan.
Under the Private Securities Litigation Reform Act of 1995, Baker, CPA, reported certain uncorrected illegal acts to Supermart’s board of directors. Baker believed that failure to take remedial action would warrant a qualified audit opinion because the illegal acts had a material effect on
An auditor who discovers that client employees have committed an illegal act that has a material effect on the client’s financial statements most likely would withdraw from the engagement ifa. The illegal act is a violation of generally accepted accounting principles.b. The client does not take
If specific information comes to an auditor’s attention that implies the existence of possible illegal acts that could have a material, but indirect effect on the financial statements, the auditor should nexta. Apply audit procedures specifically directed to ascertaining whether an illegal act
The most likely explanation why the auditor’s examination cannot reasonably be expected to bring all illegal acts by the client to the auditor’s attention is thata. Illegal acts are perpetrated by management override of internal control.b. Illegal acts by clients often relate to operating
During the annual audit of Ajax Corp., a publicly held company, Jones, CPA, a continuing auditor, determined that illegal political contributions had been made during each of the past seven years, including the year under audit. Jones notified the board of directors about the illegal contributions,
Which of the following relatively small misstatements most likely could have a material effect on an entity’s financial statements?a. An illegal payment to a foreign official that was not recorded.b. A piece of obsolete office equipment that was not retired.c. A petty cash fund disbursement that
Which of the following illegal acts should an audit be designed to obtain reasonable assurance of detecting?a. Securities purchased by relatives of management based on knowledge of inside information.b. Accrual and billing of an improper amount of revenue under government contracts.c. Violations of
An auditor who discovers that a client’s employees have paid small bribes to public officials most likely would withdraw from the engagement if thea. Client receives financial assistance from a federal government agency.b. Evidence that is necessary to prove that the illegal acts were committed
Which of the following factors would most likely heighten an auditor’s concern about the risk of fraudulent financial reporting?a. Large amounts of liquid assets that are easily convertible into cash.b. Low growth and profitability as compared to other entities in the same industry.c. Financial
Which of the following factors most likely would cause a CPA to not accept a new audit engagement?a. The prospective client has already completed its physical inventory count.b. The CPA lacks an understanding of the prospective client’s operation and industry.c. The CPA is unable to review the
An auditor who discovers that a client’s employees paid small bribes to municipal officials most likely would withdraw from the engagement ifa. The payments violated the client’s policies regarding the prevention of illegal acts.b. The client receives financial assistance from a federal
Which of the following is most likely to be presumed to represent fraud risk on an audit?a. Capitalization of repairs and maintenance into the property, plant, and equipment asset account.b. Improper revenue recognition.c. Improper interest expense accrual.d. Introduction of significant new
Which of the following is most likely to be considered a risk factor relating to fraudulent financial reporting?a. Domination of management by top executives.b. Large amounts of cash processed.c. Negative cash flows from operations.d. Small high-dollar inventory items.
What is an auditor’s responsibility who discovers management involved in what is financially immaterial fraud?a. Report the fraud to the audit committee.b. Report the fraud to the Public Company Oversight Board.c. Report the fraud to a level of management at least one below those involved in the
Individuals who commit fraud are ordinarily able to rationalize the act and also have an Incentive Opportunitya. Yes Yesb. Yes Noc. No Yesd. No No
Which of the following is least likely to be included in an auditor’s inquiry of management while obtaining information to identify the risks of material misstatement due to fraud?a. Are financial reporting operations controlled by and limited to one location?b. Does it have knowledge of fraud or
Which of the following is most likely to be an overall response to fraud risks identified in an audit?a. Supervise members of the audit team less closely and rely more upon judgment.b. Use less predictable audit procedures.c. Only use certified public accountants on the engagement.d. Place
Which of the following is least likely to be required on an audit?a. Test appropriateness of journal entries and adjustment.b. Review accounting estimates for biases.c. Evaluate the business rationale for significant unusual transactions.d. Make a legal determination of whether fraud has occurred.
Management’s attitude toward aggressive financial reporting and its emphasis on meeting projected profit goals most likely would significantly influence an entity’s control environment whena. External policies established by parties outside the entity affect its accounting practices.b.
At which stage(s) of the audit may fraud risk factors be identified?Obtaining Conducting Planning understanding fieldworka. Yes Yes Yesb. Yes Yes Noc. Yes No Nod. No Yes Yes
Which of the following factors or conditions is an auditor least likely to plan an audit to discover?a. Financial pressures affecting employees.b. High turnover of senior management.c. Inadequate monitoring of significant controls.d. Inability to generate positive cash flows from operations.
Which of the following statements is correct relating to the auditor’s consideration of fraud?a. The auditor’s interest in fraud consideration relates to fraudulent acts that cause a material misstatement of financial statements.b. A primary factor that distinguishes fraud from error is that
When the auditor believes a misstatement is or may be the result of fraud but that the effect of the misstatement is not material to the financial statements, which of the following steps is required?a. Consider the implications for other aspects of the audit.b. Resign from the audit.c. Commence a
Which of the following statements best describes the auditor’s responsibility to detect conditions relating to financial stress of employees or adverse relationships between a company and its employees?a. The auditor is required to plan the audit to detect these conditions on all audits.b. These
Which of the following most accurately summarizes what is meant by the term “material misstatement?”a. Fraud and direct-effect illegal acts.b. Fraud involving senior management and material fraud.c. Material error, material fraud, and certain illegal acts.d. Material error and material illegal
Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude ofa. Objective judgment.b. Independent integrity.c. Professional skepticism.d. Impartial conservatism.
What assurance does the auditor provide that misstatements due to errors, fraud, and direct effect illegal acts that are material to the financial statements will be detected?Direct effect Errors Fraud illegal actsa. Limited Negative Limitedb. Limited Limited Reasonablec. Reasonable Limited
Under Statements on Auditing Standards, which of the following would be classified as an error?a. Misappropriation of assets for the benefit of management.b. Misinterpretation by management of facts that existed when the financial statements were prepared.c. Preparation of records by employees to
Disclosure of fraud to parties other than a client’s senior management and its audit committee or board of directors ordinarily is not part of an auditor’s responsibility.However, to which of the following outside parties may a duty to disclose fraud exist?To the SEC when the client reports an
Which of the following statements reflects an auditor’s responsibility for detecting misstatements due to errors and fraud?a. An auditor is responsible for detecting employee errors and simple fraud, but not for discovering fraud involving employee collusion or management override.b. An auditor
Which of the following characteristics most likely would heighten an auditor’s concern about the risk of intentional manipulation of financial statements?a. Turnover of senior accounting personnel is low.b. Insiders recently purchased additional shares of the entity’s stock.c. Management places
Which of the following is most likely to be an example of fraud?a. Defalcations occurring due to invalid electronic approvals.b. Mistakes in the application of accounting principles.c. Mistakes in processing data.d. Unreasonable accounting estimates arising from oversight.
Which of the following is most likely to be a response to the auditor’s assessment that the risk of material misstatement due to fraud for the existence of inventory is high?a. Observe test counts of inventory at certain locations on an unannounced basis.b. Perform analytical procedures rather
Which of the following conditions identified during fieldwork of an audit is most likely to affect the auditor’s assessment of the risk of misstatement due to fraud?a. Checks for significant amounts outstanding at year-end.b. Computer generated documents.c. Missing documents.d. Year-end adjusting
When considering fraud risk factors relating to management’s characteristics, which of the following is least likely to indicate a risk of possible misstatement due to fraud?a. Failure to correct known reportable conditions on a timely basis.b. Nonfinancial management’s preoccupation with the
The most difficult type of misstatement to detect is fraud based ona. The overrecording of transactions.b. The nonrecording of transactions.c. Recorded transactions in subsidiaries.d. Related-party receivables.
An auditor is unable to obtain absolute assurance that misstatements due to fraud will be detected for all of the following excepta. Employee collusion.b. Falsified documentation.c. Need to apply professional judgment in evaluating fraud risk factors.d. Professional skepticism.
Audits of financial statements are designed to obtain assurance of detecting misstatement due to Fraudulent Misappropriation Errors financial reporting of assetsa. Yes Yes Yesb. Yes Yes Noc. Yes No Yesd. No Yes No
When performing a financial statement audit, auditors are required to explicitly assess the risk of material misstatement due toa. Errors.b. Fraud.c. Illegal acts.d. Business risk.
Which of the following is correct concerning requirements about auditor communications about fraud?a. Fraud that involves senior management should be reported directly to the audit committee regardless of the amount involved.b. Fraud with a material effect on the financial statements should be
Which of the following best describes what is meant by the term “fraud risk factor?”a. Factors whose presence indicates that the risk of fraud is high.b. Factors whose presence often have been observed in circumstances where frauds have occurred.c. Factors whose presence requires modification
Which of the following is an example of fraudulent financial reporting?a. Company management changes inventory count tags and overstates ending inventory, while understating cost of goods sold.b. The treasurer diverts customer payments to his personal due, concealing his actions by debiting an
Professional skepticism requires that an auditor assume that management isa. Honest, in the absence of fraud risk factors.b. Dishonest until completion of audit tests.c. Neither honest nor dishonest.d. Offering reasonable assurance of honesty.
An attitude that includes a questioning mind and a critical assessment of audit evidence is referred to asa. Due professional care.b. Professional skepticism.c. Reasonable assurance.d. Supervision.
When issuing an unqualified opinion, the auditor who evaluates the audit findings should be satisfied that thea. Amount of known misstatement is documented in the management representation letter.b. Estimate of the total likely misstatement is less than a material amount.c. Amount of known
Holding other planning considerations equal, a decrease in the amount of misstatement in a class of transactions that an auditor could tolerate most likely would cause the auditor toa. Apply the planned substantive tests prior to the balance sheet date.b. Perform the planned auditing procedures
Which of the following would an auditor most likely use in determining the auditor’s preliminary judgment about materiality?a. The results of the initial assessment of control risk.b. The anticipated sample size for planned substantive tests.c. The entity’s financial statements of the prior
In considering materiality for planning purposes, an auditor believes that misstatements aggregating $10,000 would have a material effect on an entity’s income statement, but that misstatements would have to aggregate$20,000 to materially affect the balance sheet. Ordinarily, it would be
Which of the following elements underlies the application of generally accepted auditing standards, particularly the standards of fieldwork and reporting?a. Internal control.b. Corroborating evidence.c. Quality control.d. Materiality and relative risk.
Which of the following statements is not correct about materiality?a. The concept of materiality recognizes that some matters are important for fair presentation of financial statements in conformity with GAAP, while other matters are not important.b. An auditor considers materiality for planning
Which of the following would an auditor most likely use in determining the auditor’s preliminary judgment about materiality?a. The anticipated sample size of the planned substantive tests.b. The entity’s annualized interim financial statements.c. The results of the internal control
Relationship between control risk and detection risk is ordinarilya. Parallel.b. Inverse.c. Direct.d. Equal.

Showing 4400 - 4500 of 4678

First
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47

Step by Step Answers

Services

Sitemap
Fun
Definitions
Become Tutor
Used Textbooks
Study Help Categories
Recent Questions
Expert Questions
Campus Wear
Sell Your Books

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship
Online Quiz
Give Feedback, Get Rewards

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Student Discount
Campus Ambassador

Secure Payment

Download Our App

© 2026 SolutionInn. All Rights Reserved