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Section 404 of the Sarbanes-Oxley Act requires public companies to have an external auditor attest to their internal control over financial reporting.

A) True
B) False

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The three requirements for becoming a CPA include all but which of the following?


A) Uniform CPA examination requirement
B) Educational requirements
C) Character requirements
D) Experience requirement

E) A) and D)
F) All of the above

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C

An auditor must be competent and have an independent mental attitude.

A) True
B) False

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________ risk reflects the possibility that the information upon which the business decision was made was inaccurate.


A) Client acceptance
B) Information
C) Business
D) Control

E) B) and C)
F) A) and B)

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B

An accountant:


A) must possess expertise in the accumulation of audit evidence.
B) must decide the number and types of items to test.
C) must have an understanding of the principles and rules that provide the basis for preparing the accounting information.
D) must be a CPA.

E) A) and B)
F) C) and D)

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Three common types of attestation services are:


A) audits of historical financial statements, reviews of historical financial statements, and audits of internal control over financial reporting.
B) audits of historical financial information, verifications of historical financial information, and attestations regarding internal controls.
C) reviews of historical financial information, verifications of future financial information, and attestations regarding internal controls.
D) audits of historical financial information, reviews of controls related to investments, and verifications of historical financial information.

E) C) and D)
F) A) and B)

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Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n) :


A) accounting and bookkeeping service.
B) attestation service.
C) assurance service.
D) tax service.

E) C) and D)
F) All of the above

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The Sarbanes-Oxley Act establishes standards related to the audits of privately held companies.

A) True
B) False

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To perform an audit,it is necessary for the information to be in a verifiable form and there must be some criteria by which the auditor can evaluate the information.Detail the information and criteria that would be used when: (A)an independent CPA firm audits a company's historical financial statements. (B)an Internal Revenue Service auditor audits that same company's tax return. (C)an internal auditor performs an operational audit to evaluate whether the company's computerized payroll processing system is operating efficiently and effectively.

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(A)The information used by a CPA firm in...

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Match the engagement described to the (A)type of audit and (B)auditor that would perform the engagement.Each engagement will have an answer from List-A and List-B.An answer can be used once,more than once,or not at all. Match the engagement described to the (A)type of audit and (B)auditor that would perform the engagement.Each engagement will have an answer from List-A and List-B.An answer can be used once,more than once,or not at all. Engagement: 1.Evaluate a company's payroll processing for economy. 2.Evaluate/determine if bank covenants are being met. 3.Evaluate financial statements that are to be submitted to a bank. 4.Evaluate the promptness of materials inspection in a manufacturer's receiving department. 5.Determine if Medicare reimbursements are in accordance with the Healthcare Financing Administration (HCFA). 6.Determine if the tax return of a multinational corporation is in accordance with the tax code. 7.Determine if a public school is properly applying their reimbursement for the payment-in-kind program. 8.Determine the effectiveness of a Department of Defense project. Engagement: 1.Evaluate a company's payroll processing for economy. 2.Evaluate/determine if bank covenants are being met. 3.Evaluate financial statements that are to be submitted to a bank. 4.Evaluate the promptness of materials inspection in a manufacturer's receiving department. 5.Determine if Medicare reimbursements are in accordance with the Healthcare Financing Administration (HCFA). 6.Determine if the tax return of a multinational corporation is in accordance with the tax code. 7.Determine if a public school is properly applying their reimbursement for the payment-in-kind program. 8.Determine the effectiveness of a Department of Defense project.

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1.c,d
2.b,...

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The trait that distinguishes auditors from accountants is the:


A) auditor's ability to interpret accounting principles generally accepted in the United States.
B) auditor's education beyond the Bachelor's degree.
C) auditor's ability to interpret FASB Statements.
D) auditor's accumulation and interpretation of evidence related to a company's financial statements.

E) B) and C)
F) A) and B)

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Which of the following are required to have a written report regarding the assertion of another party?


A) Which of the following are required to have a written report regarding the assertion of another party? A) B) C) D)
B) Which of the following are required to have a written report regarding the assertion of another party? A) B) C) D)
C) Which of the following are required to have a written report regarding the assertion of another party? A) B) C) D)
D) Which of the following are required to have a written report regarding the assertion of another party? A) B) C) D)

E) A) and C)
F) None of the above

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One objective of an operational audit is to:


A) determine whether the financial statements fairly present the entity's operations.
B) determine if the auditee is in compliance with GAAP.
C) make recommendations for improving performance.
D) report on the entity's relative success in attaining profit maximization.

E) A) and D)
F) All of the above

Correct Answer

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The use of the Certified Public Accountant title is regulated by:


A) the federal government.
B) state law through a licensing department or agency of each state.
C) the American Institute of Certified Public Accountants through the licensing departments of the tax and auditing committees.
D) the Securities and Exchange Commission.

E) A) and B)
F) All of the above

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B

Explain what is meant by information risk,and list the four causes of this risk.

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Information risk reflects the possibilit...

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The most common way for users to obtain reliable information is to:


A) have an internal audit.
B) have an independent audit.
C) verify all information individually.
D) verify the information with management.

E) B) and C)
F) B) and D)

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Which one of the following is more difficult to evaluate objectively?


A) Presentation of financial statements in accordance with generally accepted accounting principles
B) Compliance with government regulations
C) Efficiency and effectiveness of operations
D) All three of the above are equally difficult.

E) A) and C)
F) A) and B)

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The Sarbanes-Oxley Act is widely viewed as having ushered in sweeping changes to auditing and financial reporting.

A) True
B) False

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What are the five categories of attestation services?

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The five categories of attestation servi...

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Discuss the similarities and differences between the roles of independent auditors,GAO auditors,internal revenue agents,and internal auditors.

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The roles of all four types of auditors ...

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