1. 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 operations and industry;c. The CPA is unable the review the predecessor auditor's working papers;d. The prospective client is unwilling to make all financial records available to the CPA.;2. The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to;a. Enable the CPA firm to attest to the reliability of the client;b. Satisfy the CPA firm's duty to the public concerning the acceptance of new clients. Which of the following most likely would be the result of ineffective internal control policies;c. Minimize the likelihood of association with clients whose management lacks integrity;d. Anticipate before performing any field work whether an unqualified opinion can be expressed.;3. Which of the following procedures would an auditor most likely include in the planning phase of a financial statement audit?;a. Obtain an understanding of the entity's risk assessment process;b. Identify specific internal control activities designed to prevent fraud;c. Evaluate the reasonableness of the entity's accounting estimates;d. Perform cutoff tests of the entity's sales and purchases.;4. A successor auditor most likely would make specific inquiries of the predecessor auditor regarding;a. Specialized accounting principles of the client's industry;b. The competency of the client's internal audit staff;c. The uncertainty inherent in applying sampling procedures;d. Disagreements with management as to auditing procedures;5. In developing a preliminary audit strategy, an auditor should consider;a. Whether the allowance for sampling risk exceeds the achieved upper precision limit;b. Findings from substantive tests performed at interim dates;c. Whether the inquiry of the client's attorney identifies any litigation, claims, or assessments not disclosed in the financial statements.;d. The planned assessed level of control risk.;6. 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 accordance with GAAP, while other matters are not important;b. An auditor considers materiality for planning purposes in terms of the largest aggregate level of misstatements that could be material to any one of the financial statements;c. An auditor's consideration of materiality is influences by the auditor's perception of the needs of a reasonable person who will rely on the financial statements;d. Materiality judgments are made in light of surrounding circumstances and necessarily involve both quantitative and qualitative judgments.;7. The audit program usually cannot be finalized until the;a. Consideration of the entity's internal control has been completed;b. Engagement letter has been signed by the auditor and the client;c. Search for unrecorded liabilities has been performed and documented;d. reportable conditions have been communicated to the audit committee of the board of directors.;8. Because an audit in accordance with generally accepted auditing standards is influenced by the possibility of material misstatements, the auditor should conduct the audit with and attitude of;a. Objective judgment;b. Conservative advocacy;c. Professional responsiveness;d. Professional skepticism;9. 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 when;a. External policies established by parties outside the entity affect its accounting practices;b. Management is dominated by one individual who is also a shareholder;c. Internal auditors have direct access to the board of directors and the entity's management;d. The audit committee is active in overseeing the entity's financial reporting policies.;10.Which of the following auditor concerns most likely could be so serious that the auditor concludes that a financial statement audit cannot be conducted?;a. The entity has no formal written code of conduct;b. The integrity of the entity's management is suspect;c. Procedures requiring segregation of duties are subject to management override;d. Management fails to modify prescribed controls for changes in condition.
Paper#27139 | Written in 18-Jul-2015Price : $43