1.

Accepting an engagement to apply agreed-upon procedures to a financial projection requires the practitioner to:

A)

Issue a report suitable for general use.

B)

Also perform an examination.

C)

Take responsibility for the sufficiency of the procedures to be applied.

D)

Determine that the statements include a summary of significant assumptions.

2.

The auditor's primary responsibility is:

A)

to attest to the fairness of the financial statements

B)

to issue the financial statements

C)

to prepare the financial statements

D)

to attest to the correctness of the financial statements

3.

Which of the following should a practitioner include in an agreed-upon procedures report?

A)

All findings from application of the agreed-upon procedures.

B)

Positive assurance about whether the subject matter is fairly stated based on the criteria.

C)

Negative assurance about whether the subject matter is fairly stated based on the criteria.

D)

The statement that "Nothing came to my attention that caused me to believe that the subject matter isnotpresented based on the criteria."

4.

An accountant's standard report on a compilation should state that the accountant

A)

Obtained an understanding of the accounting practices in the client's industry.

B)

Has not audited or reviewed the accompanying financial statements.

C)

Is not aware of any material modifications that should be made to the financial statements for them to conform with GAAP.

D)

Is not responsible for disclosing errors, fraud, or illegal acts.

5.

The primary purpose of the engagement letter is to:

A)

provide a written record of the auditor and client responsibilities concerning the audit

B)

inform management of the auditing procedures the auditor plans to use

C)

schedule the timing of the auditing procedures

D)

emphasize that the auditor's certification of the financial statements is for the client's use only

6.

Which of the following statements regarding fraud isnottrue?

A)

Criminal intent is what distinguishes fraud from error.

B)

Fraud resulting in material misstatement may not involve direct personal financial gain to the person(s) committing the fraud.

C)

Professional skepticism requires that an audit team begin an engagement with a conscious recognition of the possibility of material misstatement due to fraud.

D)

The Fraud Triangle consists of Incentive, Opportunity, and Rationalization.

7.

An accountant may accept an engagement to compile pro forma financial information (PFFI) of a nonissuer only if the

A)

Financial statements on which the PFFI is based were audited or reviewed.

B)

Accountant is independent.

C)

Historical income statement and balance sheet were audited.

D)

Report on the complete financial statement is included with the PFFI.

8.

According to Title II of the Sarbanes Oxley Act (SOX) of 2002, which of the following non-audit services isnotprohibited from being performed for an audit client by a registered public accounting firm?

A)

Internal audit services.

B)

Bookkeeping services.

C)

Tax services.

D)

Appraisal or valuation services.

9.

Independence isnotrequired on which of the following types of engagements?

A)

Agreed-upon procedures.

B)

Compilation.

C)

Review.

D)

Audit.

10.

Which of the following procedures is ordinarily performed by an accountant in a compilation engagement of a nonissuer?

A)

Obtaining written representations from management indicating that the compiled financial statements will not be used to obtain credit.

B)

Reading the financial statements to consider whether they are free of obvious mistakes in the application of accounting principles.

C)

Applying analytical procedures designed to corroborate management's assertions that are embodied in the financial statement components.

D)

Making inquiries of management about actions taken at meetings of the shareholders and the board of directors.

11.

Which of the following statements is a standard applicable to financial statement audits in accordance withGovernment Auditing Standards(the Yellow Book)?

A)

An auditor should assess whether the entity has reportable measures of economy and efficiency that are valid and reliable.

B)

An auditor should determine the extent to which the entity's programs achieve the desired results.

C)

An auditor should report recommendations for actions to correct problems and improve operations.

D)

An auditor should report on the scope of the auditor's testing of compliance with laws and regulations.

12.

In a compliance audit, the auditor's primary objective is to

A)

Make recommendations to management to help ensure compliance with laws and regulations.

B)

Provide assurance that all compliance requirements have been documented.

C)

Express an opinion whether the entity maintained compliance with applicable requirements.

D)

Help management identify all compliance requirements of the entity.

13.

Management's responses to inquiries can be corroborated by each of the following,except

A)

Observation of entity activities and operations.

B)

Preparation of the summary of unadjusted differences.

C)

Visits to the entity's premises and plant facilities.

D)

Inspection of documents and internal control manuals.

14.

A practitioner may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that

A)

The prospective financial statements also are examined.

B)

Use of the report is restricted to the specified parties.

C)

Limited assurance is expressed on the prospective financial statements taken as a whole.

D)

Responsibility for the sufficiency of the procedures performed is taken by the practitioner.

15.

The auditor's responsibilities under the Single Audit Act include

A)

Designating the cognizant agency.

B)

Expressing an opinion on internal control.

C)

Reporting on compliance with grant requirements.

D)

Submitting a data collection form.

16.

Which of the following statements concerning audit documentation isfalse?

A)

The form of audit documentation should be designed to meet the circumstances of a particular engagement.

B)

An auditor may support an opinion by other means in addition to audit documentation.

C)

Audit documentation should show that the auditor has obtained an understanding of internal control.

D)

Audit documentation is the property of the client.

17.

Which of the following procedures would an accountant be most likely to perform during an engagement to review the financial statements of a nonissuer (nonpublic entity)?

A)

Compare the financial statement actual expenses to budgeted expenses.

B)

Obtain written representation from management indicating its evaluation of the effectiveness of the entity's internal controls.

C)

Obtain an understanding of the client's segregation of duties regarding the recording and reconciling of financial information.

D)

Analyze all contracts with a potentially material effect on the financial records, such as purchase contracts for large capital expenditures.

18.

In an audit of compliance with requirements for a governmental program, a test of controls neednotbe performed if

A)

Substantive procedures alone do not provide sufficient appropriate evidence.

B)

It is required by a governmental audit requirement.

C)

The controls are expected to be operationally ineffective.

D)

They are not required by a governmental audit requirement (GAR).

19.

At the end of an attestation review, the practitioner's report

A)

Should express an opinion on the relevant written assertion or subject matter.

B)

May include an adverse conclusion.

C)

May be in writing or presented orally to the board of directors.

D)

Should state any assertions or be accompanied by such assertions.

20.

An objective of a performance audit is to determine whether an entity's

A)

Operational information is in accordance with generally accepted government auditing standards.

B)

Specific operating units are functioning economically and efficiently.

C)

Performance information is presented fairly.

D)

Financial statements present fairly the results of operations.

21.

When would itnotbe appropriate to apply analytical procedures in an audit of financial statements?

A)

Performing tests of controls.

B)

Performing substantive testing.

C)

Overall engagement review.|

D)

Planning the engagement.

22.

The auditor must obtain "sufficient, competent" evidential matter to support his opinion. "Competent" means:

A)

believable

B)

relevant

C)

written

D)

enough

23.

Which of the following characteristics or actions is not necessary for evidence to be useful to the auditor?

A)

Evidence must be convincing, beyond all doubt.

B)

Evidence must respond to the audit objective for which it's being gathered.

C)

Evidence must persuade the auditor that the audit objective has been met.

D)

Evidence must be evaluated in an unbiased manner by the auditor.

24.

In performing a financial statement audit in accordance withGovernment Auditing Standards, auditors are required to report on the entity's compliance with laws and regulations. This report should

A)

Describe the laws and regulations that the entity must comply with.

B)

Express an opinion on overall compliance with laws and regulations.

C)

Indicate that the auditors do not possess legal skills and cannot make legal judgments.

D)

Describe the scope of the auditor's testing of compliance.

25.

Which of the following types of audit evidence is the most persuasive?

A)

Client worksheets supporting cost allocations.

B)

Prenumbered client purchase order forms.

C)

Bank statements obtained from the client.

D)

Client representation letter.

26.

Wolf is auditing an entity's compliance with requirements governing a major federal program in accordance with the Single Audit Act. Wolf detected noncompliance with requirements that have a material effect on the program. Wolf's report on compliance should express

A)

No assurance on the compliance tests.

B)

A qualified or adverse opinion.

C)

Reasonable assurance on the compliance tests.

D)

An adverse opinion or a disclaimer of opinion.

27.

Which of the following is the responsibility of the auditor when performing an audit of a nonissuer?

A)

Expressing an opinion on internal control.

B)

Conducting the audit in accordance with the standards of the PCAOB.

C)

Obtaining reasonable assurance regarding fair presentation.

D)

Detecting material misstatements.

28.

If the auditor obtains satisfaction with respect to the accounts receivable balance by alternative procedures because it is impracticable to confirm accounts receivable, the auditor's report should be unmodified and could be expected to

A)

Disclose in the opinion paragraph that confirmation of accounts receivable was impracticable.

B)

Refer to a note that discloses the alternative procedures.

C)

Not mention the alternative procedures.

D)

Disclose that alternative procedures were used because of a management-imposed scope limitation.

29.

In an auditor's review of interim financial information (IFI), the auditor typically performs each of the followingexcept

A)

Reading the available minutes of the latest stockholders' meeting.

B)

Inquiring of the accounting department's management.

C)

Applying financial ratios to the interim financial information

D)

Obtaining corroborating external evidence.

30.

Which of the following types of engagements maynotbe undertaken by an accountant in connection with prospective financial statements?

A)

Review

B)

Agreed-upon procedures

C)

Compilation.

D)

Examination

31.

When other information accompanying audited financial statements contains a material inconsistency that management refuses to revise, the auditor may do each of the following,except

A)

Include an other-matter paragraph in the report.

B)

Withdraw from the engagement.

C)

Include an emphasis-of-matter paragraph in the report.

D)

Withhold the auditor's report.

32.

An accountant should not compile unaudited financial statements for management of a nonissuer unless, at a minimum, the accountant:

A)

Assists in adjusting the books of account and preparing the trial balance.

B)

Types or reproduces the financial statements.

C)

Applies analytical procedures to the financial statements.

D)

Complies with the Statements on Standards for Accounting and Review Services.

33.

The scope of audits of recipients of federal financial assistance in accordance with federal audit regulations varies. Which of the following elements do these audits have in common?

A)

The materiality levels are higher and are determined by the government entities that provide the federal financial assistance to the recipients.

B)

The auditor is required to disclose all situations and transactions that could be indicative of fraud, abuse, and noncompliance with laws and regulations to the federal inspector general.

C)

The accounts should be 100% verified by substantive tests because certain statistical sampling applications are not permitted.

D)

The auditor is required to document an understanding of internal control established to ensure compliance with the applicable laws and regulations.

34.

A review typically consists of inquiries and analytical procedures. An attestation review may not rely heavily on analytical procedures because the subject matter may be

A)

Less qualitative.

B)

Less subjective.

C)

More representative.

D)

Less quantitative.

35.

The risk of incorrect acceptance and the risk of overreliance relate to the

A)

Efficiency of the audit.

B)

Effectiveness of the audit.

C)

Tolerable misstatement.

D)

Preliminary estimates of materiality levels.

36.

When another auditor is involved in examining a portion of the financial statements, and the primary auditor decides to make no reference to the other auditor in the audit report,

A)

the auditor is accepting responsibility for the other auditor's work

B)

the auditor is issuing a shared opinion report

C)

the auditor is not responsible for the other auditor's work

D)

the auditor is not responsible for the other auditor's work

37.

The accuracy of information included in notes that accompany the audited financial statements of a company whose shares are traded on a stock exchange is the primary responsibility of the:

A)

Securities and Exchange Commission.

B)

Independent auditor.

C)

Company's management.

D)

Stock exchange officials.

38.

An examination differs from an audit because

A)

An objective of an examination is to obtain reasonable assurance.

B)

The engaging party is generally the responsible party.

C)

Use of the report is more likely to be restricted.

D)

An examination does not require a request for a written assertion from the responsible party.