1) The Sarbannes and Oxley Act:

a) Arises as a result of Enron and World Com's bankruptcy

b) Create the PCAOB (Public Company Oversight Board)

c) Dramatically changed the relationship between public corporations and their

Auditors.

d) All of the above

(2) When auditing accounting information, the primary interest is:

a) Determine if fraud has occurred

b) Determine whether taxable income has been correctly calculated.

c) Analyze financial information to ensure that it meets government requirements.

d) Determine whether the information recorded on the books adequately reflects the economic events that occurred during the accounting period.

3) Which of the following is not a General Standard?

a) Proper planning and supervision

b) Mental attitude of independence.

c) Proper training

d) Due to professional care.

4) Which of the following is not a Field Work Standard?

a) Proper planning and supervision.

b) Due professional care.

c) Study of the structure of internal controls.

d) Accumulation of sufficient and competent evidence.

5) An Unqualified Report with modified wording or explanatory paragraph shall be issued when:

a) There has been a change in accounting method that significantly affects financial statements.In everything else the financial statements have been prepared following the Generally Accepted Accounting Principles.

b) When the auditor, although issuing an Unqualified Report, wants to emphasize some aspect of the audit.

c) The (a) and the (b)

d) None of the above.

6) The following assertions are true except:

a) One of the three Field Work Standards says it must be exercised due to

professional care in the performance of the audit and preparation of the

report.

b) Standards of Reporting require the report to tell whether the states

were presented according to the Gennerally Accepted

Accounting Principles.

c) Quality Control are procedures used by CPA firms to

ensure that you consistently follow the Generally Accepted Auditing Standards.

d) None of the above.

7) Where knowledge of an error in the financial statements may affect the

external users, but in general the financial statements adequately reflect the financial situation of the auditee it is correct to issue a:

a) Qualified opinion

b) Unqualified opinion

c) Adverse opinion

d) Disclaimer

8) An Adverse Opinion is issued when:

a) Some parts of the financial statements are materially misstated or misleading.

b) If proper research is done, the financial statements will be found to be missteated or misleading.

c) The financial statements as a whole are so materially missteated or misleading that they do not represent the financial situation or outcome of the transactions and cash flow in accordance with the Generally Accepted Accounting Principles.

d) The audit firm is not independent.

9) A Disclaimer is issued when:

a) The auditor believes that some of the parts of the financial statements are not adequately prepared.

b) The auditor has not been able to verify that the financial statements adequately represent the financial situation of the auditee.

c) The auditor believes that some of the parts of the financial statements are not adequately prepared.

d) The auditor has determined that the financial statements have been adequately submitted.

10) When the auditor issues an Unqualified Report it is because:

a) You are satisfied that the financial statements adequately represent the financial situation of the company.

b) You do not know whether the financial statements adequately represent the financial situation of the company.

c) You do not believe that the financial statements adequately represent the financial situation of the company.

d) You are satisfied that the financial statements adequately represent the financial situation of the company except for a specific aspect.

11) The following assertion is true:

a) Consistent with the Sarbannes and Oxley Act the Securities and Exchange Commission (SEC) requires a one-year cooling-off period before an auditor who ceases working at a CPA firm can be employed by a CPA customer.

b) The SEC's independence rule requires a concurrent partner to be rotated after five years. Concurrent partner is one who is not involved in the work of the audit, but reviews the final work of the audit.

c) When reaching agreements on auditing, there is no need to set a fixed fee.

d) The (a) and (b)

12) Where an auditor issues a qualified opinion, it means that:

a) You do not know whether the financial statements adequately represent the financial situation of the auditee.

b) You are satisfied that the financial statements adequately represent the financial situation of the auditee with the exception of a specific item.

c) It does not believe that the financial statements adequately represent the audited financial situation.

d) You are satisfied that the financial statements adequately represent the financial situation of the auditee.

13) When there is Scope restriction, a:

a) Disclaimer opinion

b) Adverse opinion

c) Qualified opinion

d) Unqualified, qualified or disclaimer depending on the materiality of the effect

restriction.

14) Which of the following would be a violation of the Code of Professional Conduct

that requires objectivity?

a) The auditor believes that Receivable Accounts may be uncobrable, but accepts the Manager's opinion of the CPA firm without making an independent assessment.

b) In preparing the income contribution form, the CPA encourages your client to make a valid deduction.

c) Both (a) and (b).

d) None of the above.

15) Several months after issuing an Unqualified Report the auditor discovers that the financial statements were materially wrong.The customer's Chief Executive Officer agrees, but refuses to issue a correction and reminds the auditor that the confidentiality commitment prevents the CPA from disclosing

information.

a) The CEO is right.The auditor must keep the information confidential.

b) The CEO is wrong.The auditor is required to issue a revised and correct audit report even if the CEO does not review and correct the financial statements

c) The CEO is wrong.But since the report was already published, it's too late to correct it.

d) The CEO is right.But to be ethically correct, the auditor must violate the confidentiality rule and disclose the error.

16) The Code of Professional Conduct issued by the AICPA says that the CPA must

maintain integrity and objectivity.The term objectivity in the code

refers to the CPA's ability to:

a) Choose independently between alternatives to accounting and auditing principles.

b) Maintain an unbiased view on everything related to your professional performance

c) Distinguish independently between accounting practices that are acceptable and those that are not.

d) Do not give in to matters in the case of audit procedures.

17) An example of indirect ownership in a customer would be that one of the following

possession of actions in the client's signature:

a) A child of the auditor

b) The auditor's grandfather

c) The auditor's wife

d) None of the above.

18) The Code of Professional Conduct says that an AICPA member in practice

public information may not disclose confidential customer information without the permission of

this.The CPA would violate this rule if it discloses information without the consent of the

customer as a result of:

a) A subpoena

b) An order from the customer's majority shareholder

c) The (a) and the (b)

d) Delivery of Worksheets as part of a review of the AICPA Ethics Committee.

19) An AICPA member violates the Code of Professional Conduct when:

a) Charges a fixed fee for each type of service provided.

b) Retains customer records even though the customer asked to have them returned.

c) Disclose confidential information about the customer without your consent.

d) The (b) and the (c)

20) On January 2, 2017, Retail Auto Parts Company received a notification from its

main supplier indicating that cash would immediately raise the price of all

items by 10%.Retail immediately re-evaluated the value of its inventory to 31

December 2016 up 10%.Retail's inventory is a

significant portion of Total Assets.Retail's stock was significant for

Current Assets, but not for Total Assets or Net Income.Choose the

level of materiality and the appropriate type of report.

a) Intangible, Unqualified

b) Material, qualified

c) Highly material, Disclaimer

21) During an audit of a corporation's financial statements, the corporation was denied

auditor permission to examine the minutes of the meetings of the Board of Directors.

These minutes contain very important decisions.Choose the level of

materiality and the appropriate type of report.

a) Intangible, Unqualified

b) Material, qualified

c) Highly material, disclaimer

22) The following assertions are true:

a) Independence in fact exists when the auditor is able to maintain an attitude of impartiality and objectivity in relation to the audited client.

b) Independence of appearance is the result of the perception of external users.

c) If the auditor is in fact independent but external users understand that the results of the audit will not lose credibility.

d) All of the above.

23) The Sarbanes Oxley Act (SOA) requires that:

a) Be the Comptroller of the companies that sell their shares in the open market responsible for hiring, compensating and supervising the work of the auditors.

b) Wait a year before a retired auditor works in certain management positions of the clients assigned to him.

c) Customers assigned to the audit partner are rotated every year.

d) None of the above.

(24) Rule 101 of independence:

(a) Prohibits members of the profession from owning shares or other direct investments of their clients as this will affect the perception of external users in relation to the independence of auditors.

b) Prohibits indirect investments if the amount invested is immaterial to the auditor.

c) Also applies to spouses, consensual partners, dependents and grandparents.

d) All of the above.

25) An example of Operational Audit would be:

a) Assess whether the computerized payroll program is working effectively and efficiently.

b) Determine whether they met government environmental standards.

c) Determine whether the financial statements were prepared in accordance with GAAP.

d) Determine if the customer has a good quality control program.

26) One of the elements of quality control in a CPA firm is acceptance and

continuation of customers. One of the requirements of this element is:

a) All staff must be independent of fact and appearance.

(b) Policies and procedures should be established to promote the effective implementation of quality control measures.

c) Qualified personnel must be hired to do their job competently.

d) The risk of partnering with clients whose management is not integrated should be minimized.

27) The Scope paragraph states:

a) An audit involves conducting procedures to obtain evidence related to quantities and other information in the financial statements.

b) The auditor's conclusion is based on the audit's findings.

c) Which CPA signature carried out the audit.

d) That financial statements are the responsibility of management.

28) The following assertion is true:

a) When considering whether GAAP's deviation is Highly Material, it is necessary to assess the extent to which it affects different parts of the financial statements.

b) A deviation from GAAP is immaterial when knowledge of this error is considered unlikely to affect the decision of external users.

c) A disclaimer is issued when the amount of the error is high and it is determined that the auditor does not comply with the Code of Professional Conduct independence rule.

d) The (a) and (b)