1. What was the AICPAs motivation to create their Special Committee on Assurance Services (better known as the Elliott Committee for its chairman) in the 1990s?

a. The Sarbanes-Oxley Act severely limited consulting opportunities for audit firms.

b. There was increasing perception that audited financial statements were becoming less relevant to business and investment decision-making.

c. Tax practitioners were not required to be CPAs to prepare tax returns.

d. The number of students choosing to take the CPA was declining.

e. Audit fees were steadily increasing so fewer companies were choosing to be audited.

2. Who issues the auditing standards that are applicable to entities required to have an integrated audit?

a. International Federation of Accountants.

b. Auditing Standards Board.

c. U.S. Government Accountability Office.

d. Securities and Exchange Commission.

e. Public Company Accounting Oversight Board.

3. Which of the following best represents the relationships among auditing, attestation, and assurance services?

a. Attestation is a type of auditing service.

b. Assurance is a type of attestation service.

c. Assurance is a type of auditing service.

d. Auditing is a type of attestation service.

e. None of the above.

4. For what primary reason is the auditor required to obtain an understanding of the audit entity and its environment, including internal control?

a. To establish trust with senior management and those charged with governance.

b. To plan the audit and determine the nature, timing, and extent of audit procedures to be performed.

c. To identify opportunities to recommend an audit firms consulting services.

d. To set audit risk at an appropriately high level.

e. To determine the audit fee to be included in the engagement letter.

5. Who issues the auditing standards that are applicable to audits of governmental entities?

a. International Auditing and Assurance Standards Board (IAASB).

b. Federal Accounting Standards Advisory Board (FASAB).

c. Governmental Accounting Standards Board (GASB).

d. U.S. Government Accountability Office (GAO).

e. Auditing Standards Board.

6. An IRS audit that whether a taxpayer has prepared a tax return in accordance with the Internal Revenue Code and applicable regulations is best characterized as a (an)?

1. Financial statement audit.
2. Operational audit.
3. Compliance audit.
4. Forensic audit.
5. Really bad day!

7. Which statement best describes the primary purpose associated with operational audits?

a. To evaluate the efficiency and effectiveness of an entitys business processes.

b. To determine whether an entity is adhering to applicable laws and regulations.

c. To enhance the reliability of financial information provided to external parties.

d. To determine whether there is fraudulent activity within the entity.

e. To obtain evidence as to the operating effectiveness of the entitys internal controls.

8. Who is the current president of the American Institute of CPAs?

a. Robert K. Elliott

b. Olivia Kirtley

c. Barry Melancon

d. Robert Mednick

e. Balaji Rajagopalan

9. The meaning of the term Generally Accepted Auditing Standards, as now used by the American Institute of CPAs in light of the clarified auditing standards, is best described as

1. Ten specific criteria organized as General Standards, Fieldwork Standards, and Reporting Standards.
2. The criteria used to evaluate the fairness of the financial statements being audited.
3. Procedures to be performed by the auditor for the purpose of gathering evidence to provide a reasonable basis for the auditors opinion.
4. Pronouncements called "Statements on Auditing Standards" issued by the AICPAs designated standard-setting body.
5. The policies and procedures that provide reasonable assurance that the firm and its personnel comply with professional, legal, and regulatory requirements.