1. Which of the following expressions best describes the primary purpose of the auditing standards (Statements on Auditing Standards)? Why are

a. guidelines that establish audit procedures that apply to various situations.

b. they are of an interpretive nature, so they serve as a guide for auditors.

c. imposed by the Code of Professional Conduct.

d. procedures that reduce inconsistencies when issuing an opinion.

2. Which of the following expressions related to the legal responsibility of the CPA is correct? CPAs are (can)

a. Escape all legal and personal liability by incorporating as a limited liability corporation (LLC).

b. liable to third parties for ordinary negligence in all cases of claim.

c. guilty until they prove that they carried out their work in good faith.

d. normally liable to their clients for both ordinary and gross negligence.

3. Under the quality control system established by a CPA firm, the rule that requires said firm to keep a record of any of its auditors who have previously been employed by one of the clients, is known as

a. professional relations

b. Adequate performance

c. monitoring

d. Ethical provisions