1. Which of the following has primary responsibility for the fairness of the representations made in financial statements?

a. Clients management

b. Independent auditor

c. Audit committee

d. AICPA

2. The most important benefit of having an annual audit by a public accounting firm is to:

a. provides assurance to investors and other outsiders that the financial statements are reliable.

b. enables officers and directors to avoid personal responsibility for any misstatements in the financial statements.

c. meets the requirements of government agencies

d. provides assurance that illegal acts, if any exist, will be brought to light.

3. Which of these organizations has the responsibility for standards for nonpublic companies?

a. AICPA

b. SEC

c. FASB

d. PCAOB

4. Which of the following DID NOT precipitate (bring about) the passage of the Sarbanes-Oxley Act of 2002 to regulate public accounting firms?

a. disclosures related to accounting irregularities at Enron and WorldCom.

b. management had not been required to sign off on the financials and used not knowing as a defense

c. conviction of the accounting firm of Arthur Anderson

d. ethical scandals at the AICPA