1.
| Which of the following is not a part of the role of internal auditors? |
| Assisting the external auditors. |
| Providing reports on the reliability of financial statements to investors and creditors. |
2.
| Which of the following would be considered an assurance service engagement? |
| I. | Expressing an opinion about the reliability of an entitys financial statements. |
| II. | Reviewing and commenting on an entity-prepared business plan. |
3.
| Which of the following best places the events of the last decade in proper sequence? |
| Increased consulting services to auditees, Enron and other scandals, Sarbanes-Oxley Act, prohibition of most consulting work for auditees, establishment of PCAOB. |
| Increased consulting services to auditees, Sarbanes-Oxley Act, Enron and other scandals, prohibition of most consulting work for auditees, establishment of PCAOB. |
| Enron and other scandals, Sarbanes-Oxley Act, increased consulting services to auditees, prohibition of most consulting work for auditees, establishment of PCAOB. |
| Sarbanes-Oxley Act, increased consulting services to auditees, Enron and other scandals, prohibition of most consulting work for auditees, establishment of PCAOB. |
4.
| Which of the following statements best describes managements and the external auditors respective levels of responsibility for a public companys financial statements? |
| Neither management nor the external auditor has significant responsibility for the fairness of the entitys financial statements in accordance with GAAP. |
| Management and the external auditor share equal responsibility for the fairness of the entitys financial statements in accordance with GAAP. |
| Management has the primary responsibility to ensure that the companys financial statements are prepared in accordance with GAAP, and the auditor provides a guarantee that the statements are free of material misstatement. |
| Management has the primary responsibility to ensure that the companys financial statements are prepared in accordance with GAAP, and the auditor provides reasonable assurance that the statements are free of material misstatement. |
5.
| The Public Company Accounting Oversight Board |
| Is a quasi-governmental organization that has a policy to ignore public comment and input in the process of setting auditing standards. |
| Is a quasi-governmental organization that has legal authority to set accounting standards for public companies. |
| Is a quasi-governmental organization that is independent of the SEC in setting auditing standards. |
| Is a quasi-governmental organization that has legal authority to set auditing standards for audits of public companies. |
6.
| Which of the following is correct regarding the types of audits over which the ASB and the PCAOB, respectively, have standard-setting authority in the United States? |
| Public company audits | | Nonpublic company audits |
| Public company audits | | Public company audits |
| Nonpublic company audits | | Public company audits |
| Nonpublic company audits | | Nonpublic company audits |
7.
| Which of the following best describes the general character of the three generally accepted auditing standards classified as standards of field work? |
| The need to maintain an independence of mental attitude in all matters relating to the audit. |
| Criteria for the content of the auditors report on financial statements and related footnote disclosures. |
| Criteria for audit planning and evidence gathering. |
The competence, independence, and professional care of persons performing the audit. |
8.Who bears ultimate responsibility for the financial statements? A. Management of the organization, equally with the external auditor that audits the statements. B. Management and the shareholders of the organization. C. The external auditor that audits the statements. D. Management of the organization.
9.The three PCAOB general standards are concerned with A. Adequate training and proficiency of the auditor, proper planning and supervision, and due professional care. B. Adequate training and independence. C. Due professional care. D. Independence, adequate training and due professional care.
