1.A CPA firm is reasonably assured of meeting its responsibility to provide services that conform with professional standards by

a.Adhering to generally accepted standards.

b.Having an appropriate system of quality control.

c.Joining professional societies that enforce ethical conduct.

d.none of them

2.The best statement of the responsibility of the auditor with respect to an audited financial statement is:

a.The audit of the financial statements relieves management of its responsibilities

b.The auditor's responsibility is confined to his expression of opinion about the audited financial statements.

c.The responsibility over the financial statements rests with the management and the auditor assumes responsibility with respect to the notes of financial statements.

d.The auditor is responsible only to his unqualified opinion but not for any other type of opinion.

3.The primary factor to be considered in determining the extent of supervision needed by an assistant is the assistant's

a.Willingness to exercise due care

b.Professional certification

c.Competence

d.Independence

4.Auditing is based on the assumption that financial data and statement are*

a.in conformity with GAAP

b.verifiable

c.presented fairly

d.consistently applied

5.The primary responsibility for the adequacy of disclosure in the financial statements of a publicly held company rests with the

a.Partner assigned to the audit engagement

b.Management of the company.

c.Auditor in charge of the field work.

d.Securities and Exchange Commission

6.In determining the scope and nature of services to be performed in public practice, a CPA firm should:

a.Require independence for all services performed.

b.Determine that the performance of all services is consistent with the firm's members role as professionals.

c.Have in place internal control procedures.

d.Only perform accounting related services.

7.Maintaining or providing access to adequate reference libraries and other authoritative sources is a procedure that is most likely performed to comply with the policy of

a.Monitoring

b.Skills and competence

c.Consultation

d.Assignment

e.Option 5

8.If there is a significant difference of opinion between a senior auditor and an audit manager on an audit engagement, to whose attention should the senior auditor first bring the matter?

a.the managing partner of the firm

b.the engagement partner of the engagement

c.the practice advisor in the CPA affiliate office

d.another audit manager of the firm

9.A firm of CPAs may use policies and procedures such as notifying professional personnel as to the names of audit clients having publicly held securities and confirming periodically with such personnel that prohibited relations do not exist. This is done to achieve effective quality control in which of the following areas?

a.Acceptance and continuance of clients.

b.Human resources

c.Relevant ethical requirements.

d.Leadership responsibilities for quality within the firm.

10. The need for assurance services arises for all of the following reasons except:

a.Remoteness between a user and the organization.

b.Complexity of the organization's transactions.

c.Closeness between a user and the organization.

d.Potential bias of the organization in providing information.

11. The person responsible for the audit engagement and its performance, and for the auditor's report that is issued in behalf of the firm is the

a.Quality control reviewer

b.Engagement partner

c.Client's management

d.Those charged with governance

12. An audit independence issue might be raised by the auditor's participation in management advisory services engagements. Which of the following statement is most consistent with the profession's attitude toward this issue?

a.Information obtained as a result of a management advisory services engagement is confidential to that performance of the attest function.

b.The decision as to loss of independence must be made by the client based upon the facts of the particular case.

c.The auditor should not make management decisions for an audit client.

d.The auditor who is asked to review management decisions is also competent to make these decisions and can do so without loss independence.

13. Which of the following best describes why an independent auditors' reports on financial statements?

a.Independent auditors are likely to detect fraud.

b.Competing interests may exist between management and the users of the statements.

c.Misstated account balances are generally corrected by an independent audit.

d.Ineffective internal controls may exist.

14. _____ states that audit firm should implement policies and procedures designed to ensure that all audits are conducted in accordance with PSAs.

a.PSA 120

b.PSA 220

c.PSA 200

d.Answer not given

15. The criteria for evaluating quantitative information vary. For example, in the audit of historical financial statements by CPA firms, the criteria are usually

a.Generally accepted auditing standards.

b.Generally accepted accounting principles.

c.Regulations of the Internal Revenue Service.

d.Regulations of the Securities and Exchange Commission.

16. The criteria for evaluating quantitative information vary. For example, in the audit of historical financial statements by CPA firms, the criteria are usually

e.Generally accepted auditing standards.

f.Generally accepted accounting principles.

g.Regulations of the Internal Revenue Service.

h.Regulations of the Securities and Exchange Commission.

17. To operate effectively, an internal auditor must be independent of*

a.The line functions of the organization.

b.The entity.

c.The employer-employee relationship which exists for other employees in the organization.

d.All of the above.

18. An audit designed to determine the extent to which the desired results of an activity established by the legislative or other authorizing body are being achieved is a (an)*

a.Economy audit.

b.Efficiency audit.

c.Program audit.

d.Financial related audit.