1.To ensure that employees remain independent, an audit firm should _______.

A.ask employees to sign a form confirming that they do not have an investment in a company that they are auditing

B.include a section in the code of conduct indicating that the employees should not invite their client to dinner

C.prohibit an employee from the Toronto office to have an investment in a company audited by the Hong Kong branch of the PA firm

D.refuse an audit where the cousin of a staff member works in the marketing department

2. Audit committees of the board of directors are mandatory for all public companies. All of the following are responsibilities of the audit committee except _______.

A.responsibility for the internal controls of the organization

B.ensuring the independence of the external auditor

C.appointing the external auditor

D.approving audit-related fees and expenses

3. Which of the following statements about professional skepticism is true?

A.Professional skepticism is not required for new audit clients.

B.Audit data analytics eliminates the need for auditors to apply professional skepticism.

C.Professional skepticism causes auditors to demand a higher level of evidence and documentation for high-risk material accounts that have fraud indicators present.

D.Professional skepticism involves maintaining a trusting mind.

4. Professional accounting bodies are self-regulating, which may cause members of the public to perceive the disciplinary process followed by CPAs as not being stringent. The following steps can be taken to increase public confidence, except _______.

A.releasing information about disciplinary hearings only when permitted by the Freedom of Information and Protection of Privacy (FOIP) Act

B.making information pertaining to disciplinary proceedings publicly available

C.handling disciplinary hearings transparently.

D.appointing non-CPAs to disciplinary committees