21 Holding everything else constant, as the auditor's evaluation of materiality , the auditor is looking to obtain a more precise conclusion about the financial statements The precision of the audit will cause the auditor to perform more extensive audit procedures A decreases, increased B increases, increased C decreases, decreased D increases, decreased 22 Which of the following statements is true 1) Client acceptance or a continuance decision is the first stage of any audit 2) The competence issues influences client acceptance and retention decisions with respect to whether the accounting firm has the expertise to perform the services requested by the client A Neither B Both 1and 2 C 2 only D 1 only 23 The set of standards used in preparing the historical financial statements, such as GAAP or IFRS, is referred to as A A review of historical financial statements B Generally Accepted Auditing Standards (GAAS) C The applicable financial reporting framework D PCAOB Auditing Standards (AS) 24 Which component of the AICPA's Code of Professional Conduct requires that a member who departs from it shall have the burden of justifying the departure in a disciplinary hearing A Commitments B Interpretations C Standards D Principles 25 Assurance, attestation, and auditing are similar because all three represent a common process of A reviewing financial forecast, examining internal controls, and providing website security B compiling and reviewing historical financial statements and providing non financial information C taking information prepared by someone else and comparing that information to an established set of criteria D compiling historical financial statements and providing non financial information and web security 26 What is the typical means by which an auditor outlines the details of the engagement, and communicates this to the client's management A An audit plan B Audit working papers C Engagement letter D Risk assessment 27 When auditors determine that the financial statements of a private firm are presented fairly in accordance with the applicable financial reporting framework, they issue the standard report, which is often referred to as a report A qualified, clean B unqualified,modified C modified, unqualified D unmodified, clean 28 In an audit situation, which of the following risks can be reduced to zero A Inherent risk, control risk, and detection risk B Detection risk and inherent risk, but not control risk C Inherent risk, control risk, and detection risk D Neither detection risk, inherent risk, nor control risk 29 Which of the following is performed during the risk assessment phase A All of the above B Risk and materiality assessment C Substantive testing of transactions and accounts D Detailed tests of controls 30 What happens if an independence threat appears to be insurmountable A The audit firm should make certain that safeguards are put in place to limit or remove those threats B An audit firm should decline the offer to be the auditor of a prospective client or resign from the audit of an existing client C The audit firm should take the engagement and continue to make certain that safeguards are put in place to limit or remove those threats D The audit firm should contact the State Board of Accountancy so they can make a press release to discourage other accountants from taking the engagement

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21.Holding everything else constant, as the auditor's evaluation of materiality_______, the auditor is looking to obtain a more precise conclusion about the financial statements. The

21.Holding everything else constant, as the auditor's evaluation of materiality_______, the auditor is looking to obtain a more precise conclusion about the financial statements. The _______precision of the audit will cause the auditor to perform more extensive audit procedures.

	A.	decreases, increased
	B.	increases, increased
	C.	decreases, decreased
	D.	increases, decreased

22.Which of the following statements is true?

1) Client acceptance or a continuance decision is the first stage of any audit

2) The competence issues influences client acceptance and retention decisions with respect to whether the accounting firm has the expertise to perform the services requested by the client.

	A.	Neither
	B.	Both 1and 2
	C.	2 only
	D.	1 only

23.The set of standards used in preparing the historical financial statements, such as GAAP or IFRS, is referred to as ________.

	A.	A review of historical financial statements
	B.	Generally Accepted Auditing Standards (GAAS)
	C.	The applicable financial reporting framework
	D.	PCAOB Auditing Standards (AS)

24.Which component of the AICPA's Code of Professional Conduct requires that a member who departs from it shall have the burden of justifying the departure in a disciplinary hearing?

	A.	Commitments
	B.	Interpretations
	C.	Standards
	D.	Principles

25.Assurance, attestation, and auditing are similar because all three represent a common process of _______.

	A.	reviewing financial forecast, examining internal controls, and providing website security.
	B.	compiling and reviewing historical financial statements and providing non-financial information.
	C.	taking information prepared by someone else and comparing that information to an established set of criteria.
	D.	compiling historical financial statements and providing non-financial information and web security.

26.What is the typical means by which an auditor outlines the details of the engagement, and communicates this to the client's management?

	A.	An audit plan
	B.	Audit working papers
	C.	Engagement letter
	D.	Risk assessment

27.When auditors determine that the financial statements of a private firm are presented fairly in accordance with the applicable financial reporting framework, they issue the standard _______ report, which is often referred to as a "_______" report.

	A.	qualified, clean
	B.	unqualified,modified
	C.	modified, unqualified
	D.	unmodified, clean

28.In an audit situation, which of the following risks can be reduced to zero?

	A.	Inherent risk, control risk, and detection risk
	B.	Detection risk and inherent risk, but not control risk
	C.	Inherent risk, control risk, and detection risk
	D.	Neither detection risk, inherent risk, nor control risk

29.Which of the following is performed during the risk assessment phase?

	A.	All of the above
	B.	Risk and materiality assessment
	C.	Substantive testing of transactions and accounts
	D.	Detailed tests of controls

30.What happens if an independence threat appears to be insurmountable?

	A.	The audit firm should make certain that safeguards are put in place to limit or remove those threats.
	B.	An audit firm should decline the offer to be the auditor of a prospective client or resign from the audit of an existing client.
	C.	The audit firm should take the engagement and continue to make certain that safeguards are put in place to limit or remove those threats.
	D.	The audit firm should contact the State Board of Accountancy so they can make a press release to discourage other accountants from taking the engagement.