6. An auditor includes a separate paragraph in an otherwise modified financial statement audit report to emphasize that the entity being reported upon had significant transactions with related parties. The inclusion of this separate paragraph a. Is appropriate and would not negate the unmodified opinion b. is considered an except for qualification of the opinion c Violates generally accepted auditing standards if this information is already disclosed in footnotes to the financial statements d. Necessitates a revision of the opinion paragraph to include the phrase with the foregoing explanation." 7. Khaled, CPA, was engaged to audit the financial statements of Sharjah Company, a private company, after its fiscal year had ended. Khaled neither observed the inventory count nor confirmed the receivables by direct communication with debtors but was satisfied that both were fairly stated after applying appropriate alternative procedures. Khaled's financial statement audit report most likely contained an) a. Qualified opinion. Disclaimer of opinion. c. Unmodified opinion d. Unmodified opinion with an emphasis-of-matter paragraph 8. Auditing involves the confirmation that transactions and events have been recorded in the proper accounts a. Classification b. Cutoff c. Presentation d. Rights and obligations One predam the 10. A violation of the profession's the tandardet e t u a a) Purchases another CPA' fees aceruing from entities over a three year period by Receives a percentage of the amount invested by the OP's shelter with the entities' knowledge and approval c) Has a public accounting practice and is president and we had that engages in data processing services for the The CPA enters this entities to the data processing company Forms an association-nota legally binding partnersho-with two other wolle practitioners and calls the association Adams, Betts & Associates END OF SECTION ONE 4. For what primary purpose does the auditor obtain an understanding of the entity and its environment? a. To determine the audit fee. b. To decide which facts about the entity to include in the audit report. c. To plan the audit and determine the nature, timing, and extent of audit procedures to be performed. d. To limit audit risk to an appropriately high level. 5. Auditing involves the confirmation that all transactions and events that should have been recorded have been recorded, and all related disclosures that should have been included in the financial statements have been included. a. Occurrence b. Completeness c. Authorization d. Accuracy 1. Which of the following statements best describes managements and the externe auditor's respective levels of responsibility for a public company's financial statements? a. Management and the external auditor share equal responsibility for the finess the entity's financial statements in accordance with GAAP. b. Neither management nor the external auditor has significant responsibility for fairness of the entity's financial statements in accordance with GAAP. c. Management has the primary responsibility to ensure that the company's finan statements are prepared in accordance with GAAP, and the auditor provides reasonable assurance that the statements are free of material misstatement. d. Management has the primary responsibility to ensure that the company's fir statements are prepared in accordance with GAAP, and the auditor provides a guarantee that the statements are free of material misstatement. 2. An independent audit adds value to the communication of financial informatie because the audit a. Confirms the exact accuracy of management's financial representations. b. Provides credibility to the financial statements. c. Guarantees that financial data are fairly presented. d. Assures the readers of financial statements that any fraudulent activity corrected 6. An auditor includes a separate paragraph in an otherwise modified financial statement audit report to emphasize that the entity being reported upon had significant transactions with related parties. The inclusion of this separate paragraph a. Is appropriate and would not negate the unmodified opinion b. is considered an except for qualification of the opinion c Violates generally accepted auditing standards if this information is already disclosed in footnotes to the financial statements d. Necessitates a revision of the opinion paragraph to include the phrase with the foregoing explanation." 7. Khaled, CPA, was engaged to audit the financial statements of Sharjah Company, a private company, after its fiscal year had ended. Khaled neither observed the inventory count nor confirmed the receivables by direct communication with debtors but was satisfied that both were fairly stated after applying appropriate alternative procedures. Khaled's financial statement audit report most likely contained an) a. Qualified opinion. Disclaimer of opinion. c. Unmodified opinion d. Unmodified opinion with an emphasis-of-matter paragraph 8. Auditing involves the confirmation that transactions and events have been recorded in the proper accounts a. Classification b. Cutoff c. Presentation d. Rights and obligations One predam the 10. A violation of the profession's the tandardet e t u a a) Purchases another CPA' fees aceruing from entities over a three year period by Receives a percentage of the amount invested by the OP's shelter with the entities' knowledge and approval c) Has a public accounting practice and is president and we had that engages in data processing services for the The CPA enters this entities to the data processing company Forms an association-nota legally binding partnersho-with two other wolle practitioners and calls the association Adams, Betts & Associates END OF SECTION ONE 4. For what primary purpose does the auditor obtain an understanding of the entity and its environment? a. To determine the audit fee. b. To decide which facts about the entity to include in the audit report. c. To plan the audit and determine the nature, timing, and extent of audit procedures to be performed. d. To limit audit risk to an appropriately high level. 5. Auditing involves the confirmation that all transactions and events that should have been recorded have been recorded, and all related disclosures that should have been included in the financial statements have been included. a. Occurrence b. Completeness c. Authorization d. Accuracy 1. Which of the following statements best describes managements and the externe auditor's respective levels of responsibility for a public company's financial statements? a. Management and the external auditor share equal responsibility for the finess the entity's financial statements in accordance with GAAP. b. Neither management nor the external auditor has significant responsibility for fairness of the entity's financial statements in accordance with GAAP. c. Management has the primary responsibility to ensure that the company's finan statements are prepared in accordance with GAAP, and the auditor provides reasonable assurance that the statements are free of material misstatement. d. Management has the primary responsibility to ensure that the company's fir statements are prepared in accordance with GAAP, and the auditor provides a guarantee that the statements are free of material misstatement. 2. An independent audit adds value to the communication of financial informatie because the audit a. Confirms the exact accuracy of management's financial representations. b. Provides credibility to the financial statements. c. Guarantees that financial data are fairly presented. d. Assures the readers of financial statements that any fraudulent activity corrected