Any public accounting firm can be a member of the AICPA if the firm meets the membership (19 requirements International Standards on Auditing are issued by the International Auditing and Assurance (20 Standards Board .B) Multiple choices: 60 points: for each statement circle the best answer The three requirements for becoming a CPA include all but which of the following (1 A) Uniform CPA examination requirement B) Educational requirements C) Character requirements D) Experience requirement (The International Standards on Auditing (ISAS (2 A) are issued by the AICPA B) override a country's regulations govering the audit of a company (C) has many of the same standards as the Auditing Standards Board (ASB D) must be followed by companies whose stock is traded in the U.S Historically auditing standards have been organized into three categories, including (3 A) Standards of field work B) Purpose of an audit C) Responsibilities of the auditor D) Proper planning and supervision The "Principles Underlying an Audit in Accordance with Generally Accepted Auditing Principles provides (4 a framework to help auditors A) understand the ten GAAS standards B) obtain complete assurance that the financial statements are free from any error C) report on the financial statements D) prevent fraud 5) To obtain reasonable assurance about whether the financial statements as a whole are free from material miss misstatement, the auditor must fulfill several performance responsibilities, including: A) verifying that all audit work is performed by a CPA with a minimum of three years experience. B) obtaining sufficient, appropriate audit evidence. C) exercising professional judgment. D) providing an opinion on the financial statements. 6) In order to properly plan and perform an audit, an important fact for both the auditor and the client to un understand is that: A) the internal control policies and procedures are developed by the auditors. B) the purpose of an audit is to prevent fraud. C) management is responsible for the preparation of the financial statements. D) management can restrict the auditor's access to important information relevant to the financial 7) Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) should be looked upon by practitioners as: 3 Page A) ideals to work towards, but which are not achievable. B) maximum standards that denote excellent work. C) minimum standards of performance that must be achieved on each audit engagement. D) benchmarks to be used on all audits, reviews, and compilations. 8) An audit of historical financial statements most commonly includes the A) balance sheet, statement of retained earnings, and the statement of cash flows. B) income statement, the statement of cash flows, and the statement of net working capital C) statement of cash flows, balance sheet, and the statement of retained earnings D) balance sheet, income statement, statement of cash flows, and the statement of changes in stockholders' equity. 9) Auditing standards require that the audit report must be titled and that the title must: A) include the word "independent." B) indicate if the auditor is a CPA. C) indicate if the auditor is a proprietorship, partnership, or corporation. D) indicate the type of audit opinion issued. 10) The auditor's responsibility section of the standard unqualified audit report states that the audit is designed A) discover all errors and/or irregularities. B) discover material errors and/or irregularities. C) conform to generally accepted accounting principles. D) obtain reasonable assurance whether the statements are free of material misstatement. 11) The audit report date on a standard unqualified report indicates: A) the last day of the fiscal period. B) the date on which the financial statements were filed with the Securities and Exchange Commission. C) the last date on which users may institute a lawsuit against either client or auditor. D) the last day of the auditor's responsibility for the review of significant events that occurred after the date of of the financial statements, 12) Which of the following is not explicitly stated in the standard unqualified audit report? A) The financial statements are the responsibility of management. B) The audit was conducted in accordance with generally accepted accounting principles. C) The auditors believe that the audit evidence provides a reasonable basis for their opinion. D) An audit includes assessing the accounting estimates used. The standard unqualified audit report for a non-public entity must (13 A) have a report title that includes the word "CPA B) be addressed to the company's stockholders and creditors C) be dated D) include an explanatory paragraph The management's responsibility section of the standard audit report for a non-public company states (14 it that the financial statements are A) the responsibility of the auditor B) the responsibility of management C) the joint responsibility of management and the auditor .D) none of the above 4 Page The auditor's responsibility section of the standard audit report states that the auditor is (15 A) responsible for the financial statements and the opinion on them B) responsible for the financial statements C) responsible for the opinion on the financial statements .D) jointly responsible for the financial statements with management If the balance sheet of a private company is dated December 31, 2011, the audit report is dated February (16 8, 2012, and both are released on February 15, 2012, this indicates that the auditor has searched for subsequent events that occurred up to A) December 31, 2011 B) January 1, 2012 C) February 8, 2012 D) February 15, 2012 17) The appropriate audit report date for a standard nonqualified audit report for a non-public entity should be the: the: A) date the financial statements are given to the Board of Directors. B) date of the financial statements. C) date the auditor completed the auditing procedures in the field. D) 60 days after the date of the financial statements as required by the SEC. 18) The standard unqualified audit report: A) is sometimes called a clean opinion. B) can be issued only with an explanatory paragraph. C) can be issued if only a balance sheet and income statement are included in the financial statements. D) is sometimes called a disclaimer report. P (19 Examples of unqualified opinions which contain modified wording (without adding an explanatory paragraph) include A) the use of other auditors B) material uncertainties C) substantial doubt about the audited company for the entity) continuing as a going concern .D) lack of consistent application of GAAP 0 20) Which of the following is least likely to cause uncertainty about the ability of an entity to continue as a 8 going concern? A) The entity is suing a competitor for a minor patent infringement. B) The entity has lost a major customer. C) The entity has significant recurring operating losses. D) The entity has working capital deficiencies. 21) When a company's financial statements contain a departure from GAAP with which the auditor concurs, t the departure should be explained in: A) the scope paragraph. B) an explanatory paragraph that appears before the opinion paragraph. C) the opinion paragraph. D) an explanatory paragraph after the opinion paragraph. 5 Page 22) As a result of management's refusal to permit the auditor to physically examine inventory, the auditor must depart from the unqualified audit report because A) the financial statements have not been prepared in accordance with GAAP. B) the scope of the audit has been restricted by circumstances beyond either the client's or auditor's control. C) the financial statements have not been audited in accordance with GAAS. D) the scope of the audit has been restricted. Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing (23 financial information for decision making is commonly called A) finance B) auditing C) accounting D) economics An accountant (24 A) must possess expertise in the accumulation of audit evidence B) must decide the number and types of items to test C) must have an understanding of the principles and rules that provide the basis for preparing the accounting information D) must be a CPA a 25) In "auditing" financial accounting data, the primary concern is with: A) determining whether recorded information properly reflects the economic events that occurred during the ccounting period, B) determining if fraud has occurred. C) determining if taxable income has been calculated correctly. D) analyzing the financial information to be sure that it complies with government requirements. The trait that distinguishes auditors from accountants is the (26 A) auditor's ability to interpret accounting principles generally accepted in the United States B) auditor's education beyond the Bachelor's degree C) auditor's ability to interpret FASB Statements . .D) auditor's accumulation and interpretation of evidence related to a company's financial statements The most common way for users to obtain reliable information is to (27 A) have an internal audit B) have an independent audit C) verify all information individually .D) verify the information with management ? In the audit of historical financial statements, what accounting criteria is most common (28 A) Regulatory accounting principles B) Applicable intemational accounting standards C) Applicable U.S. accounting standards D) B and C ?Which of the following services provides the lowest level of assurance on a financial statement (29 6 Page A) A review B) An audit C) Neither service provides assurance on financial statements .D) Each service provides the same level of assurance on financial statements One objective of an operational audit is to (30 A) determine whether the financial statements fairly present the entity's operations B) determine if the auditee is in compliance with GAAP C) make recommendations for improving performance .D) report on the entity's relative success in attaining profit maximization :Part 2 (Question --- 1 - (10 points Generally Accepted Auditing Standard is broken down into three main parts. Name and explain them briefly. :(Question -2-(10 points Briefly explain the main difference between the old and the latest auditor's report Bonus: (five points) Name the 2 cases in Lebanon where the auditors were detained and questioned by the authorities regarding the failure of their clients