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(TCO A) Green, CPA, is requested to prepare a written report on the application of the requirements of an applicable financial reporting framework to a specific transaction by an entity that is audited by another CPA. Green may Not accept such an engagement because Green would lack the necessary information on which to write such a report without conducting an audit. Not accept such an engagement because to do so would be considered unethical. Accept the engagement but should consult with the continuing CPA to ascertain all the available facts relevant to forming a professional judgment. Accept the engagement but should form an independent opinion without consulting with the continuing CPA. (TCO F) An auditor's independence is considered impaired if the auditor has: (Points : 5) A joint, closely-held business investment with the client that is material to the auditor's net worth. An automobile loan from a client bank, collateralized by the automobile. A mortgage loan, executed with a financial institution client on March 1,1990, that is material to the auditor's net worth. An immaterial, indirect financial interest in a client. TCO B) An auditor most likely would express an unmodified opinion and would not add emphasis-ofmatter or other-matter paragraphs to the report if the auditor: (Points : 5) Wishes to emphasize that the entity had significant transactions with related parties. Discovers that supplementary information required by FASB has been omitted. Believes that there is a probable likelihood of a material loss resulting from an uncertainty that is sufficiently supported and disclosed. Concurs with the entity's change in its method of computing depreciation. 5. (TCO F) Which is not a characteristic of the reliability of evidence? (Points : 5) Effectiveness of client internal controls Education of auditor Independence of information provider Timeliness Question 6.6. (TCO C) When a PCAOB auditing standard indicates that an auditor "could" perform a specific procedure, how should the auditor decide whether and how to perform the procedure? (Points : 5) By comparing the PCAOB standard with related AICPA auditing standards. By exercising professional judgment in the circumstances. By soliciting input from the issuer's audit committee. By evaluating whether the audit is likely to be subject to inspection by the PCAOB. Question 7.7. (TCO F) Analytical procedures must be used during which phase(s) of the audit? Test of controls OR planning OR completion (Points : 5) Yes; Yes; Yes No; Yes; Yes Yes; No; No No; No; No Question 8.8. (TCO F) In a financial statement audit, inherent risk is evaluated to help an auditor assess which of the following? (Points : 5) The risk that the audit procedures implemented will not detect a material misstatement of a financial statement assertion. The risk that the internal control system will not detect a material misstatement of a financial statement assertion. The internal audit department's objectivity in reporting a material misstatement of a financial statement assertion it detects to the audit committee. The susceptibility of a financial statement assertion to a material misstatement assuming there are no related controls. Question 9.9. (TCO F) A benefit obtained from comparing the client's data with industry averages is that it provides a(n) (Points : 5) indication of the likelihood of financial problems. indication where errors exist in the statements. benchmark to be used in evaluating a client's budgets. comparison of what is with what should be. Question 10.10. (TCO G) The most widely used profitability ratio is (Points : 5) quick ratio. profit margin. return on assets. earnings per share. Question 11.11. (TCO G) Which is a liquidity activity ratio? (Points : 5) Profit margin Inventory turnover Return on assets Times interest earned