plz answer below question.

need highligh ANSWER in RED

HAVE TO have at least 93% correct.otherwise answer will be deny.

Question 1 of 50 COSO is sponsored by all of the following organizations, except: Financial Executives International The American Accounting Association The AICPA The Institute of Internal Auditors The Securities and Exchange Commission (SEC) Question 2 of 50 An auditor may use ______________ as a defense under the Securities Act of 1933? Due Care Immaterial loss Contributory Negligence Independence Scienter Question 3 of 50 If an audit team discovers that fraud risk factors are present on an audit engagement, it should _______________________. Retract from the client and inform regulatory bodies. Report it findings to the Securities and Exchange Commission. Reduce the amount of evidence required and resort to management inquiry. Modify procedures to actively search for the existence of fraud. Turn the audit over to forensic accountants. Question 4 of 50 Which of the following is not an aspect of Rule 201 of the General Standards of the Code of Professional Conduct? None of these answers are correct. A member must exercise duties prudently and professionally. A member must adequately plan and supervise the performance of professional services. A member firm must not advertise services to competing clients. A member must not take on an engagement that is beyond the member's professional competence. Question 5 of 50 Which of the following is the first step in management's evaluation of internal control over financial reporting? Select and perform testing procedures to evaluate the operating effectiveness. Evaluate control deficiencies. Document operating effectiveness. Identify financial reporting risks. Identify controls that mitigate financial reporting risks. Question 6 of 50 Under the Sarbanes-Oxley Act, __________________ performed by registered accounting firms for their audit clients would not impair their independence. systems design services tax services bookkeeping services internal audit services appraisal services Question 7 of 50 _______________ describes the type of threat that occurs when management threatens to replace the audit firm because of a disagreement over an accounting issue. Coercion threat. Management participation threat. Financial self-interest threat. Undue influence threat. Adverse interest threat. Question 8 of 50 All of the following statements are false except: A free market can only exist if there is sharing of perfectly reliable information. Various types of ways that fraud could be perpetrated should be hypothesized by the auditor prior to conducting audit testing. In an audit, management is considered the "client". Transparency is a desirable, but not critical, element of effective corporate governance. The auditor has a responsibility to design the audit to provide absolute assurance of detecting material fraud. Question 9 of 50 _______________ is not a primary driver of audit quality? None of these answers are correct. Effective audit processes Audit firm culture Skills and personal qualities of audit staff Reasonable audit fees Question 10 of 50 The relationship between audit risk and detection risk is ______________. direct inverse indirect no relationship none of these answers are correct Question 11 of 50 Which of the following statements is false? It is necessary for the auditor to understand internal controls for integrated audits but not for financial statement only audits. Lapping can occur when duties are inadequately segregated. Incorrect aging of accounts receivable is a fraud scheme. Auditors can gain an understanding of internal controls by reviewing the client's documentation. If the auditor believes internal controls are ineffective, he should extend substantive testing. Question 12 of 50 Which of the following statements is false? It is true that if an auditor discovers evidence of fraud, the planned audit procedures should be adjusted accordingly. It is true that users rely on the auditors' independent assessment of financial statement presentation because few users have direct knowledge of the company's operations. It is correct that, according to professional audit standards, the audit team should assemble early in the planning stages of an audit to conduct a fraud "brainstorming" meeting in order to determine the types of fraud that may occur with the client. It is true that the consideration of fraud in financial statement audits is a relatively new concept derived originally from the Sarbanes-Oxley Act. It is true that auditing exists because users need unbiased information on which to assess management performance and make economic decisions. Question 13 of 50 An example of ________________________ is when an auditor selects a sample of items recorded and traces them back to the supporting documentation. Direct testing for valuation. Direct testing for rights. Accuracy testing for presentation. Directional testing for existence. Directional testing for completeness. Question 14 of 50 The typical range for the assessment of the risk of material misstatement is ____________. 1% - 100% 0% - 100% 0% - 5% 30% - 100% None of these answers are correct. Question 15 of 50 Which of the following employment positions could an auditor's spouse hold in a client without violating the independence requirements? Order entry staff. Controller. Treasurer. Internal audit director. Accounting department staff. Question 16 of 50 According to the SOX Act, an auditor may perform ______________ without impairing their independence. tax services actuarial services internal audit services appraisal services Performing any of these services would impair an auditor's independence. Question 17 of 50 _____________ is an inherent limitation of internal controls? Lack of auditor independence. Employee peer review. Separation of duties. Collusion. An ethical conflict. Question 18 of 50 According to the SEC, all of the following are criteria for determining revenue recognition, except: Persuasive evidence of an arrangement should exist Collectibility should be reasonably assured The seller's price to the buyer should be fixed or determinable All of these criteria should be present Delivery should have occurred, or services should have been rendered Question 19 of 50 All of the following factors will result in control risk being assessed at a lower level, except when: There is a lack of supervision of accounting personnel. Controls are well designed. Management has created a culture of ethical behavior. The control environment is operating effectively. Accounting staff are well trained and educated. Question 20 of 50 Which of the following statements is true? It is true that the risk of misstatement refers to the combination of inherent risk and control risk. It is true that the purpose of performing analytical procedures in the planning stage of an audit is to gather audit evidence and make conclusions about account balances. It is true that when an auditor multiplies the quantity of inventory on the inventory ledger by the cost of the inventory to arrive at total inventory balance per product number. This is an example of recalculation by footing. It is true that the process of sending disbursements to suppliers is part of the revenue cycle. It is true that the net profit margin ratio provides information about a company's liquidity. Question 21 of 50 An audit program is created to specify _____________________. The audit team to be assigned to the audit engagement. How an auditor should think while performing audit procedures. The audit procedures that will be performed every year for the client. The type of audit opinion to be rendered based upon procedures performed. Audit objectives and procedures to be followed during the audit process. Question 22 of 50 Which of the following statements is false? It is true that the landmark Enron fraud in the early 2000's involved the movement of significant debt off the books to related, unconsolidated entities. It is true that successful corporate governance depends upon successful management of the company, as management has the primary responsibility for creating a culture of performance with integrity and ethical behavior. It is true that independence is often referred to as the cornerstone of the auditing profession. It is true that according to the Sarbanes-Oxley Act, the audit committee must have at least 3 independent members. It is true that auditing is the process of attesting to assertions about economic actions and events. Question 23 of 50 The Sarbanes-Oxley Act strengthened auditor independence by _______________. requiring all audit staff members to be certified public accountants. requiring the lead partner to rotate off the audit engagement at least every five years. requiring auditors to report the nature of any auditor-client disagreements to the SEC. requiring auditors to provide reports in accordance with the Foreign Corrupt Practices Act. requiring a different audit firm from the one that performs the audit to prepare the client's tax return. Question 24 of 50 Which of the following statements is false? The external auditing profession includes sole-practitioner firms. Audit managers are responsible for the overall conduct of each audit. Auditors must develop industry and client-specific knowledge. With respect to work specialization, smaller audit firms are less specialized by function. The SEC has the authority to establish GAAP for companies whose stock is publicly traded. Question 25 of 50 COSO's framework for internal control includes all of the following, except: Control Activities Risk Assessment Monitoring Control Environment Segregation of Duties Question 26 of 50 Which one of the following statements is false? Some audit procedures may be performed prior to the end of the year under audit. Audit documentation serves as support for the financial statements. An example of physical observation is the auditor's testing of inventory by counting it to substantiate the existence assertion. The primary importance of the audit program is its guidance of the overall conduct of the audit. In a reasonableness test, the auditor develops an expected value of an account by using data wholly or partly independent of the client's accounting information system. Question 27 of 50 Which of the following statements is false? An alternative procedure for non-responses to positive confirmations is to examine supporting documents. Negative confirmations are used when the customer has a large number of relatively small customer balances. If confirmations are returned as undeliverable, the auditor should determine the reason. Positive confirmations require a response from the customer whether or not they agree or disagree with the indicated account balance. A side letter is a contract addendum and it does not increase audit risk. Question 28 of 50 If _________________________, this would indicate that fraud is pervasive throughout the company under audit. The company's management negotiates deals with vendors in such a manner as to pay lower prices. The company's management estimates bad debts using an aged accounts receivables ledger rather than as a percent of sales. The company's management takes an overly aggressive approach to revenue recognition. All of these would indicate that fraud is pervasive. The company's management drives luxury vehicles and takes vacations to exotic places. Question 29 of 50 Internal control is a process designed to achieve objectives in __________________. Reliability of financial reporting. Compliance with applicable laws. All of these categories. None of these categories. Operational Effectiveness. Question 30 of 50 A company has in place a process that is designed to ensure that no employee is paid for more than 80 hours of sick pay. This is an example of a(an) ___________. entity-wide control input control cash management control output control processing control Question 31 of 50 In which of the following independent situations, is it most likely that fraud related to revenue recognition will be identified by the auditor? Sales are higher in the month preceding each quarter end. Gross margin is equivalent in the current period to previous periods and is below that of the industry. The sales of a revolutionary new product are increasing beyond that of the competition in the periods immediately following its introduction. Sales have increased 5% in the current period over the previous period and is consistent with the results of competitors. Sales have decreased 5% in the current period over the previous period and is consistent with the results of competitors. Question 32 of 50 Which of the following statements is true? The Center for Audit Quality was started by the International Federation of Accountants. The five major components of an organization's internal control are: the control environment, risk assessment, control activities, information and communication, and monitoring. The Center for Audit Quality has the primary authority to set auditing standards. In an audit, management is considered the "client". Controls to monitor results of operations are considered to be transaction controls. Question 33 of 50 When an audit firm issues an Integrated Audit Report, it provides opinion(s) on which of the following? Sarbanes-Oxley compliance Neither financial statements or internal controls. Both financial statements and internal controls. The financial statements. Internal controls. Question 34 of 50 The auditors' reprocessing of transactions are designed to test which of the following assertions? Completeness Existence Occurrence Accuracy Rights Question 35 of 50 All of the following statements are false, except: The auditor's determination that day's sales in accounts receivable increased from 44 days to 100 days would usually be found through the use of ratio analysis. A detection risk of 90% would suggest that an auditor must perform extensive substantive audit testing. Audit procedures have to be announced or be completed at predictable times. Lapping of accounts receivable is least likely to occur when there is an inadequate segregation of duties. An attitude of professional skepticism by the auditor is not needed when internal controls over revenue have been tested and found to be effective. Question 36 of 50 Having _________________ is the best description of professional skepticism. an intent to deceive a character that does not waiver a questioning mind an independent appearance an attitude of intrusion and obstinacy Question 37 of 50 Which of the following statements is false? The predecessor auditor can be a source of information about the integrity of a company's management. Net profit margin equals Net Income divided by Net Sales. Technological changes can affect a company's business risk. Detection Risk equals Audit Risk divided by Control Risk Trend analysis can involve year-to-year comparisons of projections of account balances. Question 38 of 50 Auditors are concerned with the addresses provided for customers in the confirmation of accounts receivable because of which of the following reasons? A P.O. Box is more reliable than a street address. Confirmations are selected based upon zip codes. None of these answers are correct. Confirmations should be sent only to business addresses and not residential. The address may be routed to the client for retrieval and fraudulent signing. Question 39 of 50 All of the following statements are false, except: Corporate governance is a process by which the owners, but not the creditors, exert control and require accountability for the resources entrusted to the organization. The Public Company Accounting Oversight Board was established by the AICPA in response to Securities laws. The audit committee is a subcommittee of the board of directors comprised of independent outside directors. The SEC has authority to establish GAAP for all business enterprises. Management of companies should have the ability to hire and fire the external auditor. Question 40 of 50 All of the following audit procedures will address the existence/occurrence for accounts receivables and sales, except: None of these answers are correct. Trace bill of lading to sales invoice and sales journal. Confirm balances of unpaid invoices with customers. Scan sales journal for duplicate entries. Examine subsequent collection. Question 41 of 50 According to the Financial Reporting Council (FRC), when is the culture of an audit firm likely to provide a positive contribution to audit quality? When the leadership of the audit firm ensures robust systems for client acceptance and continuation based on the likelihood of increased audit fees. When the audit firm has multinational experience in conducting audits. When the leadership of the audit firm ensures financial considerations drive actions. When the leadership of the audit firm ensures partners and other staff have sufficient time and resources to deal with difficult issues as they arise. When the leadership of the audit firm creates an environment where achieving efficiency is valued, invested in and rewarded. Question 42 of 50 Which one of the following statements is true? Underlying accounting records consist of evidence of controls as well as supporting records such as checks, invoices, the general and subsidiary ledger and journal entries. Liabilities and expenses are most often tested for overstatements. Appropriateness deals with the quantity of evidence the auditor collects, whereas sufficiency deals with the quality of evidence the auditor collects. Even though all audits are different, they can all be approached in the same manner. The client's verbal evidence is more reliable than evidence from independent outside sources. Question 43 of 50 The most common criteria against which the auditor measures the fairness of financial statement presentation for a U.S.-based company is: Government accounting principles Sarbanes-Oxley compliance Auditing standards Generally accepted accounting principles Generally accepted accounting standards Question 44 of 50 _______________ is not a cause of action against an auditor for breach of contract. Providing the audit report on time. Failing to discover an immaterial error or employee fraud. All of these are cause of actions for breach of contract. Withdrawing from an audit engagement without justification. Violating client confidentiality. Question 45 of 50 All of the following are true, except: The direction of testing from recorded amounts toward supporting documentation provides evidence as to existence of assets and revenues. An example of a test for completeness in the revenue cycle includes the sampling of shipping documents and tracing them to the sales journal and general ledger. Valid evidence obtained in an audit for testing the cutoff of gross sales includes receiving reports for returned merchandise. The auditor uses professional judgment to determine which audit procedures to perform. Tracing is a process that helps establish that recorded transactions are valid. Question 46 of 50 In order for revenue recognition on a product sale to occur, the company must make sure that which of the following has been accomplished? The cash is realized on the sale of the product. The product is adequately delivered to the customer. A price is discussed based upon the customer's resale of the product. The customer is given the option to return the product at any time. The discount period has passed. Question 47 of 50 Auditing is important in a free market society because __________________. Auditors detect all errors and fraud perpetrated by company employees. All of these are correct. The public requires auditors to function as divisions of regulatory bodies. The auditor is an amiable insurance policy for investors. It provides reliable information upon which to judge economic performance. Question 48 of 50 All of the following statements are false, except: It is true that when the risk of fraud is high in financial statements, the auditor should assign less experienced auditors to the engagement. It is true that effective audit processes, by themselves, are sufficient to achieve audit quality. It is true that the court system acts as a deterrent to quality controls for the auditing profession. It is true that the auditor should not consider that fraud is present in revenue accounts because revenue is not typically a very complex account. It is true that rationalization involves the mindset of the fraudster to justify committing the fraud. Question 49 of 50 All of the following statements are false except: While inspecting documents, auditors should use original documents rather than copies, because copies are easy for management to falsify. Auditors should mail third party confirmations through the client's mailroom. Inspection of tangible assets generally provides reliable evidence with the respect to the completeness of the assets, but not necessarily about the existence of the assets. Inspection of an asset generally provides reliable evidence about the rights and obligations assertion related to that asset. Tracing is a process that helps establish that recorded transactions are valid. Question 50 of 50 Which of the following statements is false? A date at which audit evidence is collected earlier than the balance sheet date is referred to as an interim date. Vouching of transactions deals with testing forward. Underlying accounting data does not include minutes of meetings. While inspecting documents, the reliability depends on the nature and source of the documentation. The written record that forms the basis for the auditor's conclusions is referred to as audit documentation. Question 1 of 45 The _______________ is responsible for setting International Standards of Auditing. IFRS FASB AICPA IAASB IASB Question 2 of 45 Which of the following statements is false? The written record that forms the basis for the auditor's conclusions is referred to as audit documentation. A date at which audit evidence is collected earlier than the balance sheet date is referred to as an interim date. Underlying accounting data does not include minutes of meetings. Vouching of transactions deals with testing forward. While inspecting documents, the reliability depends on the nature and source of the documentation. Question 3 of 45 Which of the following audit firm members are responsible for overseeing the day-to-day activities of a specific audit? Partners Managers Technical Specialists Owners Seniors Question 4 of 45 The Sarbanes-Oxley Act strengthened auditor independence by _______________. requiring auditors to report the nature of any auditor-client disagreements to the SEC. requiring the lead partner to rotate off the audit engagement at least every five years. requiring a different audit firm from the one that performs the audit to prepare the client's tax return. requiring all audit staff members to be certified public accountants. requiring auditors to provide reports in accordance with the Foreign Corrupt Practices Act. Question 5 of 45 Which of the following statements are false? (There are multiple answers and you must choose all the ones that are false) U.S. GAAP requires a three-step process to determine the impairment of goodwill. It is true that when circumstances preclude an auditor from performing certain procedures and the auditor can be satisfied using other alternative procedures, a disclaimer of opinion will be rendered. It is true that an auditor can issue a disclaimer of opinion because of an inability to obtain sufficient appropriate evidence. Materiality applies to both interim financial statements and annual financial statements. The repeatability of a process is not a factor to consider when assessing an internal control deficiency. Question 6 of 45 Which one of the following statements is true? Even though all audits are different, they can all be approached in the same manner. Appropriateness deals with the quantity of evidence the auditor collects, whereas sufficiency deals with the quality of evidence the auditor collects. Liabilities and expenses are most often tested for overstatements. The client's verbal evidence is more reliable than evidence from independent outside sources. Underlying accounting records consist of evidence of controls as well as supporting records such as checks, invoices, the general and subsidiary ledger and journal entries. Question 7 of 45 Which of the following statements are true? (There are multiple correct answers and you should choose all that are correct) Complex auditing judgments often involve evaluating the client's estimates for allowance for doubtful accounts. Pension obligations is a long-term liability account with a high risk of material misstatement. The Iron Curtain method focuses on the materiality of current year misstatements and the reversing effect of prior-year misstatements on the income statement. It is true that the discovery of an intentional misstatement, even if immaterial, could impact the auditor's opinion on the effectiveness of the client's external controls. One of the problems auditors will have in regards to complex judgments is related to evaluating a client's internal control. Question 8 of 45 Select all of the following statements that are true. (There are multiple answers). It is true that the need for assurance services arises because the interests of the users of information may be different from that of the interests of those responsible for providing information. It is true that an individual does not need to agree to uphold the code of professional conduct in order to become licensed as a CPA. It is true that the term, financial statement audit, is used to describe a systematic process of objectively obtaining evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users. It is true that internal control is a process designed to guarantee the achievement of the objectives of reliable financial reporting, compliance with laws and regulations and ineffective and inefficient operations. It is true that the auditor is not responsible for the presentation of financial statements; therefore, the auditor has no responsibility for fraud in the financial statements. Question 9 of 45 Select all of the following statements that are true. (There are multiple correct answers and you should select all that are correct) It is true that an auditor needs to assess disclosures about what lines of business the company may discontinue. When the financial statements contain a material departure from GAAP that the auditor believes is justified, the justification should be included in a paragraph added before the opinion paragraph. When financial statements contain a material, unjustified departure from GAAP, a qualification should not be contained in the audit report. There are systematic processes that the auditor can use in making most of the complex judgments in the financial statements. It is true that existing professional guidance notes that auditors must make materiality assessments for purposes of (1) audit planning and (2) evidence evaluation after audit procedures are completed. Question 10 of 45 All of the following statements are true, except: A tendency for fraud may exist when the granting of stock options is dependent on reaching an earnings goal. A company's history of exactly meeting analyst estimates is a factor which could lead auditors to assess inherent risk at a higher level. The intentional loading of sales at the end of a period to customers that do not need the goods at that time should not be recorded as revenues. A consistent pattern of earnings growth would eliminate the auditor's concern for fraud in revenue recognition. Ineffective internal controls result in higher risk of material misstatement in the financial statements than effective internal controls. Question 11 of 45 _________________ is a specific corporate governance responsibility of Executive Management. Implementing an effective ethical environment Approving non-audit work performed by the audit firm Setting the compensation structure for the audit team Reviewing the budget of the internal audit function Approving major changes, such as mergers Question 12 of 45 All of the following statements are false, except: CPA certificates for auditors are issued by state boards of accountancy. According to Rights Theory, the highest-order rights include rights granted by the government, such as civil rights, legal rights, rights to own property, and license privileges. The deep pocket theory represents a misunderstanding whereby shareholders mistakenly believe that they are entitled to recover losses on investments for which the auditor provided an unqualified opinion on the financial statements. The court system acts as a deterrent to quality controls for the auditing profession. Effective audit processes, by themselves, are sufficient to achieve audit quality. Question 13 of 45 Which of the following statements is true? The use of prenumbered sales invoices is the primary control procedure to satisfy the objective of authorization. Auditors need to choose materiality amounts carefully because once a materiality judgment has been made, it cannot be revised. The revenue cycle considered by auditors includes the sales process but not collections. Auditors and management should agree on what is considered material. The revenue cycle involves the procedures in generating a sales order, shipping the products, recording the transaction and collecting the receivable. Question 14 of 45 Which of the following employment positions could an auditor's spouse hold in a client without violating the independence requirements? Treasurer. Order entry staff. Controller. Accounting department staff. Internal audit director. Question 15 of 45 Which of the following statements are true? (There are multiple answers) It is true that an integrated audit report provides opinions on both financial statements and internal controls. It is true that when there is an uncertainty surrounding the financial statements, the auditor may still be able to give an unqualified opinion. It is true that performing a walkthrough provides an understanding of the nature of processing in important accounting applications. It is true that the audit report can be a verbal presentation to the audit committee about the client. It is true that the revenue cycle considered by auditors includes the sales process but not collections. Question 16 of 45 If an auditor were to divulge confidential information obtained from a client in order to __________________. It would be considered a violation of the standard of confidentiality. To ensure adequate disclosure in accordance with GAAP. To respond to the information request of a shareholder. All of these would be violations of the standard of confidentiality. To initiate a complaint with the AICPA's ethics division. To respond to a quality review request of the state board of accountancy. Question 17 of 45 Which of the following statements are false? (There are multiple correct answers) It is true that "clearly trivial" and "not material" are terms that can be used interchangeably. The accounts receivable aging schedule is utilized by the auditor for analytical purposes in substantiating the completeness of the allowance for bad debt estimate. According to auditing standards, it is true that accounts receivable confirmations are required to be used if the client's accounts receivable balances are immaterial. It is true that auditors and management should agree on what is considered material. It is true that the auditor traces recorded sales to invoices, sales orders and shipping documents in order to substantiate the occurrence assertion. Question 18 of 45 Which of the following statements is true? The Center for Audit Quality was started by the International Federation of Accountants. Since the auditor is not responsible for the presentation of financial statements, he/she has no responsibility for fraud in the financial statements. The Center for Audit Quality has the primary authority to set auditing standards. The treasurer's diversion of hundreds of thousands of dollars into a personal money market account is an example of fraudulent financial reporting. A CFO intentionally overstating sales to boost profits is an example of fraudulent financial reporting. Question 19 of 45 The relationship between audit risk and detection risk is ______________. no relationship none of these answers are correct direct indirect inverse Question 20 of 45 According to the SOX Act, an auditor may perform ______________ without impairing their independence. Performing any of these services would impair an auditor's independence. tax services actuarial services internal audit services appraisal services Question 21 of 45 __________________ should sign the management representation letter. None of these answers are correct. The controller and the auditor. The chief executive officer and the chief financial officer. The members of the audit committee and board of directors. The chief financial officer and the treasurer. Question 22 of 45 Appropriateness of evidence is a measure of ______________. Quantity of evidence. Meaning of evidence. Quality of evidence. Sufficiency of evidence. None of these answers are correct. Question 23 of 45 Which of the following statements is false? It is true that the total likely misstatements found during the audit are equal to the sum of known and projected misstatements. During an audit, the auditor compares the total likely misstatements to each significant segment of the financial statements, such as total current assets, total noncurrent assets, total current liabilities, total noncurrent liabilities, owners' equity, and pretax income, to determine if they are, in aggregate, material to the financial statements. It is true that if the auditor has no reservations about management's financial statements then the auditor will issue a qualified opinion. It is true that, regarding loss contingencies, the client's legal counsel should be instructed by the client to respond directly to the auditors. it is true that independence is often referred to as the cornerstone of the auditing profession. Question 24 of 45 All of the following statements are true, except: Bondholders are one of the users of financial statements. Any major disagreement the auditor has with management should be discussed with the audit committee. Auditing exists because users need unbiased information on which to assess management performance and make economic decisions. The audit committee is a subcommittee of the board of directors comprised of independent outside directors. External auditors frequently serve on the audit committees of their clients. Question 25 of 45 The first phase in an audit is ________________. None of these answers are correct. Testing of account balances. Understanding internal controls. Client acceptance or client continuance. Understanding the client. Question 26 of 45 All of the following statements are true, except: It is true that the need for assurance services arises because the interests of the users of information may be different from that of the interests of those responsible for providing information. Most audit firms use a schedule to accumulate the known and projected misstatements and the carryover effects of prior-year uncorrected misstatements. It is true that when misstatements are detected, but they individually are not material, they should be ignored when determining the appropriate audit report. It is true that, at the end of an audit, adjustments that are "waived" will remain uncorrected. During an audit, review activities that are completed towards the end of the audit are quite varied. Question 27 of 45 All of the following are incentives or pressures to commit fraud, except: Equity convenants Pending stock option expirations Pending retirement Management compensation schemes Greed Question 28 of 45 According to the SEC, all of the following are criteria for determining revenue recognition, except: All of these criteria should be present The seller's price to the buyer should be fixed or determinable Persuasive evidence of an arrangement should exist Collectibility should be reasonably assured Delivery should have occurred, or services should have been rendered Question 29 of 45 All of the following are steps in the process for performing analytical procedures, except: Compute the difference between the auditor's expectation and the client's balance. Define when the difference between the auditor's expectation and the client's balance would be considered significant. Develop an expectation. None of these answers are correct Perform appropriate followup on all material and immaterial differences. Question 30 of 45 All of the following audit procedures will address the existence/occurrence for accounts receivables and sales, except: None of these answers are correct. Trace bill of lading to sales invoice and sales journal. Confirm balances of unpaid invoices with customers. Scan sales journal for duplicate entries. Examine subsequent collection. Question 31 of 45 The typical range for the assessment of the risk of material misstatement is ____________. 1% - 100% 0% - 100% None of these answers are correct. 30% - 100% 0% - 5% Question 32 of 45 Select all of the following statements that are true. (There are multiple correct answers and you must select all that are true) Qualified opinions can only be issued by auditors when there are violations of GAAP or scope limitations. Violations of GAAP resulting in a qualified opinion affect the standard audit report through adding an explanatory paragraph before the opinion paragraph, and modifying the opinion paragraph to read "except for." Audits of Level 3 assets are the most straightforward as they involve an observable, active market. When assessing fair value of Level 1 assets, auditors will use information on the sale of identical items in active or inactive markets as a source of audit evidence. The volume of transactions affected is not one of the critical criteria in assessing identified internal control deficiencies. Question 33 of 45 The best definition of a scienter is _________________________. A material omission of facts. Fraudulent conduct in the purchase of a security. None of these choices is correct. A causal connection between a misstatement and a material loss. A wrongful state of mind when making a misrepresentation. Question 34 of 45 Which of the following statements is false? It is true that according to the Sarbanes-Oxley Act, the audit committee must have at least 3 independent members. It is true that independence is often referred to as the cornerstone of the auditing profession. It is true that auditing is the process of attesting to assertions about economic actions and events. It is true that successful corporate governance depends upon successful management of the company, as management has the primary responsibility for creating a culture of performance with integrity and ethical behavior. It is true that the landmark Enron fraud in the early 2000's involved the movement of significant debt off the books to related, unconsolidated entities. Question 35 of 45 One form of _____________ is when a cross-sectional analysis of revenue recorded across multiple sales locations is performed. completeness analysis correlation analysis trend analysis common size analysis ratio analysis Question 36 of 45 Select all of the following statements that are true. (There are multiple answers) It is true that audit evidence consists of both information that corroborates management's assertions and information that contradicts such assertions. It is true that auditors are permitted to perform for a contingent fee an audit of the financial statements if the audit committee approves the agreement in advance of the services being provided. It is true that the audit report is modified to five paragraphs as a result of another audit firm performing part of the financial statement audit. It is true that walkthroughs and inquiries are often used to obtain an understanding of internal controls. It is true that complex audit judgments and decisions often involve accounts that require subjective estimates by management. Question 37 of 45 In order for an audit firm to perform financial statement audits for public companies, it must _____________________. Register with the Public Company Accounting Oversight Board. Register with the Institute of Internal Auditors. Register with the U.S. General Accounting Office. Register with the Internal Revenue Service. Register with the American Institute of Certified Public Accountants. Question 38 of 45 Which of the following statements are true? (There are multiple answers and you should choose all that are true). It is true that auditors are constantly challenged to evaluate the quality of a client's estimates, including areas such as obsolescence of inventory, allowance for doubtful accounts, and tax provisions among others. It is true that an auditor's consideration of materiality is a matter of professional judgment and is influenced by the auditor's perception of the needs of users of financial statements. It is true that the audit report can be a verbal presentation to the audit committee about the client. It is true that materiality judgments are made in light of the surrounding circumstances, but need not necessarily involve both quantitative and qualitative considerations. It is true that there are no differences in audit report requirements across the standards of the AICPA, PCAOB, and IAASB. Question 39 of 45 In order for revenue recognition on a product sale to occur, the company must make sure that which of the following has been accomplished? The customer is given the option to return the product at any time. The discount period has passed. The cash is realized on the sale of the product. The product is adequately delivered to the customer. A price is discussed based upon the customer's resale of the product. Question 40 of 45 __________________ would be an example of a physical control to safeguard assets. Hiring only trustworthy cashiers. Safety audits on the production-line. Locks on the warehouse doors. Separation of duties. All of these are examples of physical controls to safeguard assets. Question 41 of 45 The process of vouching helps establish that ___________________. Transactions are complete. Transactions have been recorded. Transactions are valid. None of these answers are correct. Transactions are presented properly. Question 42 of 45 Which of the following statements are true? (There are multiple correct answers) It is true that auditors are required to seek out and find all fraud, regardless of its magnitude. It is true that the audit committee must be comprised of outsiders such as the company's attorney and the audit partner of the company's external audit firm. It is true that the auditor uses professional judgement to determine which audit procedures to perform. According to auditing standards, it is true that accounts receivable confirmations are required to be used on every audit engagement. It it true that for external auditing, the primary scope of services performed includes audits of financial statements. Question 43 of 45 What is considered a reasonable time period for evaluating the likelihood of a client continuing as a going concern? One year from the last day of field work. One year from the balance sheet date. One year from the audit report date. Two years from the balance sheet date. None of these answers are correct. Question 44 of 45 Which of the following statements are true? (There are multiple correct answers) It is true that the PCAOB is a public board, appointed by Congress, to provide oversight of the firms that audit public companies registered with the SEC. It is true that auditing exists because users need unbiased information on which to assess management performance and make economic decisions. It is true that all audit procedures must be completed before year end. It is true that the AICPA's fundamental principles and guidance for auditing standards can be divided into four sections: purpose of the audit, responsibility of the auditor, performance of the audit, and reporting of the results. It is true that when the risk of material misstatement is increased, the auditor increases the extent of audit procedures and requires less evidence. Question 45 of 45 Jonathan Davis, CPA takes out an automobile loan with Silicon Valley Bank (SVB) of San Jose while attending the Silicon Valley University in San Jose. Jonathan graduates one year later and is hired as an auditor by Better Accountants, LLP. His first assigned audit engagement is with SVB, a client of Better Accountants. As a new audit assistant, Jonathan continues to pay his automobile loan payments each month. According to the AICPA, why is Jonathan considered a covered member for SVB independence purposes? He has an immaterial direct financial interest in SVB. None of these answers are correct. He graduated in the same area as the client is operating. He has a direct financial interest in SVB. He will be working on the engagement. PK##########!#KL/##########[Content_Types].xml ##(########################################################################### ################################################################################ ################################################################################ ################################################################################ ################################################################################ ################################################################################ #######################################N0#HC+J\\8 r#H#q6Hl4m#B[q8;yl#/*AD].Hioq|#I9* #s@q1:Z# J Tj##h 5(~-I ErxBPYI /.!?X G!Zf{e#G#^EU5cW#4^OkC#N_#VCW 5 ruu+n-##=E(@aQcl:k->##+K^Wx~##^{rqt/#8'r/B @"f3\\T#I S#W#Yig@X6_#]7#~ f##ao.b*lIrj),#l0%b 6iD_, |u#Z^#t y;#!Y,#}{C/h>#####PK##########! #j.Y##########word/_rels/document.xml.rels ##(########################################################################### ################################################################################ ################################################################################ #######################MO0 H*wv#h.+ qRh*1#N e\\*Q>yc{:i#Pg,##WEE#2# #OZ# *f$ j#8F#[Di###C#GI2_#jF9|Xni]}|R $|HOp V@##C5#]3># #v)#DvD$*`B# z7 5-#Km!#####PK##########! ##L)K8########word/document.xml[sH7b#B/3#d'dp##%$Ew H#iZ _#I#DVee0saYi6 A#= rv"#8O/w,yo~}C#wC#oOO,p#i# #[:KL 'Ng{+c7Yx)#4 |.Q:7;qR_#M#Y di9og#owZ # ySy yot s[q8 v$D;:{#hEY #/p6_{loh#B#,Y^z##,R!].XG# ^O#v8#(vbzs (D'E%Ix6e#Qm##\\7# y_`&I)#d#,x#{_Pq,#o#Xok###{%N#s#x#####'Ga6#'L& #GQ.dy V#O#u6HHFQ69[#L,ab!K>$-xlQ#L,##}9Lg#*pW=Eq Vn#7-bq#&y844#ED4. #,k?b#6b#@#'N#~L #=sc0qHq#9# V#/###f## `# #z/H"b# GGi::' ? mI*WnV|O#7#4#8#wI?#bt#hT#> mzM#.#HF-#|d! ###TrBh>d{2*+J#m#[hv{@r$b)^j9YjhX\\u- aX# -G# U%W#F:j}=aY#+( kco^Qxp###YJO+jo##`#5##>m d>#vP %0IJ~E[*zi\\O&.#3_E3SA{\\#{4pE##Q`A8/O*#8>D#(x "(##0]c$-5{,#EG#-ulm4Z=V##dR##?WU8sV#Uq 5@#6--8'i@pD8#DH#`4#%NQWk`# 7#}"_%# l#I{(cF|#W3qz#^W#^(#'#}EHtV ##m2#MKWO{}QFP###Y-C=###I he%wLV#C^###V##Y? aDyo8_#S#\\^nWp>CZ{#B#N0Se_O#^"##A$UI d!#j#C#RfD##@CfxUX# *\\ X]Y Ma#To#& u x A CF#M\\\\#CD7##-x ####H=S+QZ#q{ruuFX;|#-\\w:6#V5!Eqd>G#CC~Ny ?k c8 /Z#bQi*V!##\\4#`~aU#D2!5_z>###Rb# Qg #|B#`"5yvQ #ZC## Ve-(y;EM#R#h##NnSu#Qq# to['#a#T,g#7911f## P Gc1 s#9J#Xu}T##+h#bV^ um~.4zT| (6,a#+`~(#tC#/z#Srp`#K# d^ E{765 g#4#Zuc}Z?.N#0V{##U:Y#~\\{I}gu## e*6#s#Q@#(U24$%q P t`ZR$| SX#e#k8##W#:VE`pVU"`819#,##9H#h`V? \\R+VG#hW;^#py ,!#@y#vUA~K`#_#:GW##Im=#sWG#2 F .SH}aNrxX[#0UEv! ;,=e)####"74NkPK#^###G ~.}P\\TsB)_* #y[33 j##hY#.x+?2i}#5##{5Vr.yCn#rui+Kr}7{o? ypkfTZ###v\\@X=$7m#LHj}Gpj.yXpM#9 bP$zj# #^q{E##x-*L~G# z###9#j#LL MM9YC@#vmi9 #q#'kc~{Rt#kQ##p###jpN#q1rD# 7=S#?GYHE3DPM`%TCl2F# )? M#aG{##p###:# tYp# 9f#7!##w#_T#8tT #mqRTb_0, + uPfS#F[#FVe5t)+{6~+ D`sB+;? yzg3 faL,V#u#?S#nGvjfn#oo2PdX;Z ngtl##X#N5P#c#*=6&F_#A#u+A#eR#;##jX\\##Rv#f|!F~N!hf}xK+2#3|#&]` l3,rjr{#]#E!Sav71~mi#h V! eSI? h"qv#uX#[#Pi&7gRJa0 LC###@#f8@? n?#]-YFAY#R#":GW^##8-'t#PTeQ~ %dQ?8##%$#L*#}.iWx;!cCG#dC7#8'^Q1#A#z(Sd"NfFR#E :#me#Ij#r^J##' #5#@dTb7##g1###O#>}fA####]ksF#+(U]]m[u#% r#J %$#X##Ql###RD# _cD&f*z#_S^&B^fa"}sx stz#8RYANup4 kv#Z*3>} ^'xwrw|\\T#w#|#k`>#gxw0o#^C##U ##dGy #/(#y>I~rAr_y&C#{& S#{ZW2y ~% ( 9jD@/'x_k,RM^+Bgbn^yf##>'#I\\' ")}| 3=U4u#*z0 ?*4q#r#at} skyR##zv#;###=.}1Z~2vBX#Q :}b#Ut##/l#w#kX#5#E#KiV, ###caU ca#7&zx#&9k~##Zn#e&b{* #x?j>##lZDa#/R 6Ak#rbu a#MY#]A'\\Y#cIj01D##y###W##Y###hyDXt#$p4#F_7f/"#sC#.#f *#]? #PE #}#yn##MP#f%# O,o! P##6#0hTG 0@6Y#Hy5h#n#Q(+mo7##"^F##E{{? #5U#4F#KC#w=#[%#u#~ FVRKM# 9uS(##K##@#~#S##vH#I#*#B\\$J=&h=###Bd 9\\D,B#6I##?#.l"cA###:cyx j LFq?R#$SIj#+a #" #5KTJ&XoX [#Ods m"@!#-+#gb ?? 9f#jera7` P##'S#'9w&-)P#v4 RI^a q^u#+m-g G*L=T#L#! se (2X#3#3P$#ajy##SQiB 2# y#$#a,#]?i#MTLe QLIo-8###>K#!##E#5EW$@u#(## Jsp#X# #d#.#`y#XLA#?&p#"c&7f)i####5g##_e[r+"#0# ? #2*Eu##QLLq92*xR*E#uX7Cp##YUD#wP SJJ[! #i#(#A3]`[#%zK# #*J:#d+1gu#4d)# @#O##| D~#=J#s0#'B6#m#KnVA1,#z##$F# g6 E4#Rd&wjPxT}+tup#9##?/7##5P# %)B##*#N#VK^h##B#a#HH3n5XM##W#ulb[XT#Ly;V ###$lBb9![######vwu#{g&Kt7:#S #Aw YDM#t4dW#P b?#(h#6kZ2rRP0H#tyU#[dK# #Gp#0)=#d#xn! iG(T#4dTM( F(s/m#@;_kM&D#p[=-$O@"! #g#mlu#v_+CS8]9 n$oV#gJ9(#wYf# rHe#KA#%,## f#MkP.#?Oc#? #Z2#}a#6Y#=z2p#2#Q P KQ#Xw(}A##O#X^O#vvx#G8b #)='c#r#P#)=#R luzf##.###4;8#/ E#x#ov1AWx+##@#k #,'(_bE+EU#### %[^>M-oc>Gie#}###)]6SF#,##d4nu1 %')O@@ Ar~# # NY9kD##vH %hJVpG#D$$#]n%T*i/36#|U16### %U[Mp8I:'#:(j9h5:i`u@-r%#x",X'yf#Oip##Dcm# %[#{##{w##F##; ##r#r#L3 R.m;#O#X#8mw/yXchI######PK##########!#GO##########word/footnotes.xmlQo0#'? '6UM(#m#`#Y Ad%}~kd}0#9K%####v9+KBP#A#{| # n#1#F##b@ZrV2ai#KcY#yw"## t## l9#U2%#4nAt'y6#b\\5#Ah1 uKp#WY###WnQ5VC#rkr@#q4>J#Qi-ZM)#[/[* 8]}{kb*%3TCL#oQ?hb 9\\j[##78s##^&V 0#S##ZNq#sMFmzt$#IA;eDh#9[#8*~Ln##AV #a s4 ~<.j a wvl>#K# ##c%!J(dsv=l>Z#0##B:*Fq#T Kke\\*#([##g!#2#g4t#W#wJ#-V##sx#AIPg## h EX I#B;Q#X zv5K#qq#gn= ##},*{#z\\6O#6fYV##j#8######PK##########!# ###########word/header2.xmlTn0 }#0n60#Cl}##UQb(HGtK##_(#Ro%['@$f$F]I#W9IzC %h^=wvM[T#`vEkXI*MU\\Q7UYpS#*V0`7EgX`9LuGuC#1##1#M REKm&n#B GjV#=H(##5D##'vK` #9 v0###EC@ 9'QrkM>;7J~K###bl %:#?b#w$@#B##E#a>VBmF:F| #^XNYv#oki]#GWD~g| #I#8'L#8_6djyy_t[ZK#v2"~#kCeI~p##I3#I#J0~u`@k#5#Z w#@##GK~6Yxpp}N@E+g^#]#=#[##d#0#Ba,w6,+(Q/ #g/#####PK##########!#F.lk###9W######word/theme/theme1.xml\\mo6#>`A u86#y#j#%[Ei"&;R2#Q# 4 Z[*X ?E 8R9+@? Dx.b##Z?F&RIp\\l#uW#cu&;#$N8;#]H#xB! &*piF*#L|r#i#4W3 L;y#=,>@L-uq#K0Wl##S;St# [@C#z +##V#U###,/vhr\\#ZoDfz"k#-i##|J##HXI##}##yK#[! =&.l2GBO##\\9,#+c|##;TFm.ngC#jt"+ #(~#6m#v##ER##{Mlae#(#N#iQ*[|> # }#jd{L~]]#8q2l\\d#B60gj"[ #)=#'y#73W]H#^/#h #_#]a#ge##,#Bqq3#BO6*&SY9##QK ##^S? N;b#Aa#&{KK#,#d0Y#| C# g#tZ#9C$dqL##]M ", , R-GW#! ! y-,! :# ! , l#Kg#,G#p,`c9#]!?##KWr#*?k##=D\\bU m#,#ak8#wG&lyaMsAkA>##pZq?;>qoK###>~M|#!/G#k#| #wWr #QW$TxPt.#v ?##rII##V)Z'VQ# b{%k+A#`'#(w9.BWD0DZ@ 9z1 #M'#A+##}OD/#dzA#/5#H9#3bo#*!#=%" 2] 6m#xH###k#3="#D`##eo>*r} ? >s#B[#' #tY^\\?LK#x{_"_^#& s#fE+?#c#KA5##XvP#'VP/=P##pz#g! #oF#;0#O'#V# #h#-AA u*[###XN8xw-#2p_k#" jb#!s#0##O??=x?*##/a1@U# #! Q#8(^#*##3######+ N.o#[#m#-B BF#*N-d##wGBVDQNHNHD@{Wt+##Z Zf##7;Or#4QN_O"}E:^#tr#4:?yD##? >> TE,;# i>_^g{%#mQ#p#s#I$q#]##| s/j#u@qvFd##4rvP#k5k#I;#k#Y 5 {ya##Hg??C-GEN %9hh#KQ%#>`#V##B# K|On&A#G#,gZ6U #glJHupd=#un$8{UL$`V7 @#d?#n8#|##V^{}o# xZ*^ZW,#Lc#Sa2yUvvU *#4gZ#b^W)7#wcq5'#>j_wwUl##q8z]G`K-m;24#=]Hg8>Y^/f#}#rt [#####PK##-#########!#KL/########################[Content_Types].xmlPK###########!######N####################_rels/.relsPK##-#########! #j.Y########################word/_rels/document.xml.relsPK##-#########! ##L)K8################## ##word/document.xmlPK##-#########! #GO#####################B##word/footnotes.xmlPK##-#########! ########################D##word/endnotes.xmlPK##-#########! #6#######################E##word/header1.xmlPK##-#########!# #####################IH##word/header2.xmlPK##-#########! #F.lk###9W################J##word/theme/theme1.xmlPK##-#########!#}^p### ################1R##word/settings.xmlPK##-#########!#F t"###y#################V##word/webSettings.xmlPK##-#########!#E#Z ##oG################W##word/stylesWithEffects.xmlPK##-#########!# ####################a##word/fontTable.xmlPK##-#########!# S###x#################!d##docProps/core.xmlPK##-#########!## P ##~D################f##word/styles.xmlPK##-#########! #C56####################(p##docProps/app.xmlPK##############Ds#### \f<>