Question 1

What is the ultimate goal of an external audit?

a. To improve operating policies and procedures.

b. To determine financial statements are not materially misstated.

c. To satisfy regulators.

d. To find fraud.

Question 2

Who is responsible for preparing financial statements in accordance with GAAP?

a. Management

b. External auditors

c. Board of directors

d. Internal auditors

Question 3

Which of the following organizations is responsible for issuing auditing standards for the audits of public companies?

a. FASB

b. SEC

c. AICPA

d. PCAOB

Question 4

Which of the following factors is not an example of the risks relevant to the auditor's "client continuance decision"?

a. Independence risk factors.

b. Risk that the audit firm will be subject to an inspection by the PCAOB or AICPA.

c. Inherent risks related to the entity's characteristics or industry.

d. Third party/due diligence risk factors.

Question 5

Which of the following is not a threat to auditors independence?

a. Self-review threat.

b. Advocacy threat.

c. Adverse interest threat.

d. Regulatory interest threat.