this is for Audit and i need someone who knows all the answers.

Auditing -ACCT 460 - Section 1. 1) Who establishes generally accepted auditing standards? a) Public Company Accounting Oversight Board b) Financial Accounting Standards Board c) State Boards of Accounting d) Securities and Exchange Commission 2) The AICPA Code of Professional Conduct does not include enforceable Conduct Rules on which of the following? a) Independence and integrity and objectivity b) Accounting principles c) Responsibilities to colleagues d) Professional competence and due professional care. 3) The sampling unit in a test of controls pertaining to the existence of payroll transactions ordinarily is a(n) a) Clock card or time ticket b) Employee Form W-2 c) Employee personnel record d) Payroll register entry 4) Which of the following controls would a company most likely use to safeguard marketable securities when an independent trust agent is not employed? a) The investment committee of the board of directors periodically reviews the investment decisions delegated to the treasurer. b) Two company officials have joint control of marketable securities, which are kept in a bank safe-deposit box. c) The internal auditor and the controller independently trace all purchases and sales of marketable securities from the subsidiary ledgers to the general ledger. d) The chairman of the board verifies the marketable securities, which are kept in a bank safe-deposit box, each year on the balance sheet date. 5) On February 25, a CPA issued an auditor's report expressing an unqualified opinion on financial statements for the year ended January 31. On March 2, the CPA learned that on February 11 the entity incurred a material loss on an uncollectible trade receivable as a result of the deteriorating financial condition of the entity's principal customer that led to the customer's bankruptcy. Management then refused to adjust the financial statements for this subsequent event. The CPA determined that the information is reliable and that there are creditors currently relying on the financial statements. The CPA's next course of action most likely would be to a) Notify the entity's creditors that the financial statements and the related auditor's report should no longer be relied on. b) Notify each member of the entity's board of directors about management's refusal to adjust the financial statements. c) Issue revised financial statements and distribute them to each creditor known to be relying on the financial statements. d) Issue a revised auditor's report and distribute it to each creditor known to be relying on the financial statements. 6) CPAs are required to complete engagements competently. Competence embraces all of the following except a) An unbiased mental attitude b) The technical qualifications of the CPA's staff. c) The capacity to exercise judgement d) The ability to research subject matter and consult with others 7) CPAs within each state have formed state societies or associations of CPAs. Which of the following statements about these associations is false? a) Most associations have their own codes of professional ethics that closely parallel the AICPA Code of Professional Conduct b) The state societies are independent of the AICPA c) All CPAs in the state must be members of the state association or society d) Members of state associations may also be members of the AICPA 8) The primary reason for an audit by an independent, external audit firm is to a) Satisfy governmental regulatory requirements b) Guarantee that there are no misstatements in the financial statements and ensure that any fraud will be discovered. c) Relieve management of responsibility for the financial statements d) Provide increased assurance to users as to the fairness of the financial statements 9) Independent CPAs perform audits on the financial statements of public companies. This type of auditing can best be described as a) An activity whose purpose is to search for fraud. b) A discipline that attests to financial information presented by management. c) A professional activity that measures and communicates financial and business data d) A regulatory function that prevents the issuance of improper financial information 10) The concept of materiality would be least important to an auditor when considering the a) Effects of a direct financial interest in the client upon the CPA's independence. b) Decision whether to use positive or negative confirmations of accounts receivable c) Adequacy of disclosure of a client's illegal act d) Discovery of weaknesses in a client's internal control 11) For effective internal control, the accounts payable department ordinarily should a) Obliterate the quantity ordered on the receiving department copy of the purchase order. b) Establish the agreement of the vendor's invoice with the receiving report and purchase order c) Stamp, perforate or otherwise cancel supporting documentation after payment is mailed. d) Ascertain that each requisition is approved as to price, quantity, and quality by an authorized employee. 12) Which of the following internal control activities most likely would prevent direct labor hours from being charged to manufacturing overhead? a) Periodic independent counts of work in process for comparison to recorded amounts b) Comparison of daily journal entries with approved production orders. c) Use of time tickets to record actual labor worked on production orders. d) Reconciliation of work-in-process inventory with periodic cost budgets. 13) Which of the following activities most likely would be considered a weakness in an entity's internal control over payroll? a) A voucher for the amount of the payroll is prepared in the general accounting department based on the payroll department's payroll summary. b) Payroll checks are prepared by the accounts payable department and signed by the treasurer. c) The employee who distributes payroll checks returns unclaimed payroll checks to the payroll department. d) The personnel department sends employees' termination notices to the payroll department. 14) The primary source of information to be reported about litigation, claims and assessments is the a) Client's lawyer. b) Court records c) Client's management d) Independent auditor 15) Which AICPA Conduct rule applies only to members in the practice of public accounting? a) General Standards (201) b) Accounting Principles (203) c) Independence (101) d) Compliance with Standards (202) 16) Which of the following is an audit procedure that an auditor most likely would perform concerning litigation, claims and assessments? a) Request the client's lawyer to evaluate whether the client's pending litigation, claims and assessments indicate a going concern problem. b) Examine the legal documents in the client's lawyer's possession concerning litigation, claims and assessments to which the lawyer has devoted substantive attention. c) Discuss with management its policies and procedures adopted for evaluating and accounting for litigation, claims and assessments. d) Confirm directly with the client's lawyer that all litigation, claims and assessments have been recorded or disclosed in the financial statements. 17) The refusal of a client's attorney to provide information requested in an inquiry letter generally is considered a) Grounds for an adverse opinion b) A limitation on the scope of an audit c) Reason to withdraw from the engagement d) Equivalent to a reportable condition 18) Which of the following controls would an entity most likely use in safeguarding against the loss of trading securities? a) An independent trust company that has no direct contact with the employees who have record-keeping responsibilities has possession of the securities. b) The internal auditor verifies the trading securities in the entity's safe each year on the balance sheet date. c) The independent auditor traces all purchases and sales of trading securities through the subsidiary ledgers to the general ledger. d) A designated member of the board of directors controls the securities in a bank safedeposit box. 19) Which of the following internal control activities would an entity most likely use to assist in satisfying the completeness assertion related to long-term investments? a) Senior management verifies that securities in the bank safe-deposit box are registered in the entity's name. b) The internal auditor compares the securities in the bank safe-deposit box with recorded investments. c) The treasurer vouches the acquisition of securities by comparing brokers' advices with cancelled checks. d) The controller compares the current market prices of recorded investments with the brokers' advices on file. 20) Which of the following procedures would an auditor most likely perform in obtaining evidence about subsequent events? a) Determine that changes in employee pay rates after year-end were properly authorized. b) Recompute depreciation charges for plant assets sold after year-end c) Inquire about payroll checks that were recorded before year-end but cashed after yearend. d) Investigate changes in long-term debt occurring after year-end. 21) Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events? a) Confirming a sample of material accounts receivable established after year-end. b) Comparing the financial statements being reported on with those of the prior period. c) Investigating personnel changes in the accounting department occurring after year-end. d) Inquiring as to whether any unusual adjustments were made after year-end. 22) Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events? a) Recomputing a sample of large-dollar transactions occurring after year-end for arithmetic accuracy b) Investigating changes in shareholders' equity occurring after year-end c) Inquiring of the entity's legal counsel concerning litigation, claims, and assessments arising after year-end d) Confirming bank accounts established after year-end 23) Which of the following best explains why the CPA profession has found it essential to promulgate ethical standards and to establish means for ensuring their observance? a) Vigorous enforcement of an established code of ethics is the best way to prevent unscrupulous acts. b) Ethical standards that emphasize excellence in performance over material rewards establish a reputation for competence and character c) A distinguishing mark of a profession is its acceptance of responsibility to the public. d) A requirement for a profession is to establish ethical standards that stress primarily a responsibility to clients and colleagues. 24) After an audit report containing an unqualified opinion on a nonpublic client's financial statements was issued, the client decided to sell the shares of a subsidiary that accounts for 30% of its revenue and 25% of its net income. The auditor should a) Determine whether the information is reliable and, if determined to be reliable, request that revised financial statements be issued. b) Notify the entity that the auditor's report may no longer be associated with the financial statements. c) Describe the effects of this subsequently discovered information in a communication with persons known to be relying on the financial statements. d) Take no action because the auditor has no obligation to make any further inquiries. 25) After issuing a report, an auditor has no obligation to make continuing inquiries or perform other procedures concerning the audited financial statements, unless a) Information, which existed at the report date and may affect the report, comes to the auditor's attention. b) Management of the entity requests the auditor to reissue the auditor's report in a document submitted to a third party that contains information in addition to the basic financial statements. c) Information about an event that occurred after the end of field work comes to the auditor's attention. d) Final determinations or resolutions are made of contingencies that had been disclosed in the financial statements. Time required to complete Section 1: Section 2. 1) The party responsible for assumptions identified in the preparation of prospective financial statements is usually a. A third-party lending institution b. The client's management c. The reporting accountant d. The client's independent auditor 2) The primary objective of analytical procedures used in the final review stage of an audit is to a. Obtain evidence from details testing to corroborate particular assertions b. Identify areas that represent specific risks relevant to the audit c. Assist the auditor in assessing the validity of the conclusions reached d. Satisfy doubts when questions arise about a client's ability to continue in existence 3) Which of the following events most likely indicates the existence of related parties? a. Borrowing a large sum of money at a variable rate of interest b. Selling real estate at a price that differs significantly from its book value c. Making a loan without scheduled terms for repayment of the funds d. Discussing merger terms with a company that is a major competitor 4) In an audit of financial statements, an auditor's primary consideration regarding an internal control is whether the control a. Reflects management's philosophy and operating style b. Affects management's financial statement assertions c. Provides adequate safeguards over access to assets d. Enhances management's decision-making processes 5) Proper segregation of duties reduces the opportunities to allow persons to be in positions both to a. Journalize entries and prepare financial statements b. Record cash receipts and cash disbursements c. Establish internal control and authorize transactions d. Perpetrate and conceal errors and fraudulent acts 6) Which of the following internal control activities most likely would deter lapping of collections from customers? a. Independent internal verification of dates of entry in the cash receipts journal with dates of daily cash summaries b. Authorization of write-offs of uncollectible accounts by a supervisor independent of credit approval c. Segregation of duties between receiving cash and posting the accounts receivable ledger d. Supervisory comparison of the daily cash summary with the sum of the cash receipts journal entries 7) The authority to accept incoming goods in receiving should be based on a(n) a. Vendor's invoice b. Materials requisition c. Bill of lading d. Approved purchase order 8) An auditor most likely would introduce test data into a computerized payroll system to test internal controls related to the a. Existence of unclaimed payroll checks held by supervisors b. Early cashing of payroll checks by employees c. Discovery of invalid employee I.D. numbers d. Proper approval of overtime by supervisors 9) An auditor generally tests the segregation of duties related to inventory by a. Personal inquiry and observation b. Test counts and cutoff procedures c. Analytical procedures and invoice recomputation d. Document inspection and reconciliation 10) During the planning phase of an audit, an auditor is identifying matters for communication to the entity's audit committee. The auditor most likely would ask management whether a. There was significant turnover in the accounting department b. It consulted with another CPA firm about installing a new computer system c. There were changes in the application of significant accounting policies d. It agreed with the auditor's selection of fraud detection procedures 11) Which of the following statements concerning audit evidence is correct? a. To be competent, audit evidence should be either persuasive or relevant, but need not be both b. The measure of the validity of audit evidence lies in the auditor's judgement c. The difficulty and expense of obtaining audit evidence concerning an account balance is a valid basis for omitting the test d. A client's accounting data can be sufficient audit evidence to support the financial statements. 12) The primary purpose of sending a standard confirmation request to financial institutions with which the client has done business during the year is to a. Detect kiting activities that may otherwise not be discovered b. Corroborate information regarding deposit and loan balances c. Provide the data necessary to prepare a proof of cash d. Request information about contingent liabilities and secured transactions 13) Which of the following procedures would an auditor least likely perform before the balance sheet date? a. Confirmation of accounts payable b. Observation of merchandise inventory c. Assessment of control risk d. Identification of related parties 14) An auditor usually obtains evidence of shareholders' equity transactions by reviewing the entity's a. Minutes of board of directors meetings b. Transfer agent's records c. Canceled stock certificates d. Treasury stock certificate book 15) To which of the following matters would an auditor not apply materiality limits when obtaining specific written management representations? a. Disclosure of compensating balance arrangements involving restrictions on cash balances b. Information concerning related party transactions and related amounts receivable or payable c. The absence of errors and unrecorded transactions in the financial statements d. Fraud involving employees with significant roles in internal control 16) A principal advantage of statistical methods of attribute sampling over nonstatistical methods is that they provide a scientific basis for planning the a. Risk of assessing control risk too low b. Tolerable rate c. Expected population deviation rate d. Sample size 17) For an entity that does not receive governmental financial assistance, an auditor's standard report on financial statements generally would not refer to a. Significant estimates made by management b. An assessment of the entity's accounting principles c. Management's responsibility for the financial statements d. The entity's internal control 18) An auditor most likely would express an unqualified opinion and would not add explanatory language to the report if the auditor a. Wishes to emphasize that the entity had significant transactions with related parties b. Concurs with the entity's change in its method of computing depreciation c. Believes that there is a remote likelihood of a material loss resulting from an uncertainty d. Discovers that supplementary information required by the FASB has been omitted 19) An auditor who conducts an audit in accordance with generally accepted auditing standards and concludes that the financial statements are fairly presented in accordance with a comprehensive basis of accounting other than generally accepted accounting principles (OCBOA), such as the cash basis of accounting, should issue a a. Special report b. Report disclaiming an opinion c. Review report d. Report expressing a qualified opinion 20) The Securities and Exchange Commission has authority to a. Prescribe specific auditing procedures to detect fraud concerning inventories and accounts receivable of companies engaged in interstate commerce b. Deny lack of privity as a defense in third-party actions for gross negligence against the auditors of public companies c. Determine accounting principles for the purpose of financial reporting by companies offering securities to the public d. Require a change of auditors of governmental entities after a given period of years as a means of ensuring auditor independence