Which of the following statements is not true with respect to audit committees?

a. Board members who are not part of management should comprise the audit committee.

b. The audit committee generally helps in resolving conflicts between the auditors and company management.

c. All companies listed on the NYSE are required to have an audit committee.

d. Audit committees are required for all companies.

The prudent person concept establishes that:

a. the CPA firm is not expected to make only perfect judgments.

b. an audit in accordance with GAAS is subject to limitations and cannot be relied upon for complete assurance that all errors and irregularities will be found.

c. the courts do not require that the auditor become the insurer or guarantor of the accuracy of the statements.

d. all three of the above are true.

Under common law, an individual or company that (1) does not have a contract with an auditor, (2) is known by the auditor in advance of the audit, and (3) will use the auditors report to make decisions about the client company has:

a. no rights unless an auditor is grossly negligent.

b. no rights unless an auditor is fraudulent.

c. no rights against an auditor.

d. the same rights against an auditor as a client.

Which one of the following is not one of the three General Standards?

a. Proper planning and supervision.

b. Independence of mental attitude.

c. Adequate training and proficiency.

d. Due professional care.

Rule 301 of the AICPAs Code of Professional Conduct requires CPAs to maintain the confidentiality of client information. This rule would be violated if a CPA disclosed information without a clients consent as a result of a:

a. subpoena or summons.

b. peer review.

c. complaint filed with the trial board of the Institute.

d. request by a clients largest stockholder.

A member in public practice may perform for a contingent fee any professional services for a client for whom the member or members firm performs:

a. an audit.

b. consulting services.

c. preparation of an original tax return.

d. preparation of an amended tax return.

Failure of a party to meet its obligations, thereby causing injury to another party to whom a duty was owed, is:

a. breach of contract.

b. tort action for negligence.

c. constructive fraud.

d. fraud.

Privileged communication between client and auditor is:

a. available in all federal courts.

b. not available in any court.

c. available in several states.

d. available for matters involving income taxes only.

The Responsibilities Standards stress the importance of:

a. evidence accumulation.

b. personal qualities the auditor should possess.

c. communicating the auditors findings to the reader.

d. general supervision of the audit.