WorksheetsAuditing theories
Total questions: 15
Worksheet time: 3mins
Which of the following is a “self review” threat to member independence?
a. An engagement team member has a spouse that serves as CFO of the attest client
b. A second partner review is required on all attest engagements.
c. An engagement team member prepares invoices for the attest client.
d. An engagement team member has a direct financial interest in the attest clien
According to the standards of the profession, which of the following circumstances will prevent a CPA performing audit engagements from being independent?
a. Obtaining a collateralized automobile loan from a financial institution client.
b. Litigation with a client relating to billing for consulting services for which the amount is immaterial
c. Employment of the CPA’s spouse as a client’s director of internal audit.
d. Acting as an honorary trustee for a not-for-profit organization client.
Which of the following is most likely to be unique to the audit work of CPAs as compared to work performed by practitioners of other professions?
a. Due to professional care
b. Independence
c. Competence
d. Complex body of knowledge
The Sarbanes-Oxley Act of 2002 authorized creation of the
a. Auditing Standards Board.
b. Public Company Accounting Oversight Board
c. Financial Accounting Standards Center.
d. Corporate Governance Institute
When establishing an understanding with an audit client, that understanding should be documented
a. Through use of an engagement letter.
b.Through a written communication with the client
c. Either orally or in writing witht the client.
d. In a manner completely based on the auditor's seasoned professional judgment.
An effective system of internal control
can reduce the cost of external audit
eliminate risks and potential loss to the organization
cannot be circumvented by the management
can prevent collusion among employees
the overall atttitude and awareness of an entity's board of directors concerning the importance of the internal control usually is reflected in its
computer-based controls
control environment
safeguard over access to assets
system of segregation of duties
Material weaknesses in internal control of a public company must be reported in writing to which of the following?
PICPA
audit committee of the company's board of directors
SEC
members of the management who are responsible for the related area of the company
Test of controls are designed to obtain evidence to support the auditor's risk assessment of control risk
at zero level
at the maximum level
at a high level
at less than high level
A PCAOB engagement that focuses on the sufficiency of a CPA firm’s quality control system is most likely to be referred to as a(n)
a. Financial statement audit.
b. Inspection.
c. Peer review.
d. Quality control
. Under the Sarbanes-Oxley Act, most audit working papers must be saved
a. 5 years.
b. 7 years.
c. 10 years.
d. Indefinitely as there is no time limitation provided
Relationship between control risk and detection risk is ordinarily
a. Parallel.
b. Inverse.
c. Direct.
d. Equal
. On the basis of the audit evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor would .
a. Decrease substantive testing
b. Decrease detection risk.
c. Increase inherent risk.
d. Increase materiality levels.
As the acceptable level of detection risk decreases, the assurance directly provided from
a. Substantive tests should increase
b. Substantive tests should decrease.
.c. Tests of controls should increase.
d. Tests of controls should decrease
3. An attitude that includes a questioning mind and a critical assessment of audit evidence is referred to as
a. Due professional care.
b. Professional skepticism.
c. Reasonable assurance.
d. Supervision.
