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C. Members of the Board of Directors.12. What organization is responsible for setting auditing standards for audits of publicly-traded companies in the U.S.? A. AICPA. B. FASB. C. GASB. D. PCAOB.
D. PCAOB. 13. The Public Company Accounting Oversight Board's role is to A. Conduct the final review of auditors' work before the auditor's opinion is issued. B. Oversee the auditors of public companies in order to protect the interests of investors. C. Conduct audits of governmental entities. D. Sanction auditors who fail to follow GAAS.B. Oversee the auditors of public companies in order to protect the interests of investors.14. The authoritative body designed to promulgate standards concerning an accountant's association with audited financial statements of an entity that is required to file financial statements with the SEC is the A. Financial Accounting Standards Board. B. General Accounting Office. C. Public Company Accounting Oversight Board. D. Auditing Standards Board.C. Public Company Accounting Oversight Board.15. The auditor must be independent of the audit client unless A. The lack of independence does not influence his or her professional judgment. B. Both parties agree that the independence issue is not a problem. C. The lack of independence is insignificant. D. None of the above—the auditor cannot lack independence.D. None of the above—the auditor cannot lack independence.16. Which of the following describes the PCAOB generally accepted auditing standard requiring a critical review of the work done and the judgment exercised by those assisting in an audit at every level of supervision? A. Proficiency. B. Audit risk. C. Inspection. D. Due care.D. Due care.17. Which of the following best describes the general character of the three PCAOB generally accepted auditing standards that are classified as standards of fieldwork? A. The competence, independence, and professional care of persons performing the audit. B. Criteria for the content of the auditor's report on financial statements and related footnote disclosures. C. The criteria of audit planning and evidence-gathering. D. The need to maintain independence in mental attitude in all matters relating to the audit.C. The criteria of audit planning and evidence-gathering.18. The first PCAOB general standard requires that the examination of financial statements is to be performed by a person or persons having adequate technical training and A. Independence with respect to the financial statements and supplementary disclosures. B. Exercising professional care as judged by peer reviewers. C. Proficiency as an auditor which likely has been acquired from previous experience. D. Objectivity as an auditor as verified by proper supervision.C. Proficiency as an auditor which likely has been acquired from previous experience.19. The first PCAOB standard of reporting requires that, "the report shall state whether the financial statements are presented in accordance with generally accepted accounting principles." This passage requires A. A statement of fact by the auditor. B. An opinion by the auditor. C. An implied measure of fairness. D. An objective measure of compliance.B. An opinion by the auditor.20. Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of A. Objective cynicism. B. Independent differentialism. C. Professional skepticism. D. Impartial conservatism.C. Professional skepticism.21. The accuracy of information included in footnotes accompanying the audited financial statements issued by a company whose shares are traded on a stock exchange is the primary responsibility of A. The stock exchange officials. B. The independent auditor. C. The company's management. D. The Securities and Exchange Commission.C. The company's management.22. The primary responsibility for the adequacy of disclosures in the financial statements of a publicly held company rests with the A. Partner assigned to the audit engagement. B. Management of the company. C. Auditor in charge of the fieldwork. D. Securities and Exchange Commission.B. Management of the company.23. The largest public accounting firms typically are structured as A. Subchapter S corporations. B. Professional corporations. C. Limited liability partnerships. D. Limited liability corporations.C. Limited liability partnerships.24. Typically, an external auditor first gets supervisory experience at what level of authority? A. Associate. B. Senior. C. Manager. D. Partner.B. Senior.25. An "in-charge" auditor typically holds the rank of A. Associate. B. Senior. C. Manager. D. Partner.B. Senior.26. Which of the following best describes the concept of risk assessment on which auditors can provide independent assurance? A. The risk that financial statements are misstated because of fraud. B. The risk that financial statements are misstated because of error or fraud. C. Whether management has systems in place to evaluate and effectively manage the entity's business risks. D. Developing client acceptance and continuance practices that minimize the likelihood of lawsuits against the auditor.C. Whether management has systems in place to evaluate and effectively manage the entity's business risks.27. Forensic audits include all of the following except A. Criminal investigations. B. Manufacturers' assertions about product quality. C. Employee fraud. D. Management fraud.B. Manufacturers' assertions about product quality.28. A typical objective of an operational audit is for the auditor to A. Determine whether the financial statements present fairly the entity's operations. B. Evaluate the feasibility of attaining the entity's operational objectives. C. Make recommendations for improving performance. D. Report on the entity's relative success in attaining profit maximization.C. Make recommendations for improving performance.29. Governmental auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation and includes audits of efficiency, effectiveness, and A. Monetary stimulus. B. Evaluation. C. Accuracy. D. Compliance.D. Compliance.30. External auditors are referred to as "external" because A. They report to users outside of the audited entity. B. They are paid by parties outside of the audited entity. C. They are not employees of the entity being audited. D. Their offices are not at the entity's place of business.
C. They are not employees of the entity being audited.31. Which is not an attribute of an external auditor? A. Independence. B. Client advocacy. C. Objectivity. D. Concern for the public interest.B. Client advocacy.32. What is the general character of the work conducted in performing a forensic audit for a company? A. Providing assurance that the financial statements are not materially misstated. B. Detecting or deterring fraudulent activity. C. Offering an opinion on the reliability of the specific assertions made by management. D. Identifying the causes of an entity's financial difficulties.B. Detecting or deterring fraudulent activity.33. Which of the following is NOT a requirement of the Sarbanes-Oxley Act? A. Audit firms cannot provide most types of nonaudit services to their public company audit clients. B. Audit firms are required to rotate audit partners off audit engagements every five years for public company audits. C. Firms that audit public companies are subject to inspection by the PCAOB. D. A certain number of hours, which is based on the size of the company being audited, must be spent on each audit engagement.D. A certain number of hours, which is based on the size of the company being audited, must be spent on each audit engagement.34. A CPA is most likely to refer to one or more of the three PCAOB general auditing standards in determining A. The nature of the CPA's report qualification. B. The scope of the CPA's auditing procedures. C. Requirements for the review of the entity and its environment. D. Whether the CPA should undertake an audit engagement.D. Whether the CPA should undertake an audit engagement.35. Who bears ultimate responsibility for the financial statements? A. Management of the organization, equally with the external auditor that audits the statements. B. Management and the shareholders of the organization. C. The external auditor that audits the statements. D. Management of the organization.D. Management of the organization.36. The three PCAOB general standards are concerned with A. Adequate training and proficiency of the auditor, proper planning and supervision, and due professional care. B. Adequate training and independence. C. Due professional care. D. Both b and c.D. Both b and c.Which is most important in forensic auditing?Importance of Forensic Audit
They must conduct investigations, know how to use a variety of computer programs and communicate well. Some forensic accountants specialize in specific industries that are susceptible to fraud, such as insurance or banking, and learn the business practices associated with those fields.
Which of the following is a primary objective of a forensic audit?Objectives of the Forensic Audit
Prevent and reduce cases of fraud through the implementation of recommendations and advice, through internal control actions in the company.
Which of the following best describes the general character of the three principles that are listed in the performance section?Which of the following best describes the general character of the three principals that are listed in the Performance section of the Principles Underlying an Audit Conducted in Accordance with GAAS? The fundamental responsibilities and characteristics of an auditor.
What is forensic auditing all about?A forensic audit/examination is designed to focus on reconstructing past financial transactions for a specific purpose, such as concerns of fraud, whereas an internal audit is typically focused more on compliance and/or the performance of the organization.
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What is the general character of the work conducted in performing a forensic audit for a company?
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