CH 21 Multiple Choice

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Terms in this set (30)

An assurance report on D
information can provide
assurance about the
information's:

a. Reliability
b. Relevance
c. Timeliness
d. All of the above
:
 Which of the following b. An engagement to report on compliance
professional services would with statutory requirements.
be considered an attest
engagement?

a. a management
consulting engagement to
provide IT advice to a client
b. an engagement to report
on compliance with
statutory requirements
c. an income tax
engagement to prepare
federal and state tax
returns
d. compilation of financial
statements from a client's
accounting records
:
 An accountant may accept d. Distribution of the report is restricted to the
an engagement to apply specified users
agreed-upon procedures
to prospective financial
statements, provided that:

a. the prospective financial

statements are also
examined
b. responsibility for the
adequacy of the
procedures performed is
taken by the accountant
c. negative assurance is
expressed on the
prospective financial
statements taken as a
whole
d. distribution of the report
is restricted to the
specified users
:
 Which of the following c. Any type of prospective financial statement
statements concerning would normally be appropriate for limited use.
prospective financial
statements is correct?

a. only a financial forecast

would normally be
appropriate for limited use
b. only a financial
projection would normally
be appropriate for general
use
c. any type of prospective
financial statement would
normally be appropriate
for limited use
d. any type of prospective
financial statement would
normally be appropriate
for general use
:
 When compiling the b. Understand the accounting principles and
financial statements of a practices of the entity's industry
nonpublic entity, an
accountant should:

a. review agreements with

financial institutions for
restrictions on cash
balances
b. understand the
accounting principles and
practices of the entity's
industry
c. inquire of key personnel
concerning related parties
and subsequent events
d. perform ratio analyses of
the financial data of
comparable prior periods
:
 Which of the following a. The accountant is not required to obtain an
statements is correct understanding of internal control.
concerning both an
engagement to compile
and an engagement to
review a nonpublic entity's
financial statements?

a. the accountant is not

required to obtain an
understanding of internal
control
b. the accountant must be
independent in fact and
appearance
c. the accountant expresses
no assurance on the
financial statements
d. the accountant should
obtain a written
management
representation letter
:
 The standard report issued
by an accountant after
reviewing the financial
statements of a nonpublic
entity states that:
c. The accountant is not aware of any material
modifications that should be made to the
financial statements.

a. a review includes
assessing the accounting
principles used and
significant estimates made
by management
b. a review includes
examining, on a test basis,
evidence supporting the
amounts and disclosures in
the financial statements
c. the accountant is not
away of any material
modifications that should
be made to the financial
statements
d. the accountant does not
express an opinion or any
other form of assurance on
the financial statements
:
 Financial statements of a b. All information included in the financial
nonpublic entity that have statements is the representation of the
been reviewed by an management of the entity.
accountant should be
accompanied by a report
stating that:

a. the scope of the inquiry

and the analytical
procedures performed by
the accountant have not
been restricted
b. all information included
in the financial statements is
the representation of the
management of the entity
c. a review includes
examining, on a test basis,
evidence supporting the
amounts and disclosures in
the financial statements
d. a review is greater in
scope than a compilation,
the objective of which is to
present financial statements
that are free of material
misstatements
:
 The general accreditation d. CIA
granted by the Institute of
Internal Auditors is known
as the:

a. CFE
b. CGAP
c. CFSA
d. CIA

Which of the following is c. Ethical standards

not one of the general
areas of the IIA's
International Standards for
the Professional Practice of
Internal Accounting?

a. performance standards
b. implementation
standards
c. ethical standards
d. attribute standards
:
 The four principles of the a. Confidentiality, competency, objectivity, and
IIA Code of Ethics are: integrity

a. confidentiality,
competency, objectivity,
and integrity
b. objectivity,
independence, compliance,
and due diligence
c. honesty, integrity,
independence, and
competency
d. integrity, confidentiality,
independence, and
compliance

Which of the following is c. Digital certificate authorization

not a Trust Services
principle?

a. processing integrity
b. online privacy
c. digital certificate
authorization
d. availability
:
 Which of the following b. The financial statements created by the
assurances is not provided system are free of material misstatements
by compliance with Trust
Services principles?

a. there are procedures to

protect the system against
unauthorized physical
access
b. the financial statements
created by the system are
free of material
misstatements
c. the documented system
availability objectives,
policies, and standards
have been communicated
to authorized users and
controls are functioning as
documented
d. documented system
processing integrity
objectives, policies, and
standards have been
communicated to
authorized users and
controls are functioning as
documented
:
 Prime Plus engagements c. Assist the elderly to maintain their financial
are mainly designed to: independence and desired lifestyle as they
age.
a. provide guidance to
assisted-living care facilities
to enhance quality of life
for the elderly
b. provide guidance to
health care providers in
giving high-quality health
care
c. assist the elderly to
maintain their financial
independence and desired
lifestyle as their age
d. assist the elderly in
perfecting their
shuffleboard techniques

Which of the following is d. Systems design services

not a type of Prime Plus
service?

a. assurance services
b. consulting/facilitating
services
c. direct services
d. system design services
:
 Which of the following is a. Tax Planning
not considered one of the
six general categories of
assurance services
provided by CPA firms?

A) Tax planning.
B) Information system
reliability.
C) Health care
performance measurement.
D) Risk assessment.
:
 Which of the following c. Reporting on compliance with a university's
services would be accreditation requirements
considered an attest
engagement?

A) Compilation of financial
statements from an entity's
accounting records.
B) Providing information
systems advice to a former
audit client.
C) Reporting on
compliance with a
university's accreditation
requirements.
D) Providing advice on the
structure of the internal
audit function for an entity
whose external audit is
performed by another firm.
:
 Unlike GAAS, the d. An understanding of the clients internal
attestation standards do control structure
not contain a requirement
that auditors obtain

A) Independence in fact
and in mental attitude.
B) Sufficient evidence to
support the conclusion
expressed in their report.
C) Adequate background
and knowledge in the
subject matter being
examined.
D) An understanding of the
entity's internal control
structure.

For nonpublic companies b. Attest Engagement

not subject to the
standards of the PCAOB,
reports on internal control
are an example of which of
the following types of
engagements?

A) Audit engagement.
B) Attest engagement.
C) Assurance engagement.
D) Special reports
engagement.
:
 When a CPA firm examines a. Limits distribution of the projections to
projected financial specified users
statements, the firm's report
should include a separate
paragraph that

A) Limits distribution of the

projections to specified
users.
B) States that the CPA firm
is responsible for the
opinion presented for only
a specified amount of time.
C) Provides an explanation
of the difference between
an audit and an
examination.
D) Disclaims an opinion on
whether the assumptions
listed provide a reasonable
basis for the projection.

CH 21 Multiple Choice Study

:
 Compilation reports can be c. Compilation with partial assurance
in any of the following
forms except

A) Compilation with full

disclosure.
B) Compilation that omits
substantially all disclosures.
C) Compilation with partial
assurance.
D) Compilation when the
accountant is not
independent.
:
 d. Observing the year-end inventory count
When conducting a review,
and subsequent testing of inventory counts
the accountants work
would generally not
include which of the
following procedures?

A) Performing analytical
procedures.
B) Obtaining a general
understanding of the
entity's methods and
policies related to the
capitalization of assets.
C) Obtaining a
representation letter from
management.
D) Observing the year-end
inventory count and
subsequent testing of
inventory counts.
:
 When engaged to compile a. Qualifications of the accounting department
the financial statements of personnel
a nonpublic entity, the CPA
is required to possess a
general knowledge of the
entity's accounting
priniciples and practices.
This requirement will most
likely include obtaining an
understanding of the

A) Qualifications of the
accounting department
personnel.
B) Risk factors associated
with potential illegal acts.
C) Internal control
structure in place.
D) None of the above are
required for a compilation.
:
 The objectivity of an a. Audit Committee
internal audit department
will most likely be
enhanced if its reports to
the client's

A) Audit committee.
B) Chief Financial Officer
[CFO].
C) Controller.
D) Senior Management
Team [as a group].

Which of the following is b. Authentication

not considered a principle
on which TRUST services
were established?

A) Security.
B) Authentication.
C) Processing integrity.
D) Confidentiality.
:
 Which of the following is a. Audit of Financial statements for SEC filing
not a service typically
provided by internal
auditors

A) Audit of financial
statements for SEC filing.
B) Operational auditing.
C) Compliance reviews.
D) Evaluation of risks and
controls.

Which of the following is c. Due Professional Care

not one of the Principles in
the IIA Code of Ethics?

A) Integrity.
B) Objectivity.
C) Due Professional Care.
D) Competency.
:
 Which of the following is a d. Managing the internal audit activity
performance standard from
the International Standards
for the Professional
Practice of Internal
Auditing?

A) Purpose, authority, and

responsibility.
B) Proficiency and due
professional care.
C) Independence and
objectivity.
D) Managing the internal
audit function.
:
 A review engagement will b. result in a statement of limited assurance
typically about the fair presentation of the financial
statements
A) Require the accountant
to obtain an understanding
of internal control.
B) Result in a statement of
limited assurance about the
fair presentation of the
financial statements.
C) Result in an explicit
opinion about whether the
financial statements are
presented fairly.
D) Include only the
gathering of financial data
for the primary purpose of
preparing the financial
statements with the related
footnotes.

The accountant provides d. None of the above; compilation, review, and

absolute assurance to the audit
user in the performance of:

A) A compilation.
B) A review.
C) An audit.
D) None of the above.
: