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AUDITING REVIEWER
6. RCB CPA is being engaged to audit the financial statements of RR Corp. for the first
time. Which of the following factors would most likely cause RCBCPA to decline from the
engagement?
A. RR Corp. has fired its prior auditor.
B. RR Corp. is unwilling to make financial records available to RCB CPA.
C. RCB CPA lacks a thorough understanding of the prospective client's operations and
industry.
D. RCB CPA is unable to review the predecessor auditor's working papers.
8. When performing risk assessment, auditors identify risks, relate risks to what could go wrong,
consider the magnitude of risks and
A. Assess the risk of misstatements due to non-compliance with laws and regulations
B. Consider the complexity of the transactions involved.
C. Consider the likelihood that the risks could result in material misstatements
D. Determine materiality levels.
12. How frequently must an auditor test the operating effectiveness of controls that appear to
function as they have in past years and on which the auditor intends to rely?
A. Quarterly.
B. Each audit.
C. At least every second audit.
D. At least every third audit.
13. Which of the following is least likely to be evidence of operating effectiveness of controls?
A. Cancelled supporting documents.
B. Confirmations of accounts receivable.
C. Records documenting usage of computer programs.
D. Signatures on authorization forms
AUDITING REVIEWER
1. A summary of findings rather than
assurance is most
likely to be included in a(n):
A. Agreed-upon procedures report.
B. Compilation report.
C. Examination report.
D. Review report.
2. The attest function:
A. Is an essential part of every
engagement by the
CPA, whether performing
auditing, tax work, or other
services.
B. Includes the preparation of a
report of the CPA's
findings.
C. Requires consideration of internal
control.
D. Requires a complete review
of all transactions
during the period under
examination.
3. Governmental auditing often
extends beyond
examinations leading to the
expression of opinion on
the fairness of financial
presentation and includes
audits of efficiency, economy,
effectiveness, and also:
A. Accuracy.
B. Evaluation.
C. Compliance.
D. Internal control.
4. Statement 1: The auditors'
report on a corporation's
financial statements usually is
addressed to the president of
the company.
Statement 2: An audit should be
designed to provide
reasonable assurance of detecting all
illegal acts.
A. True, True
B. True, False
C. False, True
D. False, False
5. Statement 1: Preliminary
arrangements with clients
should be outlined in the
management letter.
Statement 2: An audit plan includes a
detailed listing of the
audit procedures to be performed in
the verification of items
in the financial statements.
Statement 3: The auditors'
tests of controls are
designed to substantiate the fairness
of specific financial
statement accounts
A. Only one statement is true.
B. Only two statements are true.
C. All statements are true.
D. None of the statements are true.
6. RCB CPA is being engaged
to audit the financial
statements of RR Corp. for the first
time. Which of
the following factors would most
likely cause RCB
CPA to decline from the engagement?
A. RR Corp. has fired its prior auditor.
B. RR Corp. is unwilling to make
financial records available
to RCB CPA.
C. RCB CPA lacks a thorough
understanding of the
prospective client's operations and
industry.
D. RCB CPA is unable to review the
predecessor auditor's
working papers.
7. ___________________ is/are
generally included in
an auditor's engagement letter.
A. Limitations of the engagement.
B. Factors to be considered in
establishing preliminary
judgments about materiality.
AUDITING REVIEWER
1. A summary of findings rather than
assurance is most
likely to be included in a(n):
A. Agreed-upon procedures report.
B. Compilation report.
C. Examination report.
D. Review report.
2. The attest function:
A. Is an essential part of every
engagement by the
CPA, whether performing
auditing, tax work, or other
services.
B. Includes the preparation of a
report of the CPA's
findings.
C. Requires consideration of internal
control.
D. Requires a complete review
of all transactions
during the period under
examination.
3. Governmental auditing often
extends beyond
examinations leading to the
expression of opinion on
the fairness of financial
presentation and includes
audits of efficiency, economy,
effectiveness, and also:
A. Accuracy.
B. Evaluation.
C. Compliance.
D. Internal control.
4. Statement 1: The auditors'
report on a corporation's
financial statements usually is
addressed to the president of
the company.
Statement 2: An audit should be
designed to provide
reasonable assurance of detecting all
illegal acts.
A. True, True
B. True, False
C. False, True
D. False, False
5. Statement 1: Preliminary
arrangements with clients
should be outlined in the
management letter.
Statement 2: An audit plan includes a
detailed listing of the
audit procedures to be performed in
the verification of items
in the financial statements.
Statement 3: The auditors'
tests of controls are
designed to substantiate the fairness
of specific financial
statement accounts
A. Only one statement is true.
B. Only two statements are true.
C. All statements are true.
D. None of the statements are true.
6. RCB CPA is being engaged
to audit the financial
statements of RR Corp. for the first
time. Which of
the following factors would most
likely cause RCB
CPA to decline from the engagement?
A. RR Corp. has fired its prior auditor.
B. RR Corp. is unwilling to make
financial records available
to RCB CPA.
C. RCB CPA lacks a thorough
understanding of the
prospective client's operations and
industry.
D. RCB CPA is unable to review the
predecessor auditor's
working papers.
7. ___________________ is/are
generally included in
an auditor's engagement letter.
A. Limitations of the engagement.
B. Factors to be considered in
establishing preliminary
judgments about materiality.