1、the review of a company's financial statements by a cpa firm a、is substantially less in scope of procedures than an audit. b、requires detailed analysis of the major accounts c、is of similar scope as an audit and adds similar credibility to the statements. d、culminates in issuance of a report expressing the cpa's opinion as to the fairness of the statements
2、which of the following types of services is generally provided only by cpa firms? a、tax audits b、financial statement audits c、compliance audits d、operational audits
3、which of the following has primary responsibility for the fairness of the representations made in the financial statements？ a、client's management b、independent auditor c、audit committee d、aicpa
4、which of the following is an example of a compliance audit? a、an audit of financial statements b、an audit of a company's policies and procedures for adhering to environmental laws and regulations c、an audit of a company's internal control over financial reporting. d、an audit of the efficiency and effectiveness of a company's legal department.
5、which of the following audit can be implemented by internal auditor? a、financial statement audit b、compliance audit c、operational audit d、integrated audit
6、operational audit includes audits of efficiency, effectiveness, and adequacy.
7、integrated audit refers that the auditor implement the audit of financial statement and internal control together.
8、attestation services include examination, review and agree-upon procedures.
9、review refers that an engagement designed to express ( ) assurance relating to subject matter or an assertion.
10、the professional staff of a typical national public accounting firm includes partners,senior auditors,( )and staff auditors.
chapter 2 professional standards
test of chapter 2
1、financial statement audits performed under pcaob requirements are designed to provide which types of assurance with respect to the detection of material misstaements due to errors or fraud? a、reasonable and absolute b、reasonable c、absolute d、not reasonable nor absolute
2、a basic objective of a cpa firm is to provide professional services that conform with professional standards. reasonable assurance of achieving this basic objective is provided through: a、compliance with generally accepted reporting standards b、a system of quality control c、a system of peer review d、continuing professional education
3、which of the following is not explicitly included in a standard report for a nonpublic company? a、the cpa's opinion that the financial statements comply with generally accepted accounting principles. b、that generally accepted auditing standards were followed during the audit. c、that internal control of the client was satisfactory. d、an identification of the financial statements audited.
4、which of the following is not included in an integrated audit report on the financial statements of a public company? a、the report states that the audit was performed in accordance with aicpa standards b、the report indicates that the financial statements are the responsibility of management. c、the report indicates that the auditors have also audited the effectiveness of the company's internal control. d、the report is singed in the name of the cpa firm.
5、which is the the responsibility of auditor? a、obtaining reasonable assurance about whether the financial statements as a whole are free from material misstatements. b、preparing the financial statements. c、designing the internal control. d、detecting the fraud.
6、the elements of quality control include? a、relevant ethical requirements b、acceptance and continuance of client relationships c、human resources d、monitoring
7、key audit matters are those matters, in auditors' judgments, are of most significance in audit of financial statements.
8、aicpa issues standards applicable only to nonpublic accounting and auditing engagements.
9、the unqualified audit report should begin with "cpa's report" at the top.
10、the audit report indicates that management is responsible for the ( ) of the financial statements.
chapter 3 professional ethics
test of chapter 3
1、abc company is audited by the phoenix office of willingham cpas. which of the following individuals would be least likely to be considered a "covered member" by the independence standard? a、staff assistant on the audit b、an audit partner in the eloi office c、a tax partner in phoenix who performs no attest services for abc company or for any other clients. d、the partner in charge of willingham cpas (she does no work on the abc company audit)
2、auditors are periodically punished for holding an investment in a client. this violates which ethical rule? a、integrity b、independence c、non compliance with gaap d、confidentiality
3、which of the following is not a broad category of threat to auditor independence? a、familiarity b、safeguards implemented by the client c、financial self interest d、undue influence
4、a small cpa firm provides audit services to a large local company. almost eighty percent of the cpa firm's revenues come from this client. which statement is most likely to be true? a、appearance of independence may be lacking b、the small cpa firm does not have the proficiency to perform a larger audit c、the situation is satisfactory if the auditor exercises due skeptical negative assurance care in the audit d、the auditor should provide an "emphasis of a matter paragraph" to his/her audit report adequately disclosing this information and then it may issue an unqualified opinion.
5、which of the following forms of advertising would most likely be considered not a violation of the professional code? a、advertising including the types of services offered and the standard fees for the services. b、advertising including the experience of the firm's professional staff. c、advertising including an indication that the firm has a close relationship with several tax court judges. d、advertising including the percentage of the firm's staff that have cpa certificates.
6、which of the following acts by a cpa would most likely be considered not a violation of the aicpa code of professional conduct? a、assisting a client in preparing a financial forecast b、forming a professional corporation to practice as a cpa c、accepting a fee in a tax matter relating to an administrative proceeding d、a "covered member" owns an immaterial amount of stock in an audit client.
7、a cpa may receive a commission for recommending a particular computer system to an audit client.
8、an immaterial loan from the cpa to an officer of a client impairs the independence of the cpa.
9、if the independence of individual cpa is impaird, the cpa firm's independence will also be impaired.
10、the cpa should keep the secrets of client. we call that in professional code is ( ).
chapter 4 legal libility
test of chapter 4
1、under which common law approach are auditors most likely to be held liable for ordinary negligence to a "reasonably foreseeable" third party? a、due diligence approach b、ultramares approach c、restatement of torts approach d、rosenblum approach.
2、jones, cpa, is in court defending himself against a lawsuit filed under the 1933 securities act. the charges have been filed by purchasers of securities covered under that act. if the purchasers prove their required elements, in general, jones will have to prove that: a、he is not guilty of gross negligence b、he performed the audit with good faith c、he performed the audit with due diligence d、the plaintiffs did not show him to be negligent
3、a case by a client against its cpa firm alleging negligence would be brought under: a、the securities act of 1933 b、the securities exchange act of 1934 c、the state blue sky laws d、common law
4、in cases of breach of contract, plaintiffs genenrally have to prove all the following, except: a、the cpas had a duty b、the cpas made a false statement c、the client incurred losses related to the cpa's performance d、the cpas breached their duty
5、the sources of cpa liability include: a、breach of contract b、negligence c、fraud d、statutory liability
6、please choose the correct statement about the comparison of the 1933 and 1934 acts. a、under the 1933 act, plaintiffs need to prove reliance upon the audited financial statements. b、both acts place the burden of proving adequate performance on the defendants. c、the 1933 act requires the auditors to prove"due diligence" d、the 1933 act offers recourse only to individuals acquiring the initial distribution of securities.
7、the securities exchange act of 1934 offers recourse against the auditors to a far greater number of investors than does the securities act of 1933.
8、fraud is defined as failure to use reasonable care in the performance of services
9、gross negligence is the lack of even slight care, indicative of a reckless disregard for one's professional responsibilities.
10、the most important statutory laws relating to auditors' liability are the securities act of 1933 and ( )
chapter 6 audit planning
test of chapter 6
1、which statement is correct? ( ) a、when auditors decide the materiality, they will not use their professional judgement b、when auditors consider the materiality, they need consider both qualitative and quanitative respects. c、the materiality cannot be changed during the audit d、the auditors need to consider materiality only at the beginning of audit.
2、which material misstatement risk does not belong to financial statement level risk? ( ) a、the material misstatement related to cash b、the poor control environment c、the regulations of government are changed d、the attitude of the management
3、which of the following should not normally be included in the engagement letter for an audit? a、a description of the responsibilities of client personnel to provide assistance b、an indication of the amount of the audit fee c、a description of the limitations of an audit d、a listing of the client's branch offices sellected for testing
4、the responsibilities of management include （ ） a、preparing for financial statements b、establishing effective internal control over financial reporting¡ c、compliance of regulations of companies d、complaince with auditing standards
5、when auditors understand the client, the risk assessment procedures include ( ) a、inquiry of the management b、observation c、analysis d、confirmation
6、material misstatement risk includes two levels, one is financial statement level, and the other leve is assertion level.
7、the auditors should obtain facts that might bear on the integrity of management from the predecessor auditors before accepting an audit engagement.
8、the materiality should not be used in the reporting stage of audit.
9、( ) risk can be controlled by auditors.
10、( ) risks require sepcial audit consideration.
chapter 5
test of chapter 5
1、which of the following is not a financial statement assertion made by management? a、existence of recorded assets and liabilities b、completeness of recorded assets and liabilities c、valuation of assets and liabilities d、effectiveness of internal control
2、which of the following business characteristics is not indicative of high inherent risk? a、operating results that are highly sensitive to economics factors b、large likely misstatements dected in prior audits c、substantial turnover of management d、a large amount of assets
3、of the following, which is the least reliable type of audit evidence? a、confirmations mailed by outsiders to the auditors b、correspondence between the auditors and suppliers c、copies of sales invoices inspected by the auditors d、canceled checks returned in the year-end bank statement directly to the client.
4、analytical procedures are most likely to dectect: a、weaknesses of a material nature in internal control b、unusualy transactions c、noncompliance with prescribed control activities d、improper separation of accounting and other financial duties
5、a primary purpose of the audit working paper is to a、aid the auditors by providing a list of required procedures b、provide a point of reference for future audit engagements c、support the underlying concepts included in the preparation of the basic financial statements d、support the auditors' opinion
6、in developing an expectation for analytical procedures, the auditors are likely to consider: a、financial information for comparable prior periods b、relationships between financial information and relevant nonfinancial data c、anticipated costs of audit completion d、relationships among elements of financial information within a period
7、audit risk can be controlled by the client
8、control risk is related to internal control
9、sales invoice is external evidence
10、audit evidence must be sufficient and appropriate.
11、when the management understate the revenue, it violate which management assertion? ( )
chapter 7 internal control
test of chapter 7
1、a primary objective of procedures performed to obtain an understanding of internal control is to provide the auditors with ( ) a、knowledge necessary to determine the nature, timing, and extent of further audit procedures. b、audit evidence to use in reducing detection risk c、a basis for modifying tests of controls d、an evaluation of the consistency of application of management policies
2、an auditor may compensate for a weakness in internal control by increasing the extent of ( ) a、tests of controls b、detection risk c、substantive tests of details d、inherent risk
3、which of the following would be consdiered the objectives of internal control? a、checking the accuracy and reliability of accounting data b、detecting management fraud c、complying with regulations of companies d、safeguarding assets
4、which of the following are the factors of control environment? a、integrity and ethical values b、commitment to competence c、board independence and effective oversight d、control activities
5、which of following are methods to document internal control? a、internal control questionnaire b、written narrative c、flowchart d、memorandum
6、when the client has no internal control, the auditor does not need to implement tests of control.
7、the understanding of internal control must be implemented by auditor.
8、segregation of duties means that one person cannot assume more than two authorities.
9、control risk is the possibility that a material misstatement due to error or fraud in a financial statement assertion will not be prevented or detected by the audit procedures.
10、( ) is the basis of internal control.
chapter 8 completing the audit
test of chapter 8
1、a possible loss, stemming from past events that will be resolved as to existence and amounts, is referred to as: a、analytical process b、loss contingency c、porbable loss d、unasserted claim
2、which of the following procedures is most likely to be included near completion of an audit? a、obtaining an understanding of internal control b、confirmation of receivables c、observation of inventory d、performing analytical procedures
3、audit procedures for loss contingencies include: a、review the minutes of directors’ meetings to the date of completion of fieldwork b、send letter of inquiry to client’s lawyer c、send confirmation letters to financial institutions to request information on contingent liabilities of the company d、review correspondence with financial institutions for evidence of accommodation endorsements, guarantees of indebtedness, or sales or assignments of accounts receivable
4、procedures to identify subsequent events include: a、review latest available financial statements and minutes of the board and selected committees b、inquiry about matters dealt with at meetings for which minutes are not available c、inquiry of management d、obtain lawyer’s letter
5、which of the following events occuring on january 5,2021, is most not likely to result in an adjusting entry to the 2020 financial statements? a、a business combination b、sales return c、settlement of litigation d、plant cosure due to a strike
6、subsequent events has two types: one is type i subsequent event, which needs adjusting entries of prior year. the other one is type ii subsequent event, which needs disclosing the information.
7、the purpose of obtaining representation letter from management is to have the client’s principal officers acknowledge that they are primarily responsible for the fairness of the financial statements.
8、the date of representation letter should be earlier than the audit report date.
9、loss contingencies need not be disclosed when the possibility of loss is remote
10、( )refers to an event occurring after the date of the balance sheet but prior to the date of the auditors’ report
chapter 9 audit report
test of chapter 9
1、what type or types of audit opinion are appropriate when financial statements are materially and pervasively misstated? a、unmodified opinion b、qualified opinion c、disclaimer of opinion d、adverse opinion
2、the auditors' report should be dated as of the date the: a、report is delivered to the client b、auditors have accumulated sufficient appropriate evidence c、fiscal period under audit ends d、peer review of the working papers is completed.
3、a material departure from generally accepted accounting principles will not result in auditor consideration of: a、whether to issue an adverse opinion rather than a disclaimer of opinion b、whether to issue a disclaimer of opinion rather than a qualified opinion. c、whether to issue a disclaimer of opinion rather than a unmodified opinion. d、whether to issue a qualified opinion rather than an adverse opinion
5、a qualified opinion states that the financial statements are presented fairly in conformity with generally accepted accounting principles “except for” the effects of some matter.
6、a disclaimer of opinion means that due to a significant scope limitation, the auditors were unable to form an opinion or did not form an opinion on the financial statements.
7、misstatements only include factual misstatements and judgmental misstatements.
8、departure from gaap means that the auditors cannot collect the evidence they need.
9、audit report provids an independent and expert opinion on the fairness of financial statements
10、the audit reports can be divided into standard audit report and ( ) audit report.
chapter 10 big data audit
test of chapter 10
1、big data should have characteritcs of four "v",which following is not one of four "v" ( ) a、value b、volume c、velocity d、variety
2、big data analysis includes ( ) a、continuing monitoring b、data mining c、text mining d、process mining
3、volume refers to the data size.
4、velocity, refers to the data generation speed.
5、variety, refers to many types of usable data.
6、effectively using semi-structured and unstructured big data will require auditors to develop a lower tolerance for ambiguity.
7、the estimation of complex analytical models, such as the market value of traded financial instruments or the analysis of structural accounting relationships among accounts and transactions, may require an amount of computation that increases exponentially with the size of the dataset.
8、unstructured data includes financial data, social media and web clickstreams data.
9、veracity, refers to data uncertainty and reliability.
10、( )is one of the limitations of big data since it is highly manipulated within the rules by substantial judgment.
final test
final test
1、the review of a company's financial statements by a cpa firm ( ) a、is substantially less in scope of procedures than an audit. b、requires detailed analysis of the major accounts. c、is of similar scope as an audit and adds similar credibility to the statements. d、culminates in issuance of a report expressing the cpa's opinion as to the fairness of the statements
2、which of following has primary responsibility for the fairness of the representations made in the financial statements? a、client's management b、independent auditor c、audit committee d、aicpa
3、operational audit includes ( ) a、audits of efficiency, effectiveness, and economy b、audits of efficiency, effectiveness, and adequacy c、audits of timeliness, effectiveness, and adequacy d、audits of efficiency, effectiveness, and reliance
4、the audit of financial statement provide which type of assurance? a、reasonable assurance b、absolute assurace c、reasonable and absolute d、not reasonable nor absolute
5、which of the following forms of advertising would most likely be considered a violation of the professional code? a、advertising including an indication that the firm has a close relationship with several tax court judges. b、advertising including the types of services offered and the standard fees for the services. c、advertising including the experience of the firm's professional staff. d、advertising including the percentage of the firm's staff that have cpa certificates.
6、which of the following business characteritics is not indicative of high inherent risk? a、a large amount of assets b、operating results that are highly sensitive to economics factors c、large likely misstatements detected in prior audits d、substantial turnover of management
7、analytical procedures are most likely to detect which of following? a、unusual transactions b、weaknesses of a material nature in internal control c、noncompliance with prescribed control activities d、improper separation of accounting and other financial duties
8、a primary purpose of the audit working paper is to ( ) a、support the auditors' opinion b、aid the auditors by providing a list of required procedures c、provide a point of reference for future audit engagements d、support the underlying concepts included in preparation of the basic financial statements
9、of the following, which is most reliable type of audit evidence? a、confirmations mailed by outsiders to the auditors b、copies of sales invoices inspected by the auditors c、cancelled checks returened in the year-end bank statement directly to the client d、internal control mannual of client
10、which statement is correct? a、the audit evidence should be sufficient and appropriate b、the audit evidence should be only sufficient. c、the audit evidence should be appropriate or sufficient d、the audit evidence should not be appropriate nor sufficient
11、the responsibilities of management do not include ( ) a、compliance with auditing standards b、preparing for financial statements c、establishing effective internal control over financial reporting d、compliance of regulations of companies
12、when auditors understand the client, the risk assessment procedures should not include ( ) a、confirmation b、inquiry of the management c、observation d、analysis
13、which material misstatement risk belongs to assertion level risk? a、the material misstatement related to cash b、the poor control environment c、the regulations of government are changed d、the attitude of the management
14、which of the following is not the factor of control environment? a、control activities b、integrity and ethical values c、commitment to competence d、board independence and effective oversight
15、which of following is not the method to document internal control? a、memorandum b、internal control questionnaire c、written narratives d、flowchart
16、a possible loss, stemming from past events that will be resolved as to existence and amounts, is referred as ( ) a、loss contingency b、analytical procedures c、probable loss d、unasserted claim
17、which of the following events occurring on january 2021, is most likely to result in an adjusting entry to the 2020 financial statements? a、sales return b、a business combination c、settlement of litigation d、plant closure due to a strike
18、what type or types of audit opinions is appropriate when financial statements are materially misstated but not pervasively misstated? a、qualified opinion b、adverse opinion c、unqualified opinion d、disclaimer of opinion
19、a material departure from generally accepted accounting principles will result in auditor consideration of ( ) a、whether to issue a qualified opinion rather than an adverse opinion. b、whether to issue an adverse opinion rather than a disclaimer of opinion c、whether to issue a disclaimer of opinion rather than a qualified opinion d、whether to issue a disclaimer of opinion rather than an unmodified opinion
20、big data should have characteristics of four "v", which following is not one of four "v" a、value b、volume c、velocity d、variety
21、which of the following should be included in an integrated audit report on the financial statements of a public company? a、the report indicates that the financial statements are the responsibility of management b、the report indicates that the auditors have also audited the effectiveness of the company's internal control c、the report is singed in the name of the cpa firm d、the report states that the audit was performed in accordance with aicpa standards
22、the elements of quality control include ( ) a、relevant ethical requirements b、acceptance and continuance of client relationships c、human resources d、monitoring
23、auditors are periodically punished for holding an investment in a client. this does not violate which ethical rule? a、integrity b、non-compliacne with gaap c、confidentiality d、independence
24、which of the following is one type of threat to auditor independence? a、familiarity b、financial self interest c、undue influence d、safeguards implemented by the client
25、the sources of cpa liability include ( ) a、breach of contract b、negligence c、fraud d、statutory liability
26、in developing an expectation for analytical procedures, the auditors are likely to consider: a、financial information for comparable prior periods b、relationships betweeen financial information and relevant information data c、relationships among elements of financial information within a period d、anticipated costs of audit completion
27、which statement is not correct?( ) a、when auditors decide the materiality , they will not use their professional judgment b、the materiality cannot be changed during the audit c、the auditors need to consider materiality only at the beginning of audit d、when auditors consider the materiality, they need consider both qualitative respects
28、which of the following should normally be included in the engagement letter for an audit? a、a description of the responsibilities of client personnel to provide assistance b、an indication of the amount of the audit fee c、a description of the limitations of an audit d、a listing of the client's branch offices selected for testing
29、which of the following procedures is less likely to be included near completion of an audit? a、obtaining an understanding of internal control b、confirmation of receivables c、observation of inventory d、performing analytical procedures
30、audit procedures for loss contingencies include ( ) a、review the minutes of directors' meetings to the date of completing of field work b、send letter of inquiry to client's lawyer. c、send confirmation letters to financial institutions to request information on contingent liabilities of the company. d、review correspondence with financial institutions for evidence of accommodation endorsements, guarantees of indebtedness, or sales or assignments of accounts receivable.
31、operational audit includes audits of efficiency, effectiveness, and adequacy.
32、attestation services include examination, review and agree-upon procedures.
33、integrated audit refers that the auditor implement the audit of financial statement and internal control together
34、key audit matters are those matters, in auditors' judgments, are of most significance in audit of financial statements
35、fraud is defined as the failure to use reasonable care in the performance of services.
36、control risk can be controlled by the auditor
37、the auditors should obtain facts that might bear on the integrity of management from the predecessor auditor before accepting an audit.
38、the materiality should be used in the whole process of audit.
39、when the client has poor internal control, the auditor does not need to implement tests of control.
40、segregation of duties means that one person cannot assume more than two authorities.
41、gross negligence is the lack of even ( ), indicative of a reckless diregard for one's professional responsibilities
42、( ) risk can be controlled by the auditor.
43、when the management understate the revenue, it violates which management assertion?( )
44、( ) risk is the possibility that a material misstatement due to error or fraud in a financial statement assertion will not be prevented or detected by the audit procedures.
45、the date of representation letter should be the same as the date of ( ).