Question 1

An important balance-related audit objective is realizable value.Describe the purpose of this audit objective,what it is concerned with,and give an example.

Accepted Answer

The purpose of this audit objective is t...

Question 2

________ are used as evidence to provide assurance about an account balance.

Accepted Answer

A)  Substantive analytical procedures
B)  Tests of transactions
C)  Audit risks
D)  Tests of details of balancesE) None of the above
F) B) and D)

Question 3

Which of the following statements is True regarding the distinction between general audit objectives and specific audit objectives for each class of transactions?

Accepted Answer

A)  The specific audit objectives are applicable to every class of transactions.
B)  The general audit objectives are applicable to every class of transactions.
C)  Once the specific transaction-related audit objectives are established,they can be used to develop the general transaction-related objectives.
D)  For any given class of transactions,usually only one audit objective must be met to conclude the transactions are properly recorded.E) A) and D)
F) B) and C) B

Question 4

The annual reports of many public companies include a statement about management's responsibilities and relationship with the CPA firm.

Accepted Answer

A) True 
 B)False  True

Question 5

When dealing with laws and regulations that do not have a direct effect on the financial statements,the auditor

Accepted Answer

A)  should inquire of management about whether the entity is in compliance with such laws and regulations.
B)  has no responsibility to determine if any violations of these laws has occurred.
C)  must report all violations,including inconsequential violations,to the audit committee.
D)  should perform the same procedures as for violations having a direct effect on the financial statements.E) B) and D)
F) A) and C)

Question 6

It is generally impractical for the auditor to obtain complete assurance about the correctness of each class of transactions.

Accepted Answer

A) True 
 B)False

Question 7

In testing for cutoff,the objective is to determine

Accepted Answer

A)  whether all of the current period's transactions are recorded.
B)  whether transactions are recorded in the correct accounting period.
C)  the proper cutoff between capitalizing and expensing expenditures.
D)  the proper cutoff between disclosing items in footnotes or in account balances.E) A) and B)
F) C) and D)

Question 8

Determining that the footnote disclosures related to long-term debt are accurate is an example of the ________ audit objective.

Accepted Answer

A)  occurrence
B)  completeness
C)  presentation and disclosure
D)  classification and understandabilityE) B) and C)
F) A) and B) C

Question 9

One of the characteristics of professional skepticism is ________,which is the conviction to decide for oneself,rather than accepting the claims of others.

Accepted Answer

A)  interpersonal understanding
B)  autonomy
C)  suspension of judgment
D)  self-esteemE) C) and D)
F) B) and D)

Question 10

The Sarbanes-Oxley Act provides for criminal penalties.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an accurate statement about professional skepticism?

Accepted Answer

A)  Professional skepticism involves a critical assessment of the evidence.
B)  Professional skepticism is easy to implement in practice.
C)  It is easy for auditors to understand that their clients may try to deceive them throughout the audit process.
D)  Professional skepticism is only necessary for the audits of public companies.E) A) and B)
F) A) and C)

Question 12

An audit must be performed with an attitude of professional skepticism.Professional skepticism consists of two primary components: a questioning mind and

Accepted Answer

A)  the assumption that upper-level management is dishonest.
B)  a critical assessment of the audit evidence.
C)  the assumption that all employees are motivated by greed.
D)  verification of all critical information by independent third parties.E) A) and C)
F) B) and C)

Question 13

List the four phases of a financial statement audit.

Accepted Answer

1. plan and design an audit approach bas...

Question 14

________ is the self-confidence to resist persuasion and to challenge assumptions or conclusions.

Accepted Answer

A)  Self-esteem
B)  Interpersonal understanding
C)  Suspension of judgment
D)  AutonomyE) B) and D)
F) A) and B)

Question 15

Misappropriation of assets

Accepted Answer

A)  is generally committed by company management.
B)  harms the users of the financial statements by providing them incorrect financial data for their decision making.
C)  causes harm to stockholders because the assets are no longer available to their rightful owners.
D)  causes the financial statements to be misstated since the misappropriation usually involves material amounts.E) A) and B)
F) None of the above

Question 16

In order to mitigate availability,the auditor should consult with others and make the opposing case.

Accepted Answer

A) True 
 B)False

Question 17

The profession has developed professional judgment frameworks that illustrate an effective decision-making process.

Accepted Answer

A) True 
 B)False

Question 18

When an auditor is determining what information to include in the notes to the financial statements relating to bonds payable,he is concerned with the transaction-related audit objectives.

Accepted Answer

A) True 
 B)False

Question 19

The detail tie-in is part of the ________ assertion for account balances.

Accepted Answer

A)  classification
B)  valuation and allocation
C)  rights and obligations
D)  completenessE) A) and B)
F) A) and C)

Question 20

If the auditor has obtained a reasonable level of assurance about the fair presentation of the financial statements through understanding internal control,assessing control risk,testing controls,and analytical procedures,then the auditor

Accepted Answer

A)  can issue an unqualified opinion.
B)  can significantly reduce other substantive tests.
C)  can write the engagement letter.
D)  needs to perform additional tests of controls so that the assurance level can be increased.E) C) and D)
F) All of the above

Exam 6: Audit Responsibilities and Objectives

An important balance-related audit objective is realizable value.Describe the purpose of this audit objective,what it is concerned with,and give an example.

Correct AnswerverifiedThe purpose of this audit objective is t...View AnswerShow Answer

________ are used as evidence to provide assurance about an account balance.

Correct AnswerverifiedShow Answer

Which of the following statements is True regarding the distinction between general audit objectives and specific audit objectives for each class of transactions?

Correct AnswerverifiedB

The annual reports of many public companies include a statement about management's responsibilities and relationship with the CPA firm.

Correct AnswerverifiedTrue

When dealing with laws and regulations that do not have a direct effect on the financial statements,the auditor

Correct AnswerverifiedShow Answer

It is generally impractical for the auditor to obtain complete assurance about the correctness of each class of transactions.

Correct AnswerverifiedShow Answer

In testing for cutoff,the objective is to determine

Correct AnswerverifiedShow Answer

Determining that the footnote disclosures related to long-term debt are accurate is an example of the ________ audit objective.

Correct AnswerverifiedC

One of the characteristics of professional skepticism is ________,which is the conviction to decide for oneself,rather than accepting the claims of others.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act provides for criminal penalties.

Correct AnswerverifiedShow Answer

Which of the following is an accurate statement about professional skepticism?

Correct AnswerverifiedShow Answer

An audit must be performed with an attitude of professional skepticism.Professional skepticism consists of two primary components: a questioning mind and

Correct AnswerverifiedShow Answer

List the four phases of a financial statement audit.

Correct Answerverified1. plan and design an audit approach bas...View AnswerShow Answer

________ is the self-confidence to resist persuasion and to challenge assumptions or conclusions.

Correct AnswerverifiedShow Answer

Misappropriation of assets

Correct AnswerverifiedShow Answer

In order to mitigate availability,the auditor should consult with others and make the opposing case.

Correct AnswerverifiedShow Answer

The profession has developed professional judgment frameworks that illustrate an effective decision-making process.

Correct AnswerverifiedShow Answer

When an auditor is determining what information to include in the notes to the financial statements relating to bonds payable,he is concerned with the transaction-related audit objectives.

Correct AnswerverifiedShow Answer

The detail tie-in is part of the ________ assertion for account balances.

Correct AnswerverifiedShow Answer

If the auditor has obtained a reasonable level of assurance about the fair presentation of the financial statements through understanding internal control,assessing control risk,testing controls,and analytical procedures,then the auditor

Correct AnswerverifiedShow Answer

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1. plan and design an audit approach bas...
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