Question

1. In communications with clients, when should CPAs refer to themselves as auditors:

a) During any type of engagement (Assurance or Attestation)

b) Only for review and audit attestation engagements

c) Only for audit attestation engagements

d) For all compilation, review and audit engagements

2. A compilation report that omits substantially all notes and disclosures:

a) Is not allowed

b) Includes an adverse opinion

c) Must indicate that management has elected to omit such information

d) Includes a qualified opinion

3. Which of the following forms of accountant association always leads to a report intended solely for certain parties:

a) Compilation report which omits essentially all footnotes and disclosures

b) Agreed upon procedures

c) Review report on comparative financial statements

d) Audit of a nonpublic entity

4. Regarding the consideration of internal control in an information technology environment the auditor would be concerned with:

a) Access controls

b) General ledger presentation

c) Cost of the underlying software program

d) Age of the hardware

5. Auditing that involves testing and reporting on whether an organization has complied with the requirements of various laws, regulations and agreements is referred to as:

a) Statutory auditing

b) Regulatory auditing

c) Compliance auditing

d) ASB auditing

6. An independent, objective assurance and consulting activity designed to add value and improve an organization’s operation that helps an organization accomplish its objectives is referred to as:

a) Audit services

b) Review services

c) Internal auditing service

d) Compilation services

7. Regarding the Crazy Eddie, Inc. case study that we went over in class, which of the following is true:

a) Crazy Eddie misled the customers by selling factory warranties as extended warranties

b) Crazy Eddie Understated accounts payables with fictitious debt memos from the vendors

c) The internal accountants of Crazy Eddie were at one time former auditors from the firm that provided certified audit services to the company

d) All of these choices were ploys that Eddie Antar and his family conspired

8. “Management had elected to omit substantially all the disclosures required by generally accepted accounting principles” This statement could be found on the auditor/accountant’s report for a(an):

a) Audit

b) Review

c) Compilation

d) Never should be made

9. CPA Must be independent when providing attest services, Which of the following services is (are) considered test services

a) Audit

b) Review

c) Compilation

d) Audit and review only

e) Audit, Review and compilation

10. Crazy Eddie Inc. created fictitious inventory be moving items between warehouses prior to the auditors assisting in physical inventory count. What effect did this have on the financial statements:

a) Only affect the balance sheet presentation.

b) Reduced the current Ratio significantly

c) Lowered the cost of goods sold and created higher gross profit

d) increased the cost of goods sold and reduced gross profit for tax purposes

11. A declaration about whether subject matter is presented in accordance with certain criteria is referred to as:

a) Assertion

b) Assumption

c) Attestation

d) Examination

12. Based on our review we are not aware of any material modifications that should be made to the accompany financial statements…” is a statement that is made on the report of:

a) A review

b) An audit

c) A comparison

d) A compilation, audit and review

13. External auditors are responsible to:

a) External users

b) Management

c) Board of directors

d) External users, management and Board of Directors

e) Management and board of directors only

14. Internal auditors are employed by companies to perform:

a) Internal audits

b) Operational audits

c) Certified audits

d)Internal and operational audits

e) Internal, operational and certified audits

Answer 1

1. In communications with clients, when should CPAs refer to themselves as auditors:

c) Only for audit attestation engagement.

2. A compilation report that omits substantially all notes and disclosures:

c) Must indicate that management has elected to omit such information

3. Which of the following forms of accountant association always leads to a report intended solely for certain parties:

b) Agreed upon procedures

4. Regarding the consideration of internal control in an information technology environment the auditor would be concerned with:

a) Access controls