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[answered] 1. Which of the following auditor-provided services is NOT


1. Which of the following auditor-provided services is NOT an attestation service?

A. Audit of internal control over financial reporting

B. Review of financial statements

C. Audit of financial statements

D. Accounting and bookkeeping

2) Which one of the following risks does the auditor reduce by performing an audit?
A. Interest rate risk
B. Business risks
C. Information risk
D. Environmental risk


3) Which of the following reasons make limited liability partnership (LLP) a more popular organisational structure for an audit firm than general partnership?
A. The increased litigation risk faced by auditors
B. The need for independence from clients
C. The need for better competence
D. A LLP is more profitable
4) Which of the following correctly describes an auditor?s legal liability?

A. An auditor breaches his or her common law duties if he or she does not perform those duties with a reasonable standard of skill and care and, as a consequence, the client suffers a loss
B. A criminal act arises when an auditor unknowingly signs a false report
C. A civil wrong, whereby the client entity suffers loss as a result of the auditor failing to meet his professional obligations as specified in relevant audit standards
D. An auditor can be found guilty for criminal action under Statute Law
5) Which of the following is NOT a major purpose of establishing the International Standards on Auditing (ISAs)?
A. Improve the uniformity of auditing practices and related services thought the world
B. Improve public confidence in the quality of financial reporting
C. Provide immediate guidance when there is no comparable auditing standard in a particular country
D. Override a country?s auditing regulations and standards
6) In the audit of accounts payable, an auditor?s procedures will most likely focus

A. completeness
B.valuation and allocation
C. classification and understandability
D. existence
7) Which of the following procedures would be the most appropriate for verifying the interest accrued on borrowings?
A. Confirming the interest rate with the lender
B. Vouching the payment of interest on the borrowings

C. Testing internal controls over cash payments
D. Recalculating the interest accrued on the basis of outstanding amount, interest rate and period to which it relates

8) Which of the following does setting a preliminary materiality threshold NOT help auditors to decide?
A. What audit staff to assign to the audit
B. How many items to examine
C. Whether to use sampling
D. What level of error is likely to lead to the auditor not being able to give an unqualified opinion

9) For each of the following statement select whether they are true or false.
A statutory audit gives reasonable assurance that the financial statements give a true and fair view
(i) True
(ii) False
Reasonable assurance is absolute assurance of the correctness of the subject matter
(iii) True
(iv) False
A. (i) and (iv)
B. (i) and (iii)
C.(iii) and (iv)
D. (ii) and (iii)
10) For each of the following statements select whether they are true or false in respect of the concept of materiality.
Materiality should be calculated at the planning stage of all audits
(i) True
(ii) False
Once established, the materiality level initially set cannot be revised during the course of the audit
(iii) True
(iv) False
A. (i) and (iii)
B. (i) and (iv)
C. (ii) and (iii)
D. (ii) and (iv)?
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1) Matthews & Co., CPAs, issued an unqualified opinion on Dodgers Corporation. Millennium Bank, which relied on the audited financial statements, granted a loan of $200,00,000 to Dodgers Corporation. Dodgers subsequently defaulted on the loan. To succeed in an action against Matthews & Co., Millennium Bank must prove that the bank was:

A) in privity of contract with Dodgers.

B) in privity of contract with Millennium.

C) free from contributory negligence.

D) justified in relying on the financial statements in granting the loan.

2) The principal issue to be resolved in cases involving alleged negligence is usually:
A) the amount of the damages suffered by plaintiff.

B) whether to impose punitive damages on defendant.

C) the level of care exercised by the auditor.

D) whether defendant was involved in fraud.
3) Which of the following statements is true? The auditor firm will lose its independence if:

A) a staff auditor providing audit services to the client acquires stock in that client.

B) a staff tax preparer who provides 15 hours of non-audit services to the client acquires stock in that client.

C) an audit manager in an office different than the office providing audit services has a direct, immaterial financial interest in the audit client.

D) a covered member has an indirect, immaterial financial interest in an audit client.
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4) Oehlers, CPA, is a staff auditor participating in the engagement of Capital Trust, Inc. Which of the following circumstances impairs Oehlers independence?
A) Oehlers sister is an internal auditor employed part-time by Capital Trust.

B) Oehlers friend, and employee of another local accounting firm, prepares the tax return of Capital Trust's CEO.

C) Oehlers and Capital Trust's 401K plan own stock with the same corporation.

D) During the period of professional engagement, Capital Trust gave Oehlers tickets to a football game worth $75.
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5) Which of the following statements is true? I. The auditor is required to issue a disclaimer of opinion in the event of a material uncertainty. II. The auditor is required to issue a disclaimer of opinion in the event of a going concern problem.

A) I only

B) II only

C) I and II
6) Brown Co.'s financial statements adequately disclose uncertainties that concern future events, the outcome of which are not reasonably estimable. The auditor's report should be a(n):

A) unqualified opinion.

B) disclaimer.

C) qualified opinion.

D) adverse opinion.
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7) Which of the following forms of evidence would be least persuasive in forming the auditor's opinion about marketable securities and other investments held by the company?

A) Responses to auditor's questions by the president and controller regarding the investments account.

B) Correspondence with a stockbroker regarding the quantity of client's investments held in street name by the broker.

C) Minutes of the board of directors authorizing the purchase of stock as an investment.

D) The auditor's count of marketable securities.
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8) Which of the following statements is true?

A) A large sample of highly competent evidence is persuasive if it is relevant to the
objective being tested.

B) A large sample of evidence that is neither competent nor timely is not persuasive.

C) A small sample of only one or two pieces of relevant, competent, and timely evidence lacks persuasiveness.

D) The persuasiveness of evidence can be evaluated after considering its sufficiency.

9) The auditor uses knowledge gained from the understanding of the client's business and industry to assess:

A) client business risk.

B) control risk.

C) inherent risk.

D) audit risk.
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10) The purpose of the requirement in having communication between the predecessor and successor auditors is to:

A) allow the predecessor to disclose information which would otherwise be confidential.

B) help the successor auditor to evaluate whether to accept the engagement.

C) help the client by facilitating the change of auditors.

D) ensure the predecessor collects all unpaid fees prior to a change in auditor.?
?
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1) Which of the following correctly describe the nature of auditing?

 


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