MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.1)According to generally accepted auditing standards (GAAS), the overall objective of a financial statement audit is ________.A)to obtain reasonable assurance that the financial statements taken as a whole are free from misstatement, whether due to fraud or error B)to determine whether the financial principles adopted by management in preparing the financial statements are acceptable C)to enable the auditor to express an opinion as to whether the financial statements are prepared in accordance with generally accepted accounting principles D)to reduce audit risk to an acceptably low level

Answer:C

2)Which of the following is the first task that the auditor must accomplish to demonstrate proficiency in auditing?A)Design an audit program to obtain sufficient appropriate evidence about assertions management makes in financial statements and notes.B)Recognize the underlying assertions made by management in the financial statements and notes.C)Identify the evidence relevant for the audit of assertions that are made by management in its unaudited financial statements and notes.D)Evaluate the evidence gathered in the performance of the audit program and decide whether management's assertions conform to generally accepted accounting principles and reality.

Answer:B

3)Auditors try to achieve independence in appearance in order to ________.A)comply with the generally accepted auditing standards B)maintain public confidence in the profession C)maintain an unbiased mental attitude D)become independent in appearance and in fact

Answer:B

4)Control risk is ________.A)the probability that a material misstatement could occur and not be detected by the auditor's audit procedures B)the risk that the auditor will not be able to complete the audit on a timely basis C)the probability that a material misstatement could occur and not be prevented or detected by the company's internal control policies and procedures D)the risk that the auditor will not properly control the staff on the audit engagement

Answer:C

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5)The primary purpose of obtaining an understanding of the company's internal controls in the financial statement audit is ________.A)to obtain direct sufficient appropriate audit evidence to afford a reasonable basis for an opinion on the financial statements B)to determine whether the company has changed any accounting principles C)to make suggestions to management to improve internal controls D)to help the auditors develop the audit program

Answer:D

6)An external auditor is conducting an audit of the financial statements of Camden Corporation. The external auditor is expected to ________.A)give an opinion on whether Camden's financial statements are fairly presented in all material respects B)give an opinion on the attractiveness of Camden for investment purposes and critique the wisdom and legality of its business decisions C)certify the correctness of Camden's financial statements D)make a 100% examination of Camden's records

Answer:A

7)Which of the following statements best explains an unmodified report opinion?A)The auditor was unable to complete the work necessary to form a complete opinion.B)The auditor was not aware of any reasons not to believe the statements are correct.C)Based on the evidence obtained, the auditor believes the statements are free of material error.D)The financial statements contain a departure from GAAP.

Answer:C

8)A standard unmodified audit report should be dated ________.A)no later than the date when the auditor obtained sufficient appropriate audit evidence supporting the auditor's opinion B)as at the end of the year the audit work was done C)as at the end of the year being reported on D)no earlier than the date when the auditor obtained sufficient appropriate audit evidence supporting the auditor's opinion

Answer:D

9)Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle. Which of the following should the auditor consider to be the most authoritative?A)CPA Canada Exposure Drafts.B)Industry practice.C)CPA Canada Handbook.D)Federal legislation.

Answer:C

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10)The reporting standards require that the auditor explicitly report on whether the financial statements

________.

A)used principles that are appropriate for the circumstances B)were prepared on a consistent basis with the comparative year C)are in accordance with GAAP D)contain adequate disclosure of all material matters

Answer:C

11)Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of

________.

A)independent integrityB)professional skepticism C)impartial conservatismD)objective judgment

Answer:B

12)Three-Party Accountability includes all of the following parties except ________.A)usersB)management C)Audit CommitteeD)practitioners

Answer:C

13)Key features of SOX include all of the following except ________.A)increased penalties for corporate wrongdoers B)more timely and extensive financial disclosures C)increased oversight of auditors D)fewer options of recourse for aggrieved shareholders

Answer:D

14)Which of the following has been established to oversee the auditors of public companies?A)The Canadian Securities Commission. B)Canadian Public Accountability Board.C)The SOX Board.D)Canadian Coalition for Good Governance.

Answer:B

15)An assurance engagement is one in which a CPA is engaged to ________.A)testify as an expert witness in accounting, auditing, or tax matters, given certain stipulated facts B)provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed C)issue a written communication expressing a conclusion concerning a subject matter for which an accountable party is responsible D)assemble prospective financial statements based on the assumptions of the entity's management without expressing any assurance

Answer:C

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16)All of the following are examples of assurance engagements except ________.A)financial statements reviewB)internal controls statement C)tax planningD)financial statements audit

Answer:C

17)The GAAS general standard relating to the audit of financial statements focuses on all of the following except ________.A)due professional careB)competence C)planningD)independence

Answer:C

18)According to IFAC, which of the following is not one of the elements of quality control?A)Supervision.B)Acceptance and continuance of clients.C)Independence.D)Due professional care.

Answer:D

19)In establishing a quality control system, which area should be of a secondary nature?A)Creating an independence and objectivity checklist.B)Controlling access to client files.C)Creating an internal review process.D)Creating a program for continuing professional education.

Answer:C

20)Williams & Co., a large international CPA firm, will be subject to an external peer review. The peer review will most likely be performed by ________.A)employees and partners of Williams & Co. who are not associated with the particular audits being reviewed B)peer review staff of CPA Canada C)peer review staff of the Ontario Securities Commission D)employees and partners of another CPA firm

Answer:D

21)A report giving conclusions about a firm's compliance with quality control standards is typical of which of the following?A)Quality inspection.B)Quality review.C)Practice inspection.D)Peer review.

Answer:D

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.22)Practice standards are a general set of standards intended to guide the audits of financial statements.

Answer:True False

23)The CPA Canada Handbook recommendations are a step-by-step list of procedures auditors have to complete for each engagement.

Answer:True False

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