True False Questions

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True / False Questions

• To express an opinion on financial statements, the auditor obtains reasonable assurance about

whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.

True False

• The auditors' report on a corporation's financial statements usually is addressed to the president of

the company.

True False

• The auditors are primarily responsible for preparing the financial statements and expressing an

opinion on whether they follow generally accepted auditing standards.

True False

• Partners in CPA firms usually have the responsibility for signing the audit report.

True False

• An audit is more likely to detect tax evasion than violations of antitrust laws.

True False

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• The AICPA Statements on Attestation Standards do not supersede the AICPA Statements on

Auditing Standards.

True False

• A peer review is generally performed by employees of the AICPA.

True False

• If the auditors discover illegal acts by a client, they ordinarily must immediately resign from the

engagement.

True False

• An audit should be designed to obtain reasonable assurance of detecting non-compliance with all

laws.

True False

• The pronouncements of the International Auditing and Assurance Standards Board do not

override the national auditing standards of its members, even when financial statements are issued by a multinational company.

True False

Multiple Choice Questions

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11.Audits of financial statements are designed to obtain reasonable assurance of detecting

misstatement due to:

Fraudulent Financial Reporting Misappropriation of Assets

• Yes Yes
• Yes No
• No Yes
• No No

• Option A

• Option B

• Option C

• Option D

• Financial statements are prepared following a(an)

• Applicable financial reporting framework.

• Appropriate subject matter.

• Generally accepted auditing standards.

• Set of quality control standards.

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13. An attestation engagement:

• Has as its primary source of standards the assurance standards.

• Includes a report on subject matter, or on an assertion about subject matter.

• Includes search and verification procedures for all major accounts.

• Is ordinarily an examination, review or compilation engagement.

14.An audit provides reasonable assurance of detecting which of the following types of material illegal acts?

Direct Effect Without a Direct Effect

• Yes Yes
• Yes No
• No Yes
• No No

• Option A

• Option B

• Option C

• Option D

• Which of the following is not a type of auditors' opinion?

• Adverse.

• Ordinary.

• Qualified.

• Unmodified.