True False Questions

Chapter 02 Professional Standards

True / False Questions

• Auditors may be independent in fact but not independent in appearance.

True False

• Auditing Standards issued by the PCAOB are the sole source of guidance for audits

of public entities.

True False

• Attestation standards provide guidance for a wide variety of engagements

different in scope than an audit.

True False

• Generally accepted auditing standards must be followed on all audit

engagements.

True False

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• The reporting principle relates to a firm's system of quality control criteria for

conducting an audit.

True False

• Auditors cannot effectively satisfy the responsibilities principle requiring due care if

they have not also satisfied the performance principle.

True False

• Substantive procedures performed by the audit team are most closely related to

the risk of material misstatement.

True False

• Auditing procedures are the same as auditing standards.

True False

• The concept of due care reflects the need to plan and perform the audit with an

appropriate level of professional skepticism.

True False

• Under the performance principle, auditors are required to provide absolute

assurance that the client's financial statements do not contain material misstatements.

True False

• The performance principle sets forth the quality criteria for conducting an audit.

True False

• Auditors of public entities registered with the Securities and Exchange Commission

are required to register with the Public Company Accounting Oversight Board.

True False

• Control risk is the probability that a material misstatement (error or fraud) could

occur and not be prevented or detected on a timely basis by the auditors' substantive procedures.

True False

• The word appropriateness refers to the number of transactions or components of

an account balance examined by auditors.

True False

• To be considered material, an item must be one that would influence the decision

of financial statement users.

True False

• The contents of the auditors' report are guided by the performance principle of

GAAS.

True False

• An unqualified opinion indicates that the financial statements present the entity's

financial condition, results of operations, and cash flows in conformity with GAAP.

True False

• The auditors' report should either contain an expression of opinion on the financial

statements taken as a whole or an assertion to the effect that an opinion cannot be expressed.

True False

• Evidence is considered appropriate when it is both valid and relevant.

True False