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D215 Auditing, Pre-Assesment PA 10 studiers today 5.0 (1 review) Students also studied Terms in this set (70) Western Governors UniversityD 216 Save D215 Auditing, Pre-test Teacher 69 terms sanielsen09Preview
VITA 2025 ADVANCED TEST EXAM 2...
55 terms emmaxdeleon5 Preview Business Law for Accountants - D216...135 terms jschwinn0Preview VITA 60 terms Mag Which type of work performed by a CPA is an attestation service?Financial statement review
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Which entity may obtain audited financial statements to ensure a company is complying with industry regulations?Governments
Which group performs an audit and review of financial statements to ensure financial statement users' needs are met?Independent third-party auditors
Which type of report should be issued if an auditor has determined that a company has maintained effective internal controls over financial reporting for the period under audit?Unqualified
A new CPA is aware of how accounting affects stakeholders.Which characteristic of professionalism is motivating this awareness?Concern for the public interest
Which component of the AICPA Code of Professional Conduct provides the tenets of ethical conduct that govern the professional responsibility of its members?Principles
A CPA firm provides tax services for a large automotive client. Over the years, the client has continually pushed for aggressive tax strategies that the CPA does not always agree with.While performing the current year tax return, the client threatens to discontinue the relationship with the CPA firm if they continue to disagree with the strategies presented.Which type of threat to ethical decision-making is demonstrated by this practice?Undue influence
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A CPA has prepared a couple's joint tax returns for 10 years, but the couple is now experiencing a complicated divorce where both parties wish to claim the same child as a dependent. The CPA agrees to work with both clients on their tax returns.Which standard of the AICPA Code of Professional Conduct is being violated by this CPA's action?Integrity and Objectivity
A large client asks a CPA firm for consulting help with their quarterly sales and use tax reporting. The CPA firm specializes in audit and tax preparation and has not dealt with this type of work in the past but would like to add it.The firm decides to accept the job.Which step is required to maintain compliance with the general standards of the AICPA Code of Professional Conduct?The CPA firm must send the CPAs to a continuing professional education course on sales and use tax reporting.A junior accountant is providing tax and audit services to a large company that is pressuring the accountant to reduce the amount of taxes the company owes. The junior accountant decides to use last year's tax laws instead of the current year's laws since the older laws will save the company money.Which general standard of the AICPA Code of Professional Conduct is the junior accountant violating?Due Professional Care
A CPA firm has been retained to audit a client's financial statements. The client's bank has requested audited financial statements in order to approve or deny a loan to the client. The client has suggested that the CPA firm will earn a $20,000 bonus if the bank grants the loan to the client.Which statement characterizes the permissibility of this fee structure?This fee structure is not permitted under ethical standards applicable to the auditing profession.
A CPA is auditing a car dealership and is identifying factors that affect the likelihood of overstated revenue.During which phase of the audit does the CPA take this action?Risk assessment
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After performing risk assessment procedures and tests of controls, an auditor has determined that the risk of a material misstatement (RMM) is high. How should the auditor proceed?Select a substantive approach for the audit strategy
An audit firm is finalizing the acceptance of an audit by sending the client an engagement letter. Which piece of information should be included in this letter?Client's responsibility for the preparation of the financial statements
An audit manager is concerned about a severe economic downturn in the country where its audit client is based.Which component of the audit risk model is of concern to this manager?Inherent
A company has been operating with weak internal accounting policies within an industry known for poor accounting practices. The auditor must keep audit risk below 1%.Which situation must be present to ensure this level of audit risk?There must be a low level of detection risk
A staff auditor working on a large company's audit has found a red flag that may indicate fraud. Which item was found by the auditor?Inadequate training programs
An auditor has a new audit engagement of an urgent care clinic with a high turnover of direct care workers in a geographic area that has experienced tremendous population growth.Which procedure should the auditor perform to gain an understanding of the client?Review AICPA industry guides for the healthcare industry
How does the inclusion of a non-executive individual in the composition of the board of directors affect an auditor's risk assessment?It reduces the risk of a material misstatement because they are more impartial.
A company begins to use a new accounts payable computer system and then realizes a critical data field present in the old system is missing in the new system.Which type of risk is present for this company?Control
During a yearly audit, the audit team becomes aware of the company's pressure to increase next year's profit.Which factor should the audit team be on the lookout for in the near future?Payroll expenses incurred the month after the year-end and recorded in the last month of the year
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Which management assertion states that financial and other information are disclosed fairly and in appropriate amounts?Accuracy and valuation
Which factor describes sufficiency of audit evidence gathered?Quantity of evidence
Which combination of assessed inherent risk and control risk will require the greatest amount of sufficient evidence?High inherent risk, high control risk
Which type of procedure is being performed when an auditor selects transactions from a sales journal or ledger and then examines the underlying source documents?Vouching
Which dimension of the COSO framework identifies five integrated items of internal control?Components
Which principle should an organization implement in order to have an effective risk assessment process?The organization should specify objectives with clarity to enable the identification and assessment of risks
Which action is considered a control activity that helps ensure management's directives are carried out across the entity?Ensuring there are proper authorization control procedures
Which outcome stems from understanding a client's internal control system?An ability to draw conclusions
Which classification should be used for a deficiency in internal control that would affect the decisions of the users of financial statements?Material weakness
Which element has an auditor identified in the client's internal control system when the auditor selects a reliance on controls approach?Strengths
Which level of assurance regarding a private company's internal control over financial reporting is provided in a management letter?None
An auditor uses financial statement assertions to guide the identification of possible errors or misstatements in the financial statement. Which procedure should the auditor perform next?Identify the relevant controls to test
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