Ch.1 and 2 Auditing QUIZ

Who establishes generally accepted auditing standards?

Auditing Standards Board (ASB) and the Public Company Accounting Oversight Board (PCAOB).

Which of the following is a management assertion regarding account balances at the period end?

The entity holds or controls the rights to assets, and liabilities are obligations of the entity.

Which of the following statements correctly defines the term “reasonable assurance”?

A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement.

Users of an issuer’s financial statements demand independent audits because

Management may not be objective in reporting.

An attestation engagement is one in which a CPA is engaged to

Issue an examination, a review, or an agreed-upon procedures report on subject matter, or an assertion about subject matter, that is the responsibility of another party.

Which of the following statements is true concerning an auditor’s responsibilities regarding financial statements?

An auditor’s responsibilities for audited financial statements are confined to the expression of the auditor’s opinion.

The AICPA Code of Professional Conduct requires compliance with accounting principles promulgated by the bodies designated by the AICPA Council to establish such principles. The literature considered officially established accounting principles includes

The FASB Accounting Standards Codification.

Which of the following statements best describes the primary purpose of Statements on Auditing Standards (SASs)?

They are generally accepted auditing standards.

Notes that are included with financial statements are the responsibility of the

Company’s management.

Which of the following assertions is most closely related to the audit objective to verify that all sales have been recorded?

Completeness.