Auditing

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

 Company’s management.

When a PCAOB auditing standard indicates that an auditor “could” perform a specific procedure, how should the auditor decide whether and how to perform the procedure?

 By exercising professional judgment in the circumstances.

Which of the following best characterizes an auditor’s exercise of professional skepticism?

 Having an attitude that includes a questioning mind.

An audit of the financial statements of Camden Corporation is being conducted by an external auditor. The external auditor is expected to:

 

 Express an opinion as to the fairness of Camden’s financial statements.

If a statement from the Statements on Standards for Attestation Engagements (SSAEs) provides that a procedure or action is one that the practitioner “should consider,” then which of the following interpretations is correct?

The consideration of the procedure is presumptively required, whereas carrying out the procedure is not required.

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 securities of Donley Corporation are listed on a regional stock exchange and registered with the SEC. The management of Donley engages a CPA to perform an independent audit of Donley’s financial statements. The primary objective of this audit is to provide assurance to the

 Investors in Donley securities.

An auditor finds that inventory shipped FOB shipping point before the end of Year 1 was incorrectly recorded as a sale in Year 2, when the shipped goods arrived to the customer. Which auditing assertion regarding transactions and events does this most likely relate to?

cutoff

Independent CPAs perform audits on the financial statements of issuers. This type of auditing can best be described as

 A discipline that attests to financial information presented by management.

Which of the following is a false statement about the relationship of financial statement assertions and audit procedures?

The relationship between financial statement assertions and audit procedures should be one-to-one.

The securities of Donley Corporation are listed on a regional stock exchange and registered with the SEC. The management of Donley engages a CPA to perform an independent audit of Donley’s financial statements. The primary objective of this audit is to provide assurance to the

 Investors in Donley securities.

An audit of the financial statements of Camden Corporation is being conducted by an external auditor. The external auditor is expected to

Express an opinion as to the fairness of Camden’s financial statements

Independent auditing can best be described as

 A discipline that enhances the degree of confidence that users can place in financial statements.

An auditor observes the mailing of monthly statements to a client’s customers and reviews evidence of follow-up on errors reported by the customers. This test of controls most likely is performed to support management’s financial statement assertion(s) of

 

Classification

Existence

 

 

Classification Yes

Existence No

 

Classification No

Existence No

 

Classification No

Existence Yes

 

Classification Yes

Existence Yes

Classification: no Existence: yes

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

They are guides intended to set forth auditing procedures applicable to a variety of situations.

According to AU-C 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Generally Accepted Auditing Standards, “presumptively mandatory requirements” in the auditing standards use which word?

 

 Should. = presumptively mandatory

 May.

 Can.

 Must. = unconditional requirement

 Should. = presumptively mandatory

Independent CPAs perform audits on the financial statements of issuers. This type of auditing can best be described as

 A discipline that attests to financial information presented by management.

A financial statement audit is designed to

Obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to fraud or error.

In connection with the element of monitoring, a CPA firm’s system of quality control ordinarily should provide for the maintenance of

Documentation to demonstrate compliance with its policies and procedures.

An independent auditor must have which of the following?

The ability to exercise sound professional judgment.