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Multiple Choice Quiz
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1
Nonaudit clients sometime engage public accounting firms to perform a specified set of audit procedures rather than a complete audit of the financial statements taken as a whole. This type of engagement is called a(n)
A)Individual account engagement.
B)Agreed-upon procedures engagement.
C)Assurance service.
D)Compliance audit.
2
Even though Sarbanes-Oxley only applies to publicly traded companies, private companies and organizations may request that public accounting firms attest to the effectiveness of their internal controls. Several conditions must be met before a public accounting firm can undertake such an engagement. Which of the following is NOT one of the necessary conditions?
A)Management accepts responsibility for the effectiveness of its internal control.
B)Management's evaluation of control is based on reasonable criteria.
C)Management's evaluation of control is be supported by an internal audit review.
D)Management presents a written assertion about the effectiveness of its internal control.
3
Which of the following statements is true concerning a compliance audit?
A)Compliance audits are only performed by governmental auditors.
B)Risks such as inherent risk, control risk, and detection risk are not appropriate in the planning and performance of a compliance audit.
C)Materiality is difficult to measure in a compliance audit.
D)A report on compliance can only include negative assurance.
4
A review of unaudited financial states consists of
A)Conducting internal control evaluation and obtaining a management representation letter.
B)Conducting inquiry of management and documenting internal controls.
C)Performing analytical procedures and determining compliance with laws and regulations.
D)Conducting inquiry of management, performing analytical procedures, and obtaining a management representation letter.
5
A compilation report should include all of the following except
A)A statement that the compilation has been performed in accordance with Statement of Standards for Accounting and Review Services.
B)A statement that the financial statements are the representation of management.
C)A statement that adequate disclosure has been made concerning accounting policy and practice.
D)A statement that the financial statements have not been audited or reviewed.
6
Which of the following statements is true concerning interim financial information?
A)An audit of interim financial information is required for SEC companies.
B)The accountant needs to obtain sufficient knowledge of the entity's business and industry before undertaking an engagement on interim financial information.
C)An accountant may not report on financial information presented separately from audited financial statements.
D)Interim financial information may not be included as part of a note to the audited financial statements.
7
According to AU 915, "Reports on Application of Requirements of an Appropriate Financial Reporting Framework", which of the following is NOT allowed when writing a report in response to a request for consultation regarding the application of requirements of an appropriate financial reporting framework?
A)Providing a written report on a hypothetical transaction.
B)Identification of the entity requesting the information.
C)A statement that the entity's management is responsible for proper accounting treatment in consultation with its own auditors.
D)A statement that the report is for the sole use of specified parties.
8
A business that executes or records transactions on behalf of a client is called a(n)
A)Third-party provider.
B)Service organization.
C)Outsourcer.
D)Profit center.
9
The AICPA Special Committee on Assurance Services (SCAS) identified five mega trends that can affect a CPA's business. Which of the following is not one of these mega trends identified by the SCAS?
A)Information technology.
B)Demands for transparency.
C)New social structures.
D)All of the above were identified as mega trends.
10
Which of the following would not be included in an auditor's report on financial statements prepared under a special purpose framework?
A)A sentence that identifies the special purpose framework.
B)Referral to the special purpose framework in the opinion sentence.
C)A statement that the financial statements were prepared in accordance with accounting principles generally accepted in the United States of America.
D)All of the above would be included in the report.





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