ACC 562 FINAL EXAM PART 1

Online Homework Solutions aims to provide quality study notes and tutorials to the students of ACC 562 FINAL EXAM PART 1 in order to ace their studies.

ACC 562 FINAL EXAM PART 2

TWO DIFFERENT VERSIONS PART 2 POSTED

The responsibility for designing and maintaining policies and procedures to identify, evaluate, and account for contingencies rests with whom?

Answer

management.

auditor.

audit committee.

client’s attorney.

When a subsequent event provides evidence about conditions that did not exist at the balance sheet date, the auditor should do which of the following?

Answer

ensure that any necessary footnote disclosures be included with the statements.

ensure that the financial statements are adjusted to reflect the information, including any necessary footnote disclosures.

give an inappropriate opinion.

provide management with a new engagement letter to document the terms of the revised arrangement.

The driver of audit quality under the Financial Reporting Council’s Audit Quality Framework that relates to audit methodology and tools applied to the audit is which of the following?

Answer

audit firm culture.

reliability and usefulness of audit reporting.

effectiveness of the audit process.

factors outside the control of auditors.

Where would the auditor make mention of issues noted during audit procedures that are not of audit significance?

Answer

Engagement letter.

Management letter.

Representation letter.

Attorney letter.

If the auditor concludes that there may be a going concern problem, the auditor should do which of the following?

Answer

withdraw from the engagement.

issue a qualified or adverse opinion.

identify and assess management’s plan to overcome the problem.

communicate this fact with management one level above the controller.

For registration statements filed with the SEC preparatory to selling securities, the subsequent events review goes from

Answer

the balance sheet date to the date the audit report is issued.

the balance sheet date to the end of field work.

the balance sheet date to the date of subsequent discovery of omitted procedures.

the balance sheet date to the effective date of the registration statement.

Management of Megadile, Inc. refuses to sign the management representation letter given to them in the course of the audit on the grounds that it invades the company’s privacy. Such actions will be considered by the auditors to be

Answer

a violation of full and fair disclosure.

securities law violation.

a scope limitation.

a breakdown in internal controls.

When a subsequent event provides evidence about conditions that existed at the balance sheet date, the auditor should do which of the following?

Answer

assign a specialist.

ensure that the financial statements are adjusted to reflect the information, including any necessary footnote disclosures.

shop for an opinion that fits the desired type of event.

provide management with a new engagement letter to document the terms of the revised arrangement.

A legal concept that is not significant to the doctrine of privity is that of

Answer

negligence.

ultramares.

scienter.

engagement letters.

In a lawsuit brought under the Securities Act of 1933, which of the following must the plaintiff show?

Answer

Reliance on financial statements.

Auditors guilt.

Due diligence.

That a loss was sustained.

Which of the following terms refers to an intentional concealment or misrepresentation of a material fact that causes damage to those deceived?

Answer

gross negligence.

fraud.

ordinary negligence.

breach of contract.

The Securities Exchange Act of 1933 places the burden of proof on which of the following?

Answer

third-party plaintiff.

attorney defendant.

auditor defendant.

client plaintiff.

An example of a case that subjected an auditor to criminal charges is

Answer

the McKesson & Robbins case.

the Citizens Timm case.

the Bily v. Arthur Young & Co. case.

the Equity Funding case.

In order to reduce the auditor’s liability exposure, engagement letters should include which of the following?

Answer

a clearly stated scope of the work to be done.

a statement that a trial by jury is acceptable.

the guaranteed fee structure for the engagement.

a statement that the auditor is not liable to the SEC.

When the client and the auditor are both sued and judgment is rendered against both, the auditor will be required to settle the entire judgment if the client is bankrupt. Which of the following is a representation of the above?

Answer

Private Litigation Reform.

Joint and several liability statutes.

Comparative fraud.

The Securities Acts.

Which aspect of statutory law places the burden of proof onto the auditor?

Answer

Scienter.

Securities Act of 1933.

Joint and Several Liability.

Ultramares.

The court case that established the precedent that an auditor can be held liable to third parties for fraud and gross negligence, but limited auditor liability for ordinary negligence to those who are in privity of contract, is the

Answer

McKesson and Robbins case.

1136 Tenants Corporation case.

CIT Financial Corporation case.

Ultramares Corporation case.

The adjustments arising from the audit that were considered to be material should be informed by the auditor to the:

Answer

audit staff.

management.

audit committee.

internal auditors.

The primary scope of services performed in external auditing (CPA) is:

Answer

risk analysis.

control analysis.

operations analysis.

audit of financial statements.

The primary scope of services performed in external auditing (CPA) is:

Answer

risk analysis.

control analysis.

operations analysis.

audit of financial statements.

The partial or complete outsourcing of internal audit activities is made to public accounting firms or to other specialized firms that perform which of the following types of services?

Answer

primarily risk, control, and audit activities.

attestation services as demanded by market place.

operations analysis and risk analysis.

analytical and substantial procedures.

External assurance over sustainability reports must be provided by which of the following:

Answer

Certified Public Accountants in conjunction with the annual financial audit.

those with competence in the subject matter and assurance practices.

Certified Sustainability Experts.

individuals that are not independent with the company issuing the sustainability report.

Which method focuses on the materiality of current year misstatements and the reversing effect of prior-year misstatements on the income statement?

Answer

Rollover method

Iron curtain method

Percentage approach

Judgmental method

The two general types of assurance that can be provided to sustainability reports include which of the following:

Answer

Reasonable assurance and Limited assurance.

Material assurance and Reasonable assurance.

Limited assurance and material assurance.

Reasonable assurance and Compliance assurance

Which of the following is needed by a client while estimating fair value?

Answer

A systematic process to identify each asset that is subject to realizable value or at cost.

A process to identify relevant historical values.

An analysis of whether the organization has the ability to hold the asset to maturity and whether the decline in value is permanent.

A realistic process to estimate future cash flows to discount back to a present value.

For the same client, SEC prohibits a CPA firm from providing which of the following services?

Answer

tax and external audit services

internal and external audit services.

management letter and audit services.

internal control and financial statement audits.

VERSION 2

Question 1

External documentation may lack reliability. Which of the following is the most probable reason for that?

Answer

the external party may be competent in performing duties.

the documentation may be properly understood by the client in the response.

the auditor may decide not to use the documentation and replace it with other documents.

the documentation may have been altered if the process is not controlled from inception.

Question 2

For the financial statements to be presented in accordance with generally accepted accounting principles, the information included must:

Answer

embody the appropriate assertions of management.

be consistent, comparable and fully accurate.

have full and adequate disclosure of all transactions.

be prepared by an independent auditor

Question 3

Which one of the following original documents would most likely be found in the audit working papers?

Answer

Vendor invoices

Check registers

Returned confirmation requests

Payroll time cards

Question 4

Sufficient evidence gathered by the auditor involves which of the following?

Answer

The amount of evidence to be obtained.

The type of evidence to be obtained.

Obtaining limited evidence to achieve efficiency.

The use of an audit program to obtain evidence

Question 5

Which of the following assertions is the primary assertion that is satisfied by physically observing the client’s count of inventory?

Answer

rights.

valuation.

completeness.

existence.

Question 6

Which one of the following would be considered the most persuasive type of audit evidence?

Answer

purchase orders from vendors

customer accounts receivable files

computerized general ledger

confirmations from banks

Question 7

Which one of the following would be the most persuasive type of evidence?

Answer

check register

bank statement

observation of assets

inquiry with the in-house attorney

Question 8

Which one of the following is the primary reason for documenting audit work?

Answer

to prevent litigation by other parties that question the audit performance.

to provide a stand-alone medium that gives audit conclusions and supports the opinion.

to give the client a full reporting of all work performed on their behalf.

to supply a point of reference for all auditors performing the work subsequently

Question 9

Performance of audit procedures at an interim date causes the risk of material misstatement occurring between the interim date and the end of the year to

Answer

decrease.

increase.

remain the same.

become more difficult to ascertain

Question 10

A major disadvantage of MUS sampling is which of the following?

Answer

Sample selection is relatively easy.

Sample sizes are relatively small.

It is difficult to test for understatement.

It directly controls for the risk of incorrect acceptance

Question 11

In analyzing misstatements using sampling techniques, the auditor should analyze the misstatements

Answer

qualitatively and quantitatively.

absolutely and proportionately.

haphazardly and randomly.

methodically and systematically

Question 12

The sample size varies directly with

Answer

the expected failure rate.

the tolerable error rate.

the allowable risk of assessing control risk too low.

the nonsampling risk.

Question 13

When confirming receivables in testing for overstatements, there are few or no misstatements expected, and the selection is based on dollars, the auditor is likely to use

Answer

MUS sampling.

stratified mean-per-unit sampling.

ratio estimation sampling.

attribute sampling.

Question 14

Dividing the population into relatively homogeneous groups in order to reduce sample size is called

Answer

Ratio estimation.

Difference estimation.

Stratification.

MUS sampling

Question 15

While auditors may use either statistical or nonstatistical sampling, some auditors restrict the use of nonstatistical sampling mainly because it is

Answer

less effective.

less objective.

less efficient.

less risky.

Question 16

Which one of the following accounting constraints supports the concept of audit sampling?

Answer

Conservatism

Materiality

Cost-benefit

Industry practice

Question 17

Haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be

Answer

statistically sound.

representative of the population.

representative of the sample.

in the upper stratum.

Question 18

When is the assessment of fraud risk on a single engagement completed by the audit team?

Answer

Upon completion of the planning stage.

Once internal control is understood.

Only after the audit risk model has been used to design tests.

Once the audit is complete

Question 19

Which of the following is most likely considered a material omission from the rules of financial statement reporting?

Answer

The company no longer discloses a previously settled contingency.

The company does not present the fair value of all current assets on the balance sheet.

A privately held company does not disclose earnings per share.

A company with a net loss does not present a statement of cash flows

Question 20

If material fraud perpetrated by management is discovered by the auditor, the nature of the fraud should always be reported directly to:

Answer

the PCAOB

the SEC

the FBI

the audit committee of the company

Question 21

Which of the following creates an opportunity for fraud to be committed in an organization?

Answer

Management demands financial success.

Poor internal control.

Commitments tied to debt covenants.

Management is aggressive in its application of accounting rules

Question 22

Which of the following computerized audit procedures best assists the engagement team in detecting asset misappropriations?

Answer

Creation of bank confirmations.

Tracing of recorded assets to source documents.

Search for duplicate payments.

Determination of obsolete inventory

Question 23

What is the best method an auditor may use to detect fraud in the financial statements of clients?

Answer

Use professional skepticism.

Understand and properly apply Generally Accepted Accounting Standards.

Brainstorm with the client to find the types of fraud occurring.

Actively search for all errors in the financial statements.

Question 24

Which of the following are most often involved in perpetrating fraud in financial statement reporting?

Answer

The auditors and the attorneys.

The audit committee members.

The chief executive and chief financial officers.

The accounts payable clerks.

Question 25

Audits of financial statements are valuable to the detection of fraud because:

Answer

Auditors are not required to seek out and find all fraud.

Auditors expect that management will make them aware of any fraud in the financial statements.

Society expects that the auditor will ensure that financial statements have not been materially misstated due to fraud.

Society realizes that some fraud is not capable of being discovered by auditors.

ACC 562 FINAL EXAM PART 1

ACC 562 FINAL EXAM PART 1

http://www.onlinehomeworksolutions.com/

AC · ACC · ACCT · ACCTG · ACG · ACNT · ACT · AED · AET · AFT · AH · AI · AIMS · AJS · AL · ALG · AMBA · ANT · AR · ART · ARTS · AST · BA · BAI · BAM · BAT · BBA · BBC · BBUS · BCJ · BCOM · BE · BEH · BEM · BEST · BHA · BI · BIMS · BIO · BIOL · BIOS · BIS · BITO · BIZ · BIZNZ · BM · BMDS · BMGT · BMIS · BNSN · BOB · BOLT · BOOK · BORE · BOS · BR · BRO · BSA · BSHS · BT · BTM · BU · BUA · BUL · BURN · BUS · BUSI · BUSN · BUSS · BYP · BZ · CBM · CC · CCIS · CCJ · CE · CEIS · CFIN · CGD · CGS · CIS · CJ · CJA · CJHS · CJS · CJUS · CMC · CMGT · CMIS · CMIT · CO · COIN · COIT · COL · COLA · COLL · COM · COMM · COMP · COSC · COUN · CPMGT · CQ · CRI · CRMJ · CS · CSC · CSCI · CSE · CSI · CSS · CST · CUL · CX · DAAC · DB · DBM · DMB · DMDK · DOCX · DRAW · DRG · EARN · EBT · EBUS · EC · ECC · ECCO · ECE · ECET · ECN · ECO · ECOL · ECOM · ECON · ECT · EDU · EE · EED · EEK · EEL · EG · EGM · EGT · EH · ELL · EM · EMG · EN · END · ENG · ENGL · ENGR · ENV · ENVV · ESE · ETH · ETHC · EX · EXP · FEN · FF · FI · FILE · FIN · FINA · FINC · FINGM · FIRM · FIS · FN · FNC · FNCE · FNS · FNT · FP · GB · GBA · GBM · GE · GEN · GEO · GEOG · GET · GEW · GLG · GM · GMC · GOAL · GOT · GOV · GOVT · GP · GRID · GRM · GRT · GS · GSCM · GTT · GURU · HA · HALL · HCI · HCIS · HCP · HCR · HCS · HEA · HHS · HI · HIS · HIST · HIUS · HLT · HLTH · HM · HMCO · HMT · HPE · HR · HRDV · HRM · HS · HSA · HSC · HSCO · HSM · HSS · HTM · HTML · HU · HUIS · HUM · HUMN · HW · HWY · HY · ICS · IFRS · IM · IME · INB · INF · INFA · IS · ISA · ISCOM · ISM · ISMN · ISSC · ISSN · IT · ITB · ITC · ITCO · ITEC · ITEM · ITM · IWT · JESS · JET · JFT · JGT · JIS · JKQ · JUIS · JUST · JWI · JWM · JWMI · KIO · KO · LAS · LASA · LAW · LAWS · LCC · LDR · LEG · LEST · LIB · LIES · LIKE · LIT · LLC · LO · LOG · LP · LSS · LTC · MA · MAN · MAT · MATH · MATT · MB · MBA · MBAA · MC · MCJ · MEC · MFW · MG · MGMT · MGT · MHA · MILL · MIS · MISC · MIST · MKT · MKTG · ML · MM · MMHA · MN · MNSO · MOON · MPM · MT · MTH · MTK · NET · NETW · NH · NIBR · NIT · NR · NRS · NSG · NTC · NU · NUR · NURS · NV · OBEO · OI · OM · OMM · ORG · OWNS · PA · PAR · PARI · PBO · PCN · PDF · PEP · PG · PGBM · PH · PHI · PHIL · PHL · PHSC · PHY · PHYS · PL · PLY · PM · PPA · PR · PRES · PRG · PROJ · PRS · PRT · PS · PSY · PSYC · PSYT · PXT · QAT · QGT · QLT · QNT · QRB · QS · QSO · QTR · QUANT · RACE · RDG · RE · REL · RENT · RES · RICK · RM · ROLE · ROOM · RTT · SA · SAT · SBE · SC · SCI · SCIE · SCIN · SCM · SE · SEC · SEI · SHS · SLP · SNAG · SO · SOC · SOCS · SOEN · SRM · SRT · SS · STA · STAR · STAT · STR · TCO · TCOS · TEC · THEM · TIER · TLB · TLMT · TM · TO · TRP · TURN · TY · UC · UCC · UGB · UNVI · USTIC · VCT · VIEW · VTC · WAYS · WEB · WEE · WEEL · WRTG · WW · XACC · XBCOM · XBIS · XCOM · XECO · XMGT · ZNSO

ACC 562 FINAL EXAM PART 1