ACC 562 Midterm Ch 1 - 3

Topics: Auditing, Internal control, Financial audit Pages: 5 (715 words) Published: November 25, 2014
Strayer
ACC 562 Advance Auditing
MIDTERM EXAM (CH 1 – 3)
Question 1

CPAs are licensed by the

Correct Answer:
   state's board of accountancy.

Question 2

The Certified Internal Auditor program is administered by the

Correct Answer:
   IIA.

Question 3

The objective of an operational audit is to

Correct Answer:
evaluate the effectiveness and efficiency with which resources are employed.

Question 4

As it relates to an audit, materiality is

Correct Answer:
determined based upon the importance to a user of the financial statements.

Question 5

Independent professional services that are provided on financial or other information that improve the quality of decision making are known as

Correct Answer:
assurance services.

Question 6

An expectation of the public is that the auditor will recognize that the primary users of audit assurance are

Correct Answer:
third-party users.

Question 7

The primary governing board that performs quality reviews on registered CPA firms that audit public companies is the

Correct Answer:
PCAOB

Question 8

An audit which has as its purpose the evaluation of the economy and efficiency with which resources are employed is known as a(n)

Correct Answer:
operational audit.

Question 9

Management of a company is responsible for

Correct Answer:
preparing the financial statements.

Question 10

The audit agency for the U. S. Congress is the

Correct Answer:
GAO.

Question 11

An audit committee must be comprised of outside directors and at least one outside financial expert.  Which of the following is considered an outside director?

Correct Answer:
A director who is not a member of management and has no other relationship to the organization.

Question 12

A proper system of corporate governance is one that demands

Correct Answer:
accountability back through the system to the shareholders.

Question 13

Section 304 of the Sarbanes-Oxley Act requires executives to forfeit any bonus or incentive-based pay or profits (including stock options) from the sale of stock received in the twelve months prior to an earnings restatement. This is often referred to as:

Correct Answer:
   claw back provision

Question 14

Which one of the following will provide auditing standards of public companies?

Correct Answer:
   PCAOB

Question 15

The responsibility for operating an enterprise is delegated to the:

Correct Answer:
   management.

Question 16

The Sarbanes-Oxley Act of 2002 requires which of the following?

Correct Answer:
All publicly held companies will provide a report on internal control over financial reporting.

Question 17

The audit client of the CPA firm is:

Correct Answer:
   the audit committee.

Question 18

The Public Company Accounting Oversight Board was established by:

Correct Answer:
an act of Congress.

Question 19

Audit committees are required to have what person in its composition?

Correct Answer:
A financial expert

Question 20

Corporate governance is a process by which the owners and creditors of an organization

Correct Answer:
 exert control and require accountability.

Question 21

In determining the types of activities, engagements and interactions an auditor should have with a client, the CPA and the audit firm must do which of the following?

Correct Answer:
assess all of their relationships with every client to ensure that independence is intact.

Question 22

Independence is not required for which of the following types of services?

Correct Answer:
consulting....
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