Question

this is multiple choice question, this is my mid term question, please do not give the answers by guessing because these marks really improtant to me, answer only if you are 100% sure, Thank you so much.
1) Which of the following is not a type of auditor's opinion?
a) Qualified
b)Adverse
c) Unmodified
d)Disclaimer of opinions
e) Ordinary

2) Which of the following is least likely to be considered a covered member for the purpose of this year auditing of ABC Inc. by the Atlanta branch of a national CPA firm ?
a) A partner of the Atlanta office who only worked on audits of past years of ABC INC. but currently has no repsonisibilitie with this year's audit
b) a partner in charge of the Atlanta office of the CPA firm
c) a partner in charge of the entire CPA firm
d) A partner of the houston pffice branch of the CPA firm but who has a small , immaterial investment in ABC Inc.

3) Which of the following family relations is most likely to impair an Auditor;s independence with respect to a particular client on which the auditor works as a covered member?
a) an uncle who has an immaterial investment in the client of which the auditor is aware.
b) an uncle who has a material investment in the client of which the auditor is not aware
c) the auditor's spouse participates in a 401(K) retirement plan sponsored by the client.
d) the auditor's uncle is president of the client.

4) The Sarbanes-Oxley Act requires that auditors of large publicly traded companies in the U.S. perform an Integrated Audit that includes an audit report on the entity's internal control and which of the following
a) compliance with lawas and regulations
b) financial statements and compliances with laws and regulations
c) financial statements
d) neither financial statements nor compliance with laws and regulations

5)An analytical procedure that involves comparing an entity's ratios with other companies in the same industry is
a) comparison analysis
b) cross sectional analysis
c) horizontal analysis
d) vertical analysis

Answer 1

1)

Correct Answer : e) Ordinary

Reason: An auditor’s opinion comprises either of qualified, Adverse, unmodified or disclaimer of opinions. There is no such opinion called ordinary opinion

2)

Correct Answer: d)

Reason: For the purpose of conducting audit an auditor should not have any interest (material or immaterial) with the client. Therefore, a partner of the Houston office branch of the CPA firm who has a small immaterial investment in ABC Inc. is least likely to be considered.

3)

Correct Answer: d)

Reason: It is very likely to be possible for an auditor to give biased opinion on the books of accounts in case where the uncle of the auditor is the president of the client. The relationship between the client and the auditor does not become independent in this case.

4)

Correct answer: b)

Reason: Sarbanes Oxley Act was introduced to keep check on the regulations and to avoid any fraud related to preparation and presentation of the financial statements to its stockholders. Therefore financial statements and compliances with laws and regulations is the correct answer.

5)

Correct answer: a)

Reason: Cross section, horizontal and vertical analysis is done to compare an entity’s performance with its own. On the other hand, comparison analysis involves comparing an entity’s ratio with other companies in the same industry.