Question

5. Auditing that involves testing and reporting on whether an organization has complied with the requirements of various laws, regulations and agreements is referred to as:

a) Statutory auditing

b) Regulatory auditing

c) Compliance auditing

d) ASB auditing

6. An independent, objective assurance and consulting activity designed to add value and improve an organization’s operation that helps an organization accomplish its objectives is referred to as:

a) Audit services

b) Review services

c) Internal auditing service

d) Compilation services

7. Regarding the Crazy Eddie, Inc. case study that we went over in class, which of the following is true:

a) Crazy Eddie misled the customers by selling factory warranties as extended warranties

b) Crazy Eddie Understated accounts payables with fictitious debt memos from the vendors

c) The internal accountants of Crazy Eddie were at one time former auditors from the firm that provided certified audit services to the company

d) All of these choices were ploys that Eddie Antar and his family conspired

8. “Management had elected to omit substantially all the disclosures required by generally accepted accounting principles” This statement could be found on the auditor/accountant’s report for a(an):

a) Audit

b) Review

c) Compilation

d) Never should be made

9. CPA Must be independent when providing attest services, Which of the following services is (are) considered test services

a) Audit

b) Review

c) Compilation

d) Audit and review only

e) Audit, Review and compilation

Answer 1

Ans 5= A- statutory auditing:- The term statutory is used to denote the audit is required by statute. A statute is a law or regulation enacted by the legislative branch of the organization’s associated government. Statutes can be enacted at multiple levels, including federal, state or other municipality. In business, statute can also refer to any rule set forth by the organization’s leadership team.

Ans 6:- C :- Internal auditing service :- Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Ans 7 :- C :- The internal accountants of Crazy Eddie were at one time former auditors from the firm that provided certified audit services to the company.

Ans 8 :- D :- compilation :- a CPA can issue compiled financial statements without disclosures as long as the compilation report discloses the omission.Management has elected to omit substantially all of the disclosures required by accounting principles generally accepted in the United States of America. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the Company’s financial position, results of operations and cash flows. Accordingly, the financial statements are not designed for those who are not informed about such matters.