Question

6.

Which of the following is a common incentive or condition that increases the likelihood for fraudulent financial reporting?

Group of answer choices

- Ineffective segregation of assets.

- Significant related party transactions.

- Management bonuses based on reported earnings.

- Access to undeposited cash.

15.

Which of the following is a responsibility of the PCAOB?

Group of answer choices

- To set financial reporting standards for public companies.

- To set financial reporting standards for private companies.

- To set audit standards for public companies.

- To set audit standards for private companies.

17. Which of the following best describes the audit committee’s oversight responsibility?

Group of answer choices

-Provide oversight of reporting outside the organization.

-Provide oversight of internal auditing function.

-Provide oversight of the external audit.

-All of the above.

32. The auditor may use analytical procedures during which phase of the audit?

Group of answer choices

- Planning the audit.

- Substantive testing.

- Completing the audit.

- All of the above.

34.

Which of the following best describes the misstatements identified throughout the audit that will be considered at the end of the audit in determining whether the financial statements overall are materially correct?

Group of answer choices

- Posting materiality.

- Performance materiality.

- Overall materiality.

- Tolerable error.

35.

Which item is correct concerning the risk of material misstatement?

Group of answer choices

- Risk of material misstatement arises because audit procedures have been misapplied.

- Risk of material misstatement can be controlled and changed by the auditor.

- Risk of material misstatement must be assessed in non-quantitative terms.

- Risk of material misstatement is controllable by the client.

45.

Which of the following statements regarding detection risk is true?

Group of answer choices

- Detection risk incorporates both substantive analytical procedures and tests of details.

- Detection risk provides guidance to the auditor on the substantive audit procedures needed to achieve the desired audit risk.

- A low level of detection risk means the auditor needs to obtain more evidence from substantive procedures.

- All of the above.

57.

On what information does the auditor base a going concern evaluation?

Group of answer choices

- On separate procedures.

- On the management discussion and analysis (MD&A).

- On information obtained from normal audit procedures performed to test management’s assertions.

- On the statement of cash flows for the current period.

59. During which of the following phases of the audit are analytical review procedures required by the auditing standards?

Group of answer choices

- The planning phase of the audit.

- The final review phase of the audit.

- Both the planning and final review phases of the audit.

- Performance of tests of controls.

62.

Which of the following is an example of the contents of an opinion paragraph found in an unqualified audit report?

Group of answer choices

- "We have audited...."

- "Nothing came to our attention..."

- "The financial statements referred to above present fairly..."

- "An audit includes examining, on a test basis..."

Answer 1

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6. Which of the following is a common incentive or condition that increases the likelihood for fraudulent financial reporting?

- Significant related party transactions.

15. Which of the following is a responsibility of the PCAOB?

- To set financial reporting standards for public companies.

17. Which of the following best describes the audit committee’s oversight responsibility?

-All of the above.

32. The auditor may use analytical procedures during which phase of the audit?

- Planning the audit.

34. Which of the following best describes the misstatements identified throughout the audit that will be considered at the end of the audit in determining whether the financial statements overall are materially correct?

- Overall materiality.

35. Which item is correct concerning the risk of material misstatement?

- Risk of material misstatement is controllable by the client.

45. Which of the following statements regarding detection risk is true?

- All of the above.

57. On what information does the auditor base a going concern evaluation?

- On information obtained from normal audit procedures performed to test management’s assertions.

59. During which of the following phases of the audit are analytical review procedures required by the auditing standards?

- Both the planning and final review phases of the audit.

62. Which of the following is an example of the contents of an opinion paragraph found in an unqualified audit report?

- "The financial statements referred to above present fairly..."