ACC 562 Auditing and Professional Conduct: A Comprehensive Assessment

Name: ACC 562 Auditing and Professional Conduct: A Comprehensive Assessment
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Author: Claire Mitchell

This assessment evaluates auditing practices and the professional conduct of auditors in compliance with industry standards.

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ACC 562 Auditing and Professional Conduct: A Comprehensive Assessment
ACC 562 MIDTERM EXAM LATEST 2015
Question 1
Answer
Independent professional services that are provided on financial or other information that
improve the quality of decision making are known as
Answer
internal auditing.
financial auditing.
assurance services.
attestation services.
Question 2
The objective of an operational audit is to
Answer
evaluate whether laws have been broken by management.
evaluate fairness of presentation of financial statements.
evaluate compliances with company rules and regulations.
evaluate the effectiveness and efficiency with which resources are employed.
Question 3
The AICPA remains a valuable organization because of its continuing involvement in
Answer
the audit standard setting process.
regulation and enforcement of the audit profession.
education and administration of the CPA exam.
promulgation of accounting standards.
Question 4
The auditor of financial statements must make very difficult interpretations regarding
authoritative literature. Additionally, the auditor must
Answer
consider whether the application of a generally accepted accounting principle best portrays the
economic activity of the company.
force management to make certain decisions regarding their financial statements.
disregard independence in order to find the underlying truth of the evidence.
establish new criteria by which financial statements may be compared.
Question 5
CPAs are licensed by the
Answer
PCAOB.
AICPA.
state's board of accountancy.
state's society of CPAs.
Question 6
The criteria against which the auditor measures the fairness of financial statement presentation
are known as

Answer
auditing standards.
generally accepted accounting principles.
generally accepted accounting standards.
governmental accounting principles.
Question 7
The audit committee of the board of directors of a company is responsible for
Answer
hiring the auditor.
preparing the financial statements.
the audit workpapers.
independence and obtaining evidence.
Question 8
What is the criteria used in an operational audit?
Answer
GAAP.
effectiveness and efficiency.
rules and regulations.
company policies.
Question 9
As it relates to an audit, materiality is
Answer
not taken into consideration.
related only to the sufficiency of procedures performed.
based upon audit fees.
determined based upon the importance to a user of the financial statements.
Question 10
Auditing is important in a free market society because
Answer
the public requires CPAs functioning as divisions of regulatory bodies.
auditors detect all errors and fraud made by company employees.
it provides reliable information based upon which to judge economic performance.
the auditor is an amiable insurance policy for investors.
Question 11
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:
Answer
claw back provision
give back provision
restatement provision
fraud provision
Question 12
The AICPA is an organization that is
Answer
historically self-regulated.

regulated by the federal government.
regulated the state governments.
a new organization established by an act of congress in 2002.
Question 13
A proper system of corporate governance is one that demands
Answer
decision making by auditors in place of management.
accountability back through the system to the shareholders.
internal audit representation on the board of directors.
audit planning to obtain competent and sufficient audit evidence.
Question 14
The organization that will continue to set auditing standards for firms auditing private companies
is the
Answer
FASB
GAO
SEC
AICPA
Question 15
Which of the following are the CEO and CFO of a public company prohibited from performing
under the Sarbanes-Oxley Act of 2002?
Answer
Certification of financial statements
Disclosure of off-balance sheet transactions
Reporting on internal control over financial reporting
Selecting the external auditors
Question 16
The responsibility for operating an enterprise is delegated to the:
Answer
auditor.
audit committee.
management.
board of directors.
Question 17
According to the Sarbanes-Oxley Act of 2002, how often must audit managers and partners
rotate off an engagement of a public company?
Answer
Each busy season
When independence is in question
Every five years
Managers and partners are not required to rotate off of public client engagements
Question 18
The audit client of the CPA firm is:
Answer
management.
the SEC.

the audit committee.
the stockholders.
Question 19
The Sarbanes-Oxley Act of 2002 requires which of the following?
Answer
Only the largest four accounting firms may audit public companies.
Smaller public companies that cannot afford to become compliant with the act must delist and
become pink sheet companies.
All publicly held companies will provide a report on internal control over financial reporting.
Chief financial officers of public companies must be CPAs.
Question 20
Which one of the following will provide auditing standards of public companies?
Answer
GAO
AICPA
GAAP
PCAOB
Question 21
Information about a client that cannot be subpoenaed by a court of law is referred to as what type
of information?
Answer
confidential information.
privileged communication.
contingent information.
audit communication
Question 22
An auditor that has an attitude that includes a questioning mind and a critical assessment of audit
evidence is considered which of the following?
Answer
Professionally Skeptical.
Professionally Independent.
Professionally Competent.
Professionally Efficient.
Question 23
A CPA firm is considered independent when it performs which of the following services for a
publicly traded audit client?
Answer
Serving as a member of the client’s board of directors.
Determining which accounting policies will be adopted by the client as approved by the board of
directors.
Accounting information system design and implementation as approved by the board of
directors.
Tax return preparation as approved by the board of directors.
Question 24
The AICPA Principles of Professional Conduct include which of the following?
Answer

public interest, objectivity and independence.
due professional care and supervision.
scope and nature of services and adequate training.
integrity and confidentiality
Question 25
Which of the following is included in the AICPA Code of Professional Conduct?
Answer
Principles, Rules of Conduct and Ethics Rulings.
Rules of Conduct, Interpretations and Principles.
Principles, Rules of Conduct and Ethics Rulings.
Principles, Rules of Conduct, Interpretations and Ethics Rulings.
Question 26
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?
Answer
only assess the relationships of clients that pay audit fees that are material to their firm.
assess all of their relationships with every client to ensure that independence is intact.
focus on client satisfaction above all other considerations.
realize that ethics are only guidelines and a matter of personal judgment.
Question 27
Mark Pulley is an auditor at Pulley and Hurst, LLC. If Pulley's five-year-old daughter owns
shares of stock in McBurgers Corporation, then Pulley is considered to have what type of interest
in McBurgers Corporation?
Answer
immaterial indirect interest in McBurgers Corporation.
material indirect interest in the McBurgers Corporation.
a loophole for claiming independence from McBurgers Corporation.
direct interest in McBurgers Corporation.
Question 28
Independence is not required for which of the following types of services?
Answer
audits.
reviews.
consulting.
attestation.
Question 29
Which one of the following is an example of a conflict of interest for a CPA?
Answer
performing tax services and a compilation engagement for a client
serving as legal counsel and an auditor for a client
providing an audit on internal financial controls and financial statements for a client
being employed as a chief financial officer while serving as a member of the board of directors
for the same company
Question 30
William Tyler, CPA, may not accept a commission for recommending a product or service to
which type of client?

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Accounting

ACC 562 Auditing and Professional Conduct: A Comprehensive Assessment

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