ACC504 Mid-Term Review: Advanced Auditing Concepts and Application

Name: ACC504 Mid-Term Review: Advanced Auditing Concepts and Application
Brand: Excelsior University
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Author: Sarah Robinson

A mid-term review covering advanced auditing concepts.

Sarah Robinson

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ACC504 Mid-Term Review: Advanced Auditing Concepts and Application
ACC504 Mid Term Advanced Auditing
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Question
1. What is the term used to identify the risk that the client's financial statements may be
materially false and misleading?
A. Business risk.
B. Information risk.
C. Client risk.
D. Risk assessment.
2. The audit objective that all transactions are recorded in the proper account is related most
closely to which one of the ASB transaction assertions?
A. Occurrence.
B. Completeness.
C. Accuracy.
D. Classification.
3. Assurance services involve all of the following except
A. Relevance as well as the reliability of information.
B. Nonfinancial information as well as traditional financial statements.
C. Providing absolute rather than reasonable assurance.
D. Electronic databases as well as printed reports.
4. An attestation engagement is one in which a CPA is engaged to
A. Issue a report on subject matter or an assertion about the subject matter that is the
responsibility of another party.
B. Provide tax advice or prepare a tax return based on financial information the CPA has not
audited or reviewed.
C. Testify as an expert witness in accounting, auditing, or tax matters, given certain stipulated
facts.
D. Assemble prospective financial statements based on the assumptions of the entity's
management without expressing any assurance.
5. The process by which a CPA obtains a certificate and license in a state other than the state in
which the CPA's certificate was originally obtained is referred to as
A. Substantial equivalency.
B. Quid pro quo.
C. Relicensing.
D. Re-examination
6. Which of the following would be considered an assurance engagement?
A. Giving an opinion on a prize promoter's claims about the amount of sweepstakes prizes

awarded in the past.
B. Giving an opinion on the conformity of the financial statements of a university with generally
accepted accounting principles.
C. Giving an opinion on the fair presentation of a newspaper's circulation data.
D. Giving assurance about the average drive length achieved by golfers with a client's golf balls.
E. All of the above.
7. Bankers who are processing loan applications from companies seeking large loans will
probably ask for financial statements audited by an independent CPA because
A. Financial statements are too complex to analyze themselves.
B. They are too far away from company headquarters to perform accounting and auditing
themselves.
C. The consequences of making a bad loan are very undesirable.
D. They generally see a potential conflict of interest between company managers who want to
get loans and the bank's needs for reliable financial statements.
8. The Sarbanes-Oxley Act of 2002 prohibits public accounting firms from providing which of
the following services to an audit client?
A. Bookkeeping services.
B. Internal audit services.
C. Valuation services.
D. All of the above.
9. The risk to investors that a company's financial statements may be materially misleading is
called
A. Client acceptance risk.
B. Information risk.
C. Moral hazard.
D. Business risk.
10. Substantial equivalency refers to
A. An auditor's tendency not to believe management's assertions without sufficient
corroboration.
B. Providing consulting work for another firm's audit client in exchange for the other firm's
providing consulting services to one of your clients.
C. The waiving of certification exam parts for an individual holding an equivalent certification
from another professional organization.
D. Permitting a CPA to practice in another state without having to obtain a license in that state.
11. Which of the following best describes the relationship between auditing and attestation
engagements?
A. Auditing is a subset of attestation engagements that focuses on the certification of financial
statements.

B. Attestation is a subset of auditing that provides lower assurance than that provided by an audit
engagement.
C. Auditing is a subset of attestation engagements that focuses on providing clients with advice
and decision support.
D. Attestation is a subset of auditing that improves the quality of information, or its context, for
decision makers.
12. Which of the following best describes the focus of the following engagements?
A. Option A
B. Option B
C. Option C
D. Option D
13. Which of the following is an example of a regulatory auditor?
A. Internal auditors.
B. Big 4 auditors.
C. U.S. Internal Revenue Service auditors.
D. Operational auditors.
14. The definition of performance audits does not include
A. Economy audits.
B. Efficiency audits.
C. Financial audits.
D. Program audits.
15. CPA certificates and licenses to practice are issued by the
A. AICPA.
B. States or territories.
C. AICPA Examinations Division.
D. GAO.
16. The attestation standards do not require the attestation report to include a statement that
A. Provides a conclusion whether the subject matter is presented in conformity with established
or stated criteria.
B. Indicates that the practitioner has significant reservations about the engagement.
C. Identifies the subject matter or assertion being reported on.
D. Indicates that the accountant assumes no responsibility to update the report.
17. Control risk is
A. The probability that a material misstatement could not be prevented or detected by the entity's
internal control policies and procedures.
B. The probability that a material misstatement could occur and not be detected by auditors'
procedures.
C. The risk that auditors will not be able to complete the audit on a timely basis.
D. The risk that auditors will not properly control the staff on the audit engagement.
18. Which of the following is an element of a system of quality control that should be considered

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Excelsior University

Subject

Accounting

ACC504 Mid-Term Review: Advanced Auditing Concepts and Application

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