Only senior partners are liable for the partnership's debts. Auditing standards issued by The AICPA and The PCAOB are considered minimum standards of performance. Form 10-k must be filed with the senate whenever a public company experiences a significant event.
Only senior partners are liable for the partnership's debts. Auditing standards issued by The AICPA and The PCAOB are considered minimum standards of performance. Form 10-k must be filed with the senate whenever a public company experiences a significant event.
Only senior partners are liable for the partnership's debts. Auditing standards issued by The AICPA and The PCAOB are considered minimum standards of performance. Form 10-k must be filed with the senate whenever a public company experiences a significant event.
1. Which of the following statements is true as it relates to limited liability partnerships?
A) Only senior partners are liable for the partnership's debts.
B) Partners have no liability in a limited liability partnership arrangement. C) Partners are personally liable for the acts of those under their supervision. D) All partners must be AICPA members.
2. Which of the following best describes the roles of the AICPA and the PCAOB in establishing auditing standards? A) Auditing standards issued by the AICPA and the PCAOB are considered minimum standards of performance for auditors. B) The AICPA sets auditing standards for use in audits of non-public entities. C) The PCAOB sets auditing standards for use in audits of publicly held companies. D) All of the above.
3. The AICPA has authority to establish standards and rules in all but which of the following areas? A) Auditing standards applicable to financial statements of private companies B) Compilation and review standards C) Code of Professional conduct D) Auditing standards applicable to financial statements of private and public companies
4. Which of the following statement is the most correct answer? A) All CPA firms registered with the PCAOB are required to undergo a peer review annually. B) The Public Company Accounting Oversight Board (PCAOB) provides oversight to auditors of publicly traded and private companies. C) Form 10-K must be filed with the SEC whenever a public company experiences a significant event. D) The overall purpose of the Securities and Exchange Commission is to assist in providing investors with reliable information upon which to make investment decisions.
5. If an auditor of a public company cannot find guidance issued by the PCAOB on a particular audit matter, the auditor should generally seek guidance from which of the following sources? A) Statements on Auditing Standards B) Statements on Standards for Accounting and Review Services C) Regulations issued by the Securities and Exchange Commission D) The AICPA Code of Professional Conduct
6. To exercise due professional care, an auditor should A) Attain the proper balance of professional experience and formal education. B) Critically review the work performed and judgment exercised by those assisting in the audit. C) Examine all available corroborating evidence supporting management's assertions. D) Design the audit to detect all instances of illegal acts.
7. What is the essential meaning of the generally accepted auditing standard that requires that the auditor be independent? A) The auditor must be without bias with respect to the client under audit. B) The auditor must adopt a critical attitude during the audit. C) The auditor's sole obligation is to third parties. D) The auditor may have a direct ownership interest in his client's business if it is not material.
8. What is the general character of the three generally accepted auditing standards classified as general standards? A) Criteria for competence, independence, and professional care of individuals performing the audit. B) Criteria for the content of the financial statements and related footnote disclosures. C) Criteria for the content of the auditors' report on financial statements and related footnote disclosures. D) Criteria of audit planning and evidence gathering.
9. To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, the auditor must fulfill several performance responsibilities, including: A) verifying that all audit work is performed by a CPA with a minimum of three years experience. B) obtaining sufficient, appropriate audit evidence. C) exercising professional judgment. D) providing an opinion on the financial statements.
10. In order to properly plan and perform an audit, an important fact for both the auditor and the client to understand is that: A) the internal control policies and procedures are developed by the auditors. B) the purpose of an audit is to prevent fraud. C) management is responsible for the preparation of the financial statements. D) management can restrict the auditor's access to important information relevant to the financial statements.
11. Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) should be looked upon by practitioners as: A) ideals to work towards, but which are not achievable. B) maximum standards that denote excellent work. C) minimum standards of performance that must be achieved on each audit engagement. D) benchmarks to be used on all audits, reviews, and compilations.
12. A procedure in which a quality control partner periodically tests the application of quality control procedures is most directly related to which quality control element? A) Engagement performance. B) Human resources. C.) Leadership responsibilities for quality with the firm. D) Monitoring
13. Requirements for training, independence and due professional care are included in which group of the generally accepted auditing standards? A) Fieldwork. B) General. C) Reporting. D) Quality control
14. A requirement that working papers be reviewed by the supervisor, and any deficiencies be discussed with the preparer is an example of a quality control procedure in the area of: A) Acceptance and continuance of client relationships and specific engagements. B) Engagement performance. C) Human resources. D) Relevant ethical requirements.
15. A requirement to design recruitment processes and procedures to help the firm select individuals meeting minimum academic requirements established by the firm is an example of a quality control procedure in the area of: A) Acceptance and continuance of client relationships and specific engagements. B) Engagement performance. C) Human resources. D) Relevant ethical requirements.
Answer: CDDDA BAABC CDBBC
Problem_1
Answer :
DISCUSSION QEUESION 2-21 General Standards 1. The audit is to be performed by a person or persons having adequate technical training and proficiency is an auditor. It was inappropriate for Holmes to hire the two students to conduct the audit. The audit must be conducted by persons with proper education and experience in the field of auditing. Although a junior assistant has not completed his or her formal education, he or she may help in the conduct of the audit as long as there is proper supervision and review. 2. In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors. To satisfy the second general standard, Holmes must be without bias with respect to the client under audit. Holmes has an obligation for fairness to the owners, management, and creditors who may rely on the report. Because of the financial interest in whether the bank loan is granted to Ray, Holmes is independent in neither fact nor appearance with respect to the assignment undertaken. 3. Due professional care is to be exercised in the performance of the audit and the preparation of the report.\ This standard requires Holmes to perform the audit with due care, which imposes on Holmes and everyone in Holmes' organization a responsibility to observe the standards of fieldwork and reporting. Exercise of due care requires critical review at every level of supervision of the work done and the judgments exercised by those assisting in the audit. Holmes did not review the work or the judgments of the assistants and clearly failed to adhere to this standard. Standards of Field Work 1. The work is to be adequately planned and assistants, if any, are to be properly supervised. This standard recognizes that early appointment of the auditor has advantages for the auditor and the client. Holmes accepted the engagement without considering the availability of competent staff. In addition, Holmes failed to supervise the assistants. The work performed was not adequately planned. 2. A sufficient understanding of the internal controls is to be obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed. Holmes did not obtain any understanding of the internal control structure. There appears to have been no audit at all. The work performed was more an accounting service than it was an auditing service.
3. Sufficient, competent evidential matter is to be obtained through inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under examination. Holmes acquired no evidence that would support the financial statements. Holmes merely checked the mathematical accuracy of the records and summarized the accounts. Standard audit procedures and techniques were not performed. Standards of Reporting 1. The report shall state whether the financial statements are presented in accordance with generally accepted accounting principles. Holmes' report made no reference to generally accepted accounting principles. Because Holmes did not conduct a proper audit, the report should state that no opinion can be expressed as to the fair presentation of the financial statements in accordance with generally accepted accounting principles. 2. The report shall identify those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period. Holmes' improper audit did not result in a determination of whether principles were consistently observed. 3. Informative disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report Management is primarily responsible for adequate disclosure in the financial statements, but when the statements do not contain adequate disclosures the auditor should make such disclosures in the auditor's report. In this case both the statements and the auditor's report lack adequate disclosures. 4. The report shall either contain an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. When an overall opinion cannot be expressed, the reasons therefor should be stated. In all cases where an auditor's name is associated with financial statements, the report should contain a clear-cut indication of the character of the audit, if any, and the degree of responsibility the auditor is taking. Although the Holmes report contains an expression of opinion, such opinion is not based on the results of a proper audit. Holmes should not express an opinion because he failed to conduct an audit in accordance with generally accepted auditing standards.