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Multiple Choice
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1

As a result of the Sarbanes-Oxley Act passed by Congress in 2002, which of the following statements is true with regard to standard-setting in the auditing profession?
A)Standard setting for both privately-held and publicly-held clients is now government regulated through the PCAOB.
B)Standard-setting for publicly-held clients only is now government regulated through the PCAOB.
C)Standard-setting for both privately-held and publicly-held will remain in the private sector [with the Auditing Standards Board] until the year 2010.
D)None of the above statements are true.
2

Which of the following management assertions would be of least importance in the audit of accounts receivable:
A)Valuation
B)Existence
C)Completeness
D)Rights & Obligations
3

What is the meaning of the generally accepted auditing standard which 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.
4

The first general standard of generally accepted auditing standards, which states in part that the examination is to be performed by a person or persons having adequate technical training, requires that an auditor have
A)Education and experience in the field of auditing.
B)Ability in the planning and supervision of audit work.
C)Proficiency in business and financial matters.
D)Knowledge in the areas of financial accounting.
5

To exercise due professional care, an auditor should
A)Attain the proper balance of professional experience and formal education.
B)Design the audit to detect all instances of illegal acts.
C)Critically review the judgment exercised by those assisting in the audit.
D)Examine all available corroborating evidence supporting management's assertions.
6

Which of the following statements best describes an auditor's responsibility to detect errors, fraud, and illegal acts?
A)The auditor should study and evaluate the client's internal control system and design the audit to provide reasonable assurance of detecting all errors and fraud.
B)The auditor should consider the types of errors and fraud that could occur and determine whether the necessary internal controls are prescribed and are being followed.
C)The auditor should assess the risk that errors and fraud may cause the financial statements to contain material misstatements and design the audit to provide reasonable assurance of detecting material errors and fraud.
D)The auditor should assess the risk that errors and fraud may cause the financial statements to contain material misstatements and determine whether the necessary internal controls are prescribed and are being followed satisfactorily
7

Which of the following best describes why auditors obtain an understanding of a prospective new client?
A)To serve as a basis for providing business advice.
B)To determine the number of hours to allocate to the audit.
C)To evaluate the risk of material misstatements.
D)To evaluate the predecessor auditor's work.
8

Which of the following would not be considered a compliance audit?
A)The Internal Revenue Service examines a corporation's tax return to ensure that is was prepared in accordance with tax laws.
B)An auditor ensures that a specific division within a company followed company policies.
C)An auditor examined whether a corporation receiving federal assistance followed applicable rules and regulations.
D)An auditor examined a company's claims that its product is superior to a competitor's on specific dimensions.
9

Which of the following is not an increased area of emphasis on the auditing section of the new computer-based Uniform CPA Examination:
A)Statistical sampling skills
B)Research skills
C)Information technology
D)Case studies and simulations
10

The most favorable type of audit report opinion for the client to receive is:
A)Qualified
B)Unqualified
C)Disclaimer
D)Full assurance





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