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Auditing and Assurance Services: Multiple Choice Questions

This document contains 40 multiple choice questions about auditing and assurance services based on Chapter 1 of an auditing textbook. The questions cover topics such as the definition of audit risk, the requirements of the Sarbanes-Oxley Act, the process of obtaining a CPA license in another state, definitions of different types of risks and audits, the role of the Government Accountability Office, examples of assurance engagements, and the role and mindset of auditors in attestation engagements.

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314 views

Auditing and Assurance Services: Multiple Choice Questions

This document contains 40 multiple choice questions about auditing and assurance services based on Chapter 1 of an auditing textbook. The questions cover topics such as the definition of audit risk, the requirements of the Sarbanes-Oxley Act, the process of obtaining a CPA license in another state, definitions of different types of risks and audits, the role of the Government Accountability Office, examples of assurance engagements, and the role and mindset of auditors in attestation engagements.

Uploaded by

ttoraddora
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 01

Auditing and Assurance Services

Multiple Choice Questions

31. The probability that the information circulated by a company will be false or misleading is
referred to as
A. Business risk.
B. Information risk.
C. Assurance risk.
D. Audit risk.

32. The Sarbanes-Oxley Act of 2002 requires that the key company officials certify the financial
statements. Certification means that the company CEO and CFO must sign a statement
indicating:
A. They have read the financial statements.
B. They are not aware of any false or misleading statements (or any key omitted disclosures).
C. They believe that the financial statements present an accurate picture of the company's
financial condition.
D. All of the above.

33. The process of a CPA obtaining 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.
34. The risk an entity will fail to meet its objectives is referred to as
A. Business risk.
B. Information risk.
C. Assurance risk.
D. Audit risk.

35. The four basic requirements for becoming a CPA in most states are
A. Education, the CPA Examination, experience, and substantial equivalency.
B. The CPA Examination, experience, continuing professional education, and a state certificate.
C. Continuing professional education, the CPA Examination, experience, and an AICPA
certificate.
D. Education, the CPA Examination, experience, and a state certificate.

36. The study of business operations for the purpose of making recommendations about the
efficient use of resources, effective achievement of business objectives, and compliance with
company policies is referred to as
A. Environmental auditing.
B. Financial auditing.
C. Compliance auditing.
D. Operational auditing.

37. The accounting, auditing, and investigating agency of the U.S. Congress, headed by the U.S.
Comptroller General is known as
A. The Federal Bureau of Investigation (FBI).
B. The U.S. General Accounting Office (GAO).
C. The Internal Revenue Service (IRS).
D. The United States Legislative Auditors (USLA).
38. Which of the following would be considered an assurance engagement?
Refer To: 01-38
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.

39. It is always a good idea for auditors to begin an audit with the professional skepticism
characterized by the assumption that
Refer To: 01-38
A. A potential conflict of interest always exists between the auditor and the management of the
enterprise under audit.
B. In audits of financial statements, the auditor acts exclusively in the capacity of an auditor.
C. The professional status of the independent auditor imposes commensurate professional
obligations.
D. Financial statements and financial data are verifiable.

40. In an attestation engagement, a CPA practitioner is engaged to


Refer To: 01-38
A. Compile a company's financial forecast based on management's assumptions without
expressing any form of assurance.
B. Prepare a written report containing a conclusion about the reliability of a management
assertion.
C. Prepare a tax return using information the CPA has not audited or reviewed.
D. Give expert testimony in court on particular facts in a corporate income tax controversy.

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