Auditing Theory Test Bank
An auditor's working papers will generally be least
Select the best answer for each of the following
questions.
1. Broadly defined, the subject matter of any audit
consists of
a) Financial statements
b) Economic data
c) Assertions
d) Operating data
2. The third standard of field work states that sufficient
competent evidential matter may in part be obtained
through the following methods except
a) Inspection
b) Observation
c) Confirmation
d) Reconciliation
3. If an auditor believes that material error or fraud
exist, the auditor should
a) Consider the implications and discuss the
matter with appropriate levels of management
b) Make the investigation necessary to determine
whether errors or fraud have in fact occurred
c) Request that management investigate whether
errors or fraud have in fact occurred
d) Consider whether errors or fraud where the result of
employee's failure to comply with specific controls
4. Which of the following is not normally performed in
the pre-planning or pre-engagement phase?
a) Deciding whether to accept or reject an audit
engagement
b) Inquiring from predecessor auditor
c) Preparing an engagement letter
d) Making a preliminary estimate of materiality
5. On the basis of the audit evidence gathered and
evaluated, an auditor decides to increase the assessed
level of control risk from that originally planned. To
achieve an overall audit risk level that is substantially
the same as the planned audit risk level, the auditor
would
a) Decrease substantive testing
b) Increase inherent risk
c) Decrease detection risk
d) Increase materiality levels
6. An effective internal control
a) Cannot be circumvented by management
b) Can reduce the cost of an external audit
c) Can prevent collusion among employees
d) Eliminates risks and potential loss to the
organization
7. In auditing through a computer, the test data
method is used by auditors to test the
a) Accuracy of input data
b) Validity of the output
c) Procedures contained within the program
d) Normalcy of distribution of test data
8.
likely to include documentation showing how the
a) Client's schedules were prepared
b) Engagement had been planned
c) Client's system of internal control had been
reviewed and evaluated
d) Unusual matters were resolved
9. Which of the following sampling methods would be
most appropriate in performing tests of controls over
authorization of cash disbursements
a) Attributes
b) Variables
c) Ratio
d) Stratified
10. Analytical procedures used in the overall review
stage of an audit generally include
a) Considering unusual or unexpected account
balances that were not previously identified
b) Performing test of transactions to corroborate
management's financial statement assertions
c) Gathering evidence concerning account balances
that have not changed from the prior year
d) Re-testing control procedures that appeared to be
ineffective during the assessment of control risk
11. Results of the financial statement audit are
communicated to users through
a) Financial statement
b) Written management assertion
c) Audit report
d) None of the above
12. What is the primary difference between financial
reporting risk and audit risk?
a) The application of accounting principles
b) Responsibilities of the respective parties
involved
c) Demands of users of financial statements
d) Risks of being sued by third parties
13. Relationship between control risk and detection
risk is ordinarily
a) Parallel
b) Inverse
c) Direct
d) Equal
14. A representation letter issued by a client
a) Is essential for the preparation of the audit program
b) Is a substitute for testing
c) Does not reduce the auditor's responsibility
d) Reduces the auditor's responsibility only to the
extent that it is relied upon
15. The recruitment of senior management for an
assurance client, such as those in a position to affect
the subject of the assurance engagement may least
likely create
a) Self-interest threat
b) Advocacy threat
c) Intimidation threat
d) Familiarity threat
16. In reviewing the audit work performed, the
engagement partner
a) Must review all audit documentation
b) Need not review all audit documentation, but
may do so
c) Need not review all audit documentation
d) Must ask the staff performing the audit work to sign
the audit report
17. The independent auditor lends credibility to clients
financial statements by
a) Maintaining a clear-cut distinction between
managements representations and the auditors
representation
b) Testifying under oath about clients financial
statements
c) Stating in the auditors management letter that the
examination was made in accordance with generally
accepted auditing standards
d) Attaching an auditors opinion to the clients
financial statements
18. The most difficult type of misstatement to detect is
fraud based on
a) The over-recording of transactions
b) The non-recording of transactions
c) Recorded transactions in subsidiaries
d) Related party receivables
19. Assuming a recurring audit, in which of the
following situations would the auditor be unlikely to
send a new engagement letter to the client?
a) A recent change in partner and/or staff
involved in the audit engagement
b) A change in the terms of engagement
c) A recent change of client management
d) A significant change in the nature or size of the
client's business
20. When an auditor expresses an adverse opinion
he/sheshould disclose the substantive reasons for such
anopinion in an explanatory paragraph
a) Within the notes to the financial statements
b) Preceding the opinion paragraph
c) Following the opinion paragraph
d) Preceding the introductory paragraph
21. Tolerable error means
a) An error that arises from an isolated event that has
not recurred other than on specifically identifiable
occasions and is therefore not representative of errors
in the population
b) An error that the auditor expects to be present in
the population
c) The maximum error in a population that the
auditor is willing to accept
d) The possibility that the auditor's conclusion, based
on a sample may be different from the conclusion
reached if the entire population were subjected to the
same audit procedure
22. Examples of events or conditions, which
individually or collectively, may cast significant doubt
about the going concern assumption include the
following except
a) Net liability or net current liability position
b) Change from credit to cash-on-delivery transactions
with suppliers
c) Labor difficulties or shortages of important supplies
d) Compliance with capital or other statutory
requirements
23. Which of the following procedures is not included in
a review engagement on a nonpublic entity
a) Inquiries of management
b) Inquiries regarding events subsequent to the
balance sheet date
c) Any procedures designed to identify relationships
among data that appear to be unusual
d) A study and evaluation of internal control
structure
24. In planning the audit engagement, the auditor
should consider each of the following except
a) The kind of opinion that will likely be given
b) Matters relating to the entitys business and the
industry in which it operates
c) The entitys accounting policies and procedures
d) Anticipated levels of control risk and materiality
25. What assurance is provided by the practitioner in
an agreed-upon procedures engagement?
a) Reasonable
b) Absolute
c) Moderate
d) No assurance
26. To test for unsupported entries in the journal, the
direction of audit testing should be from the
a) Journal entries
b) Ledger entries
c) Original source documents
d) Externally generated documents
27. For good internal control, the purchasing
department should not be responsible for
a) Authorizing the acquisition of goods
b) Finding the lowest cost vendor
c) Reviewing the vendors catalog descriptions and
prices for standardized items
d) Designing the purchase order form
28. Involves tracing a few transactions through the
accounting system
a) Test of controls
b) Walk-through test
c) Analytical procedures
d) Substantive procedures
29. This exists, when other information, not related to
matters appearing in the financial statements, is
incorrectly stated or presented
a) Material inconsistency
b) Material misstatement
c) Material misstatement of fact
d) Material error affecting the other information
30. Who appoints the members of the Board of
Accountancy
a) The chairman of BOA
b) The president of the Philippines
c) The chairman of the PRC
d) The president of PICPA
31. An auditor is required to obtain an understanding
of the entity's business, including business cycles and
reasons for business fluctuations. What is the audit
purpose most directly served by obtaining this
understanding?
a) To enable the auditor to accurately identify
significant deficiencies in internal control
b) To assist the auditor in accurately interpreting
information obtained during an audit
c) To allow the auditor to more accurately perform
tests of controls
d) To decide whether it will be necessary to perform
analytical procedures
32. Which of the following is not true about the report
release date?
a) It is defined as the date after which existing
documentation must not be deleted, and
additions to the documentation file must be
documented as such
b) It is often the date on which the report is delivered
to the client
c) It is the date on which the auditor grants the client
permission to use the report
d) It is used to define the beginning of the retention
period
33. An auditor should not issue a report on
a) Quarterly financial information
b) Internal control
c) Management performance
d) The achievability of forecasts
34. Which of the following procedures would an auditor
most likely perform to obtain evidence about the
occurrence of subsequent events?
a) Confirming a sample of material accounts receivable
established after year-end
b) Comparing the financial statements being reported
on with those of the prior period
c) Investigating personnel changes in the accounting
department occurring after year-end
d) Inquiring as to whether any unusual
adjustments were made after year-end
35. To which of the following matters would materiality
limits not apply when obtaining written client
representations?
a) Violations of state labor regulations
b) Disclosure of line-of-credit arrangements
c) Information about related party transactions
d) Instances of fraud involving management
36. Who ultimately determines the scope of the audit?
a) The auditor
b) The client
c) Both a and b
d) Neither a nor b
37. Financial statements prepared in accordance with a
financial reporting framework designed to meet the
financial information needs of specific users are
referred to as
a) Special purpose financial statements
b) Special purpose framework
c) General purpose financial statements
d) Specific purpose financial statements
38. An auditor plans to apply substantive tests to the
details of asset and liability accounts as of an interim
date rather than as of the balance sheet date. The
auditor should be aware that this practice
a) Eliminates the use of certain statistical sampling
methods that would otherwise be available
b) Presumes that the auditor will reperform the tests of
the balance sheet date
c) Should be especially considered when there are
rapidly changing economic conditions
d) Potentially increases the risk that errors that
exist at the balance sheet date will not be
detected
39. Close family include the following, except
a) Parent
b) Sibling
c) Non-dependent child
d) Spouse
40. A computer-assisted audit technique that is most
likely to be effective in a continuous auditing
environment is
a) Parallel simulation
b) Controlled reprocessing
c) Embedded audit modules
d) Transaction tripping
41. Which of the following is not prohibited by the
Code of Professional Ethics for CPAs?
a) Advertising and solicitation of clients
b) Payment of commissions to obtain a client
c) Receiving a contingent fee on a tax case
before the Bureau of Internal Revenue
d) Offering employment to a staff member of another
CPA without first informing the CPA
42. The management's assessment of the entity's
ability to continue as a going concern covers a period
of
a) Not longer than 12 months from balance sheet date
b) At least 12 months from the balance sheet
date
c) Not longer than 12 months from the date of audit
report
d) At least 12 months from the date of audit report
43. To obtain evidential matter about control risk, an
auditor selects tests from a variety of techniques
including
a) Inquiry
b) Analytical procedures
c) Calculation
d) Confirmation
44. The need for independent audits of financial
statements can be attributed to all of the following
conditions except
a) Remoteness
b) Consequence
c) Complexity of subject matter
d) Validity
45. After issuing a report an auditor includes that an
auditing procedure considered necessary at the time of
the examination was omitted from the examination.
The auditor should first
a) Undertake to apply the omitted procedure or
alternative procedures that would provide a
satisfactory basis for the auditor's opinion
b) Assess the importance of the omitted
procedure to the auditor's ability to support the
opinion expressed on the financial statements
taken as a whole
c) Notify the audit committee or the board of directors
that the auditor's opinion can no longer be relied upon
d) Review the results of other procedures that were
applied to compensate for the one omitted or to make
its omission less important
46. This quality control element requires a CPA firm to
establish policies and procedures to provide it with
reasonable assurance that engagements are performed
in accordance with professional standards and
regulatory and legal requirements, and that the firm or
the engagement partner issue reports that are
appropriate in the circumstances
a) Ethical requirements
b) Engagement performance
c) Monitoring
d) Human resources
47. Communication with a predecessor auditor is
initiated by
a) Management
b) The successor auditor
c) The audit committee of the board of directors
d) The chair of the board of directors
48. In which of the following may confidential
information not be disclosed?
a) To comply with the quality review of a member
body or professional body
b) To submit evidence in the course of legal
proceedings
c) Acquiring information in the course
performing professional services and use that
information for personal advantages
d) When consent to disclose information is given by
the client
49. The auditor should perform the following risk
assessment procedures to obtain an understanding of
the entity and its environment, including its internal
control, except
a) Inquiries of management and others within the
entity
b) Reperformance
c) Analytical procedures
d) Observation and inspection
50. The auditor should determine overall responses to
address the risks of material misstatement at the
financial statement level. Such responses most likely
include
a) Assigning less experienced staff
b) Performing predictable further audit procedures
c) Performing substantive procedures at an interim
date instead of at period end
d) Emphasizing to the audit team the need to
maintain professional skepticism in gathering
and evaluating audit evidence
51. The need for assurance services arises for all of the
following reason except
a) Potential bias in providing information
b) Closeness between a user and the
organization
c) Complexity of the processing systems
d) Remoteness between a user and the organization
52. Which one of the following is not a key attribute
needed to perform assurance?
a) Subject matter knowledge
b) Independence
c) Established criteria or standards
d) Accounting skills
53. Which one of the following is not part of the attest
process?
a) Providing the accuracy of the books and
records
b) Gathering evidence about assertions
c) Evaluating evidence against objective criteria
d) Communicating the conclusions reached
54. Users of the audit report can reasonably expect the
audited financial statements to be
a) Complete and contain many of the important
financial disclosures
b) Presented fairly according to the substance of
GAAP
c) Free from all errors
d) All of the above
55. Which of the following services is the broadest and
most inclusive
a) Audit
b) Attestation
c) Assurance
d) Compliance
56. One reason why an auditor makes an analytical
review of the clients operations is to identify
a) Improper separation of accounting and other
financial duties
b) Weakness of a material nature in the system of
internal accounting control
c) Unusual transactions
d) Non-compliance with prescribed control procedures
57. Analytical procedures used in planning an audit
should focus on identifying
a) Material weaknesses in the internal control structure
b) The predictability of financial data from individual
transactions
c) The various assertions that are embodied in the
financial statements
d) Areas that may represent specific risk relevant
to audit
58. An integrated test facility (ITF) would be
appropriate when the auditor needs to
a) Trace a complex logic path through an application
system
b) Verify processing accuracy concurrently with
processing
c) Monitor transactions in an application system
continuously
d) Verify load module integrity for production
programs
59. The rotation of senior accounting personnel can be
regarded as a safeguard
a) Created by the profession
b) Within the clients systems and procedures
c) In the work environment
d) Created within the business community
60. If certain forms are not consecutively numbered
a) Systematic sampling may be appropriate
b) Selection of a random sample probably is not
possible
c) Stratified sampling should be used
d) Random number tables cannot be used
61. A cash shortage may be concealed by transporting
funds from one location to another or by converting
negotiable assets to cash. Because of this, which of the
following is vital?
a) Simultaneous confirmations
b) Simultaneous bank reconciliations
c) Simultaneous verification
d) Simultaneous surprise cash count
62. Which of the following is most likely to indicate a
significant deficiency relating to a client's anti-fraud
programs?
a) A broad scope of internal audit activities
b) A "whistle-blower" program that encourages
anonymous submissions
c) Audit committee passivity when conducting
oversight functions
d) Lack of performance of criminal background
investigations for likely customers
63. Which of the following is not an attestation
standard?
a) Sufficient evidence shall be obtained to provide a
reasonable basis for the conclusion that is expressed in
the report
b) The report shall identify the subject matter on the
assertion being reported on and state the character of
the engagement
c) The work shall be adequately planned and
assistants, if any, shall be properly supervised
d) A sufficient understanding of internal control
shall be obtained to plan the engagement
64. Proper segregation of functional responsibilities
calls for separation of the functions of
a) Authorization, execution, and payment
b) Authorization, recording, and custody
c) Custody, execution, and reporting
d) Authorization, payment, and recording
65. Control risk should be assessed in terms of
a) Specific controls
b) Types of potential fraud
c) Financial statement assertions
d) Control environment factors
66. Which of the following is not a step in an auditor's
assessment of control risk?
a) Evaluate the effectiveness of internal control with
tests of controls
b) Obtain an understanding of the entity's information
system and control environment
c) Perform tests of details of transactions to
detect material misstatements in the financial
statements
d) Consider whether controls can have a pervasive
effect on financial statement assertions
67. Which of the following procedures would an auditor
ordinarily perform first in evaluating management's
accounting estimates for reasonableness?
a) Develop independent expectations of management's
estimates
b) Consider the appropriateness of the key factors or
assumptions used in preparing the estimates
c) Test the calculations used by management in
developing the estimates
d) Obtain an understanding of how management
developed its estimates
68. An entity's income statements were misstated due
to the recording of journal entries that involved debits
and credits to an unusual combination of expense and
revenue accounts. The auditor most likely could have
detected this fraudulent financial reporting by
a) Tracing a sample of journal entries to the general
ledger
b) Evaluating the effectiveness of internal control
c) Investigating the reconciliations between controlling
accounts and subsidiary records
d) Performing analytical procedures designed to
disclose differences from expectations
69. Which of the following is most likely to be unique
to the audit work of CPAs as compared to work
performed by practitioners of other professions?
a) Due professional care
b) Competence
c) Independence
d) Complex body of knowledge
70. Which of the following would an auditor most likely
use in determining the auditor's preliminary judgment
about materiality?
a) The anticipated sample size of the planned
substantive tests
b) The entity's annualized interim financial
statements
c) The results of the internal control questionnaire
d) The contents of the management representation
letter
71. Which of the following conditions identified during
fieldwork of an audit is most likely to affect the
auditor's assessment of the risk of misstatement due
to fraud?
a) Checks for significant amounts outstanding at year-
end
b) Computer generated documents
c) Missing documents
d) Year-end adjusting journal entries.
72. An auditor ordinarily uses a working trial balance
resembling the financial statements without footnotes,
but containing columns for
a) Cash flow increases and decreases
b) Audit objectives and assertions
c) Reclassifications and adjustments
d) Reconciliations and tick marks
73. The risk that an auditor will conclude, based on
substantive tests, that a material misstatement does
not exist in an account balance when in fact such
misstatement does exist is referred to as
a) Detection risk
b) Sampling risk
c) Non-sampling risk
d) Inherent risk
74. The usefulness of the standard bank confirmation
request may be limited because the bank employee
who completes the form may
a) Be unaware of all the financial relationships
that the bank has with the client
b) Not believe that the bank is obligated to verify
confidential information to a third party
c) Sign and return the form without inspecting the
accuracy of the client's bank reconciliation
d) Not have access to the client's cutoff bank
statement
75. A material weakness is a significant deficiency (or
combination of significant deficiencies) that results in a
reasonable possibility that a misstatement of at least
'what amount will not be prevented or detected?
a) An amount greater than zero
b) An amount greater than zero, but at least
inconsequential
c) An amount greater than inconsequential
d) A material amount
76. The existence of audit risk is recognized by the
statement in the auditor's standard report that the
auditor
a) Obtains reasonable assurance about whether
the financial statements are free of material
misstatement.
b) Assesses the accounting principles used and also
evaluates the overall financial statement presentation.
c) Realizes some matters either individually or in the
aggregate, are important while other matters are not
important.
d) Is responsible for expressing an opinion on the
financial statements, which arc the responsibility of
management.
77. Which of the following services would be most
likely to be structured as an attest engagement?
a) Advocating a client's position in tax matter.
b) A consulting engagement to develop a new
database system for the revenue cycle.
c) An engagement to issue a report addressing
an entity's compliance with requirements of
specified laws.
d) The compilation of a client's forecast information.
78. Which of the following is ordinarily considered to
be a fraud risk factor?
a) The company's financial statements include a
number of last minute material adjustments.
b) Management regularly informs investors of forecast
information.
c) The company has experienced increasing earnings
over the previous five years.
d) The company's president is included as a member of
the board of directors.
79. Which is least likely to be a question asked of
client personnel during a walk-through in an audit of
the internal control of an issuer (public) company?
a) What do you do when you find an error'?
b) Who is most likely to commit fraud among
your coworkers?
c) What kind of errors have you found?
d) Have you ever been asked to override the process
or controls?
80. An auditor who uses the work of a specialist may
refer to and identify the specialist ill the auditor's
report if the
a) Specialist is also considered to be a related party.
b) Auditor indicates a division of responsibility related
to the work of the specialist.
c) Specialist's work provides the auditor greater
assurance of reliability.
d) Auditor expresses an "except for" qualified
opinion or an adverse opinion related to the work
of the specialist.
81. Which of the following statements concerning
evidential matter is correct?
a) Appropriate evidence supporting management's
assertions should be convincing rather than merely
persuasive.
b) Effective internal control contributes little to the
reliability of the evidence created within the entity.
c) The cost of obtaining evidence is not an important
consideration to an auditor in deciding what evidence
should be obtained.
d) A client's accounting data cannot be
considered sufficient audit evidence to support
the financial statements.
82. Confirmations of accounts receivable address
which assertion most directly?
a) Completeness
b) Existence
c) Valuation
d) Classification
83. When performing a review of an issuer company,
which is least likely to be included in the CPA's inquires
of management members with responsibility for
financial and accounting matters?
a) Subsequent events
b) Significant journal entries and other adjustments
c) Communications with related parties
d) Unusual or complex situations affecting the financial
statements
84. The adverse effects of events causing an auditor to
believe there is substantial doubt about an entity's
ability to continue as a going concern would most likely
be mitigated by evidence relating to the
a) Ability to expand operations into new product lines
in the future.
b) Feasibility of plans to purchase leased equipment at
Jess than market value.
c) Marketability of assets that management plans
to sell.
d) Committed arrangements to convert preferred stock
to long-term debt.
85. One reason that an auditor only obtains
reasonable, and not absolute, assurance that financial
statements are free from material misstatement is
a) Comprehensive basis reporting
b) Employee collusion
c) Material misstatements
d) Professional skepticism
86. When an auditor concludes there is substantial
doubt about a continuing audit client's ability to
continue as a going concern for a reasonable period of
time, the auditor's responsibility is to
a) Issue a qualified or adverse opinion, depending
upon materiality, due to the possible effects on the
financial statements.
b) Consider the adequacy of disclosure about the
client's possible inability to continue as a going
concern.
c) Report to the client's audit committee that
management's accounting estimates may need to be
adjusted.
d) Reissue the prior year's auditors report and add an
explanatory paragraph that specifically refers to
"substantial doubt" and "going concern."
b) Consider the adequacy of disclosure about the
client's possible inability to continue as a going
concern.
87. The accountant who is not independent may
perform which of the following types of engagements?
a) Audit
b) Agreed-upon procedures
c) Compilation
d) Review
c) Compilation
88. Which of the following should an auditor obtain
from the predecessor auditor prior to accepting an
audit engagement?
a) Analysis of balance sheet accounts
b) Analysis of income statement accounts
c) All matters of continuing accounting significance
d) Facts that might bear on the integrity of
management
d) Facts that might bear on the integrity of
management
89. Which is least likely to be a response when an
auditor has obtained evidence indicating a risk of
material misstatement in the area of inventory?
a) Request inventory counts at the end of each month.
b) Discuss questions of inventory valuation with any
other auditors involved with the audit.
c) Make oral inquiries of major suppliers in addition to
written confirmations.
d) Perform inventory observations on an unannounced
basis.
a) Request inventory counts at the end of each
month.
90. The independent auditor selects several
transactions in each functional area and traces them
through the entire system, paying special attention to
evidence about whether or not the controls are in
operation. This is an example of a(n)
a) Application test
b) Test of controls
c) Substantive test
d) Test of a function
b) Test of controls
91. Accounting control procedures within computer
processing may leave no visible evidence indicating
that the procedures were performed. In such
instances, the auditor should test these controls by
a) Making corroborative inquiries.
b) Observing the separation of duties of personnel.
c) Reviewing transactions submitted for processing and
comparing them to related output.
d) Reviewing the run manual.
c) Reviewing transactions submitted for
processing and comparing them to related
output.
92. If information is for management's use only, which
of the following forms of CPA association with financial
information is most likely to result in no report being
issued?
a) An agreed-upon procedures engagement
b) An audit
c) A compilation
d) A review

c) A compilation
93. In obtaining an understanding of a manufacturing
entity's internal control over inventory balances, an
auditor most likely would
a) Review the entity's descriptions of inventory policies
and procedures.
b) Perform test counts of inventory during the entity's
physical count.
c) Analyze inventory turnover statistics-to identify
slow-moving and obsolete items.
d) Analyze monthly production reports to identify
variances and unusual transactions.
a) Review the entity's descriptions of inventory
policies and procedures.
94. When auditing merchandise inventory at year-end,
the auditor performs a purchase cutoff test to obtain
evidence that
a) All goods owned at year-end are included in the
inventory balance.
b) All goods purchased before year-end are received
before the physical inventory count.
c) No goods held on consignment for customers are
included in the inventory balance.
d) No goods observed during the physical count are
pledged or sold.
a) All goods owned at year-end are included in
the inventory balance.
95. A company has changed its method of inventory
valuation from an unacceptable one toone in
conformity with generally accepted accounting
principles. The auditor's report on the financial
statements of the year of the change should include
a) No reference to consistency.
b) A reference to a prior period adjustment in the
opinion paragraph.
c) An explanatory paragraph explaining the change.
d) A justification for making the change and the impact
of the change on reported net income.
c) An explanatory paragraph explaining the
change.
96. An abnormal fluctuation in gross profit that might
suggest the need for extended audit procedures for
sales and inventories would most likely be identified in
the planning phase of the audit by the use of
a) Tests of transactions and balances
b) A preliminary review of internal control
c) Specialized audit programs
d) Analytical procedures
d) Analytical procedures
97. Which of the following statements best describes
the ethical standard of the profession pertaining to
advertising and solicitation?
a) All forms of advertising and solicitation are
prohibited.
b) There are no prohibitions regarding the manner in
which CPAs may solicit new business.
c) A CPA may advertise in any manner that is not
false, misleading, or deceptive.
d) A CPA may only solicit new clients through mass
mailings.
c) A CPA may advertise in any manner that is not
false, misleading, or deceptive.
98. A note to the financial statements of a bank
indicates that all of the records relating to its business
operations are stored on magnetic disks; and that
there are no emergency back-up systems or duplicate
disks stored since the bank and their auditors consider
the occurrence of a catastrophe to be remote. Based
upon this, one would expect the auditor's report to
express
a) An adverse opinion
b) An "except for" opinion
c) An unqualified opinion
d) A qualified opinion
c) An unqualified opinion
99. Which of the following is not typically performed
when accountants are performing a review of the
financial statements of a nonissuer?
a) Analytical procedures applied to financial data
b) Inquiries about significant subsequent events
c) Inquiries of the client's attorney about legal matters
d) Obtaining an understanding of the accounting
principles followed by the client's industry
c) Inquiries of the client's attorney about legal
matters.
100. Which of the following is least likely to be a
restricted use report?
a) A report on financial statements prepared following
a comprehensive basis of accounting other than
generally accepted accounting principles.
b) A report on internal control significant deficiencies
noted in an audit.
c) A required communication with the audit committee.
d) A report on compliance with aspects of contractual
agreements.
a) A report on financial statements prepared
following a comprehensive basis of accounting
other than generally accepted accounting
principles.