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Chapter 2 Professional Standards True/False Questions 1. The generally accepted auditing standards of field work include a requirement that the auditors obtain sufficient competent evidential matter. Answer: True Difficulty: Easy 2. The auditors' report on a corporation's financial statements usually is addressed to the president of the company. Answer: False Difficulty: Easy 3. The auditors are primarily responsible for preparing the financial statements and expressing an opinion on whether they follow generally accepted auditing standards. Answer: False Difficulty: Medium 4. Partners in CPA firms usually have the responsibility for signing the audit report. Answer: True Difficulty: Medium 5. An audit is more likely to detect tax evasion than violations of antitrust laws. Answer: True Difficulty: Hard 6. The attestation standards do not supersede any of the generally accepted auditing standards. Answer: True Difficulty: Medium 7. A peer review is generally performed by employees of the AICPA. Answer: False Difficulty: Medium 8. If the auditors discover illegal acts by a client, they ordinarily must immediately resign from the engagement. Answer: False Difficulty: Medium 9. An audit should be designed to provide reasonable assurance of detecting all illegal acts. Answer: False Difficulty: Medium 12 Whittington, Principles of Auditing, Fifteenth Edition Chapter 2 Professional Standards 10. The pronouncements of the International Auditing Assurance Standards Board do not override the national auditing standards of its members, even when financial statements are issued by a multinational company. Answer: True Difficulty: Medium Multiple Choice Questions 11. Audits of financial statements are designed to obtain reasonable assurance of detecting misstatement due to: Fraudulent Financial Reporting Misappropriation of Assets A) Yes Yes B) Yes No C) No Yes D) No No Answer: A Difficulty: Hard 12. Which of the following has the highest level of accounting authority within the GAAP Hierarchy? A) Authoritative body pronouncements. B) Pronouncements of bodies composed of expert accountants exposed for public comment. C) Pronouncements of bodies composed of expert accountants, not exposed for public comment. D) Pronouncements of the Federal Accounting Reserve Board. Answer: A Difficulty: Easy 13. An attestation engagement: A) Has as its primary source of standards the assurance standards. B) Includes a report on subject matter, or on an assertion about subject matter. C) Includes search and verification procedures for all major accounts. D) Is ordinarily an examination, review or compilation engagement. Answer: B Difficulty: Hard 13 Whittington, Principles of Auditing, Fifteenth Edition Chapter 2 Professional Standards 14. An audit provides reasonable assurance of detecting which of the following types of important illegal acts? ... View Full Document

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