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Chapter 1 1. An independent audit of a small business by a CPA firm usually results in an unconditional guarantee of the accuracy of the financial statements. (Points : 1) True False 2. Managers are often assigned to supervise several concurrent audit engagements. (Points : 1) True False 3. Auditors ordinarily have a more significant effect on information risk than on business risk. (Points : 1) True False 4. The term "peer review" refers to the process of evaluating CPA staff members for promotion to partnership in the firm. (Points : 1) True False 5. The AICPA issues CPA certificates to candidates that pass the CPA examination. (Points : 1) True False 6. An independent audit on an annual basis is required by the AICPA for all corporations (Points : 1) True False 7. The economic interests of the providers of financial information and the users of the information are the same, and this common interest creates the demand for an annual independent audit. (Points : 1) True False 8. Since corporations have limited liability, CPA firms are never organized as corporations. (Points : 1) True False 9. The internal auditing staff of a large corporation usually reports to a committee of the board of directors or to a member of the top management group. (Points : 1) True False 10. A registration statement containing audited financial statements generally must be filed with the SEC before a new issue of securities is offered for sale to the public. (Points : 1) True False 11. A senior auditor may plan and conduct an audit, in which case that auditor takes ultimate responsibility for the engagement. (Points : 1) True False 12. Partners maintain relations with clients, but do not get directly involved in the audit engagements. (Points : 1) True False 13. CPA firms sometimes compile or review financial statements for small companies not having trained accountants in their employ. Under these circumstances the CPA firm issues a report, but a report that differs from that issued as a result of an audit.... View Full Document

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