Chapter 01 - The Role of the Public Accountant in the American Economy Chapter 01 The Role of the Public Accountant in the American Economy Answer Key True / False Questions 1. Independent audits of today place more emphasis on sampling than did the audits of the 19 th century. TRUE Difficulty: Medium 2. The American Institute of Certified Public Accountants issues CPA certificates and permits CPAs to practice. FALSE Difficulty: Medium 3. A company is either audited by the GAO or internal auditors, but not both. FALSE Difficulty: Easy 4. The SEC does not pass on the merits of the securities that are registered with the agency. TRUE Difficulty: Medium 1-1
Chapter 01 - The Role of the Public Accountant in the American Economy 5. The American Institute of Certified Public Accountants has the primary authority to establish accounting standards. FALSE Difficulty: Easy 6. An annual peer review is a requirement of the AICPA. FALSE Difficulty: Medium 7. Many small companies elect to have their financial statements reviewed by a CPA firm, rather than incur the cost of an audit. TRUE Difficulty: Easy 8. Staff assistants in CPA firms generally are responsible for planning and coordinating audit engagements. FALSE Difficulty: Easy 9. The Sarbanes-Oxley Act requires that auditors of publicly traded companies in the United States perform an integrated audit that includes providing assurance on both the financial statements and on compliance with laws and regulations. FALSE Difficulty: Medium 1-2
Chapter 01 - The Role of the Public Accountant in the American Economy 10. Auditing is frequently only a small part of the practice of local CPA firms. TRUE Difficulty: Medium Multiple Choice Questions 11. A summary of findings rather than assurance is most likely to be included in a(n): A. Agreed-upon procedures report. B. Compilation report. C. Examination report. D. Review report. Difficulty: Medium 12. The Statements on Auditing Standards have been issued by the: A. Auditing Standards Board. B. Financial Accounting Standards Board. C. Securities and Exchange Commission. D. Federal Bureau of Investigation. Difficulty: Easy 13. The risk associated with a company's survival and profitability is referred to as: A. Business Risk. B. Information Risk. C. Detection Risk. D. Control Risk. Difficulty: Easy 1-3
Chapter 01 - The Role of the Public Accountant in the American Economy 14. Historically, which of the following has the AICPA been most concerned with providing? A. Professional standards for CPAs. B. Professional guidance for regulating financial markets. C. Standards guiding the conduct of internal auditors. D. Staff support to Congress. Difficulty: Medium 15. The organization charged with protecting investors and the public by requiring full disclosure of financial information by companies offering securities to the public is the: A. Auditing Standards Board. B.
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