The Financial Statement Auditing Environment
True / False Questions
1. A series of business and related auditing failures led to the passage of the Sarbanes-Oxley Act
2. The primary audit context with which an auditor is concerned is the client's industry or business.
3. The audit committee generally includes senior executives of the organization.
4. A financial statement audit is generally organized based on the five basic business processes or
5. One of the five basic business processes is the warehousing cycle.
6. Audit procedures are designed to test management assertions.
7. PCAOB auditing standards must be followed on all financial statement audits performed in the
8. A financial statement audit must be conducted based on GAAP.
9. Generally, the financial statements of U.S. companies must be prepared based on GAAP.
10. PCAOB auditing standards must be followed on all audits of public Companies' financial
Multiple Choice Questions
11. The Audit committee consists of:
A. Members of management
B. A subcommittee of the AICPA who establish the SAS
C. Members of the Board of Directors
D. Appointed government overseers
12. What organization is responsible for setting auditing standards for audits of publicly-traded
companies in the U.S.?
13. The Public Company Accounting Oversight Board's role is to
A. Conduct the final review of auditors' work before the auditor's opinion is issued
B. Oversee the auditors of public companies in order to protect the interests of investors
C. Conduct audits of governmental entities
D. Sanction auditors who fail to follow GAAS
14. The authoritative body designed to promulgate standards concerning an accountant's association
with audited financial statements of an entity that is required to file financial statements with the
SEC is the
A. Financial Accounting Standards Board
B. General Accounting Office
C. Public Companies Accounting Oversight Board
D. Auditing Standards Board
15. The auditor must be independent of the audit client unless:
A. The lack of independence does not influence his or her professional judgment.
B. Both parties agree that the independence issue is not a problem.
C. The lack of independence is insignificant.
D. None of the above--the auditor cannot lack independence.
16. Which of the following describes the generally accepted auditing standard requiring a critical
review of the work done and the judgment exercised by those assisting in an audit at every level of
B. Audit risk
D. Due care
17. Which of the following best describes the general character of the three generally accepted
auditing standards that are classified as standards of fieldwork?
A. The competence, independence, and professional care of persons performing the audit
This is the end of the preview. Sign up
access the rest of the document.