Chapter 02 - Professional Standards Chapter 02 Professional Standards True / False Questions 1. To express an opinion on financial statements, the auditor obtains reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. True False 2. The auditors' report on a corporation's financial statements usually is addressed to the president of the company. True False 3. The auditors are primarily responsible for preparing the financial statements and expressing an opinion on whether they follow generally accepted auditing standards. True False 4. Partners in CPA firms usually have the responsibility for signing the audit report. True False 5. An audit is more likely to detect tax evasion than violations of antitrust laws. True False 6. The attestation standards do not supersede generally accepted auditing standards. True False 7. A peer review is generally performed by employees of the AICPA. True False 2-1
Chapter 02 - Professional Standards 8. If the auditors discover illegal acts by a client, they ordinarily must immediately resign from the engagement. True False 9. An audit should be designed to obtain reasonable assurance of detecting non-compliance with all laws. True False 10. The pronouncements of the International Auditing and Assurance Standards Board do not override the national auditing standards of its members, even when financial statements are issued by a multinational company. True False Multiple Choice Questions 11. Audits of financial statements are designed to obtain reasonable assurance of detecting misstatement due to: A. Option A B. Option B C. Option C D. Option D 12. Financial statements are prepared following a(an) A. Applicable financial reporting framework. B. Appropriate subject matter. C. Generally accepted auditing standards. D. Set of quality control standards. 2-2
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. 14. An audit provides reasonable assurance of detecting which of the following types of material illegal acts? A. Option A B. Option B C. Option C D. Option D 15. Which of the following is not a type of auditors' opinion? A. Adverse. B. Ordinary. C. Qualified. D. Unmodified. 16. Which of the following is one of the elements of AICPA quality control? A. Assurance of proper levels of association. B. Due professional care. C. Engagement performance.
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