B evaluate the feasibility of attaining the entitys

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Unformatted text preview: nce audit. c. operational audit. d. production audit. 15. medium d Which of the following is a type of audit evidence? a. Oral responses to the auditor from employees of the company under audit. b. Written communications from company employees or outsiders. c. Observations made by an auditor. d. Evidence may take any of the above forms. 1-82 16. medium a Which of the following services provides the lowest level of assurance on a financial statement? a. A review. b. An audit. c. Neither service provides assurance on financial statements. d. Each service provides the same level of assurance on financial statements. 17. medium c The three requirements for becoming a CPA include all but which of the following? a. Uniform CPA examination requirement. b. Educational requirements. c. Character requirements. d. Experience requirement. 18. medium a In “auditing” financial accounting data, the primary concern is with: a. determining whether recorded information properly reflects the economic events that occurred during the accounting period. b. determining if fraud has occurred. c. determining if taxable income has been calculated correctly. d. analyzing the financial information to be sure that it complies with government requirements. 19. medium d Financial statement users often receive unreliable financial information from companies. Which of the following is not a common reason for this? a. Complex business transactions. b. Large amounts of data. c. Lack of firsthand knowledge about the business. d. Each of these choices is a common reason for unreliable financial information. 20. challenging d Which of the following is not a Trust Services principle as defined by the AICPA or CICA? a. Online privacy. b. Availability. c. Processing integrity. d. Operational integrity. 21. challenging c Which one of the following is more difficult to evaluate objectively? a. Presentation of financial statements in accordance with generally accepted accounting principles. b. Compliance with government regulations. c. Efficiency and effectiveness of operations. d. All three of the above are equally difficult. 22. (SOX) challenging c The Sarbanes-Oxley Act prohibits a CPA firm that audits a public company from providing which of the following types of services to that company? a. Reviews of quarterly financial statements. b. Preparation of corporate tax returns. c. Most consulting services. d. Tax services. 23. challenging a Which of the following audits can be regarded as generally being a compliance audit? a. IRS agents’ examinations of taxpayer returns. b. GAO auditor’s evaluation of the computer operations of governmental units. c. An internal auditor’s review of a company’s payroll authorization procedures. d. A CPA firm’s audit of the local school district. 24. challenging b Which of the following can be significantly affected by an audit? a. Business risk. b. Information risk. 1-83 c. d. The risk-free interest rate. Inherent risk. 25. challenging d The trait that distinguishes auditors from accountants is the: a. auditor’s ability to interpret accounting principles generally accepted in the United States. b. auditor’s education beyond the Bachelor’s degree. c. auditor’s ability to interpret FASB Statements. d. auditor’s accumulation and interpretation of evidence related to a company’s financial statements. 26. challenging b Attestation services on information technology include WebTrust services and SysTrust services. Which of the following statements most accurately describes SysTrust services? a. SysTrust services provide assurance on business processes, transaction integrity and information processes. b. SysTrust services provide assurance on system reliability in critical areas such as security and data integrity. c. ysTrust services provide assurance on internal control over financial reporting. d. SysTrust services provide assurance as to whether accounting personnel are following procedures prescribed by the company controller. Essay Questions 27. easy Discuss the three primary requirements for becoming a CPA. Answer: The three primary requirements for becoming a CPA are: • Educational requirement. An undergraduate degree with a major in accounting is required. Most states now require 150 semester hours for licensure and some states require 150 semester hours before taking the CPA exam. • Uniform CPA examination requirement . This is a four-part exam with components on auditing and attestation, financial accounting and reporting, regulation, and business environment and concepts. • Experience requirement. The experience requirement varies from state to state with some states requiring no experience, while other states require up to two years of audit experience. 28. easy Two types of attestation services provided by CPA firms are audits and reviews. Discuss the similarities and differences between these two types of attestation services. Which type provides the least assurance? Answer: Two primary types of attes...
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This note was uploaded on 02/04/2014 for the course ACCOUNTING 211 taught by Professor Alikapur during the Fall '13 term at American University of Sharjah.

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