Chapter two Quiz from the Website The Public Company Accounting Oversight Board [PCAOB] derives its

s authority to set and enforce auditing standards for public company audits from o An Act of Congress Which of the following is generally not considered one of the five business processes or cycles? o Information technology. Which of the following is NOT a typical responsibility for an associate/staff level auditor? o Assisting in the development of the audit plan. Prior to the Sarbanes-Oxley Act of 2002, the _________ was responsible for creating all new auditing standards in the United States. Today, for publiclyheld companies, that responsibility rests with the _____________. o AICPA Auditing Standards Board (ASB); PCAOB. To exercise due professional care, an auditor should o Critically review the work performed and judgment exercised by those assisting in the audit. What is the essential meaning of the generally accepted auditing standard that requires that the auditor be independent? o The auditor must be without bias with respect to the client under audit. The principles underlying an audit conducted in accordance with GAAS as developed by the ASB and the IAASB include all of the following except o The auditor should plan and conduct the audit to obtain assurance that the financial statements are free of any misstatement. The responsibility for implementing sound accounting practices and principles, maintaining an adequate internal control structure, and making fair representations in the financial statements rests primarily with the o Senior management. Which of the following is considered an example of a compliance audit? o The examination of a company's adherence to government-mandated safety provisions. Which of the following best describes the relationship between management and the board of directors? o Management reports to the board of directors. Which of the following best describes the roles of the AICPA and the PCAOB in establishing auditing standards? o Auditing standards issued by the AICPA and the PCAOB are considered minimum standards of performance for auditors. o The AICPA sets auditing standards for use in audits of non-public entities. o The PCAOB sets auditing standards for use in audits of publicly held companies.

"Mid-tier" firms o Are national in their practices and have international affiliates. Which of the following organizations affect the environment that CPAs work in? o AICPA, SEC, and PCAOB Which of the following primarily shapes the context in which auditing takes place? o The client's business environment. An "integrated audit" includes o A financial statement audit and an audit of internal control over financial reporting.

Chapter two Quiz from Book Which of the following is not a part of the role of internal auditors? o Providing reports on the reliability of financial statements to investors and creditors. Operational auditing is oriented primarily toward o Future improvements to accomplish the goals of management. Which of the following would be considered an assurance service engagement? o Expressing an opinion about the reliability of a clients financial statements. Which of the following best places the events of the last decade in proper sequence? o Increased consulting services to audit clients, Enron and other scandals, Sarbanes-Oxley Act, prohibition of most consulting work for audit clients, establishment of PCAOB. Which of the following statements best describes managements and the eternal auditors respective levels of responsibility for a public companys financial statements? o Management has the primary responsibility to ensure that the companys financial statements are prepared in accordance with GAAP, and the auditor provides reasonable assurance that the statements are free of material misstatement. Which of the following best describes the relationship between business objectives, strategies, processes, controls, and transactions? o To achieve its objectives, a business formulates strategies and implements processes, which are carried out through business transactions. The entitys information and internal control systems must be designed to ensure that the transactions are properly executed, captured, and processed. The Public Company Accounting Oversight Board o Is a quasi-governmental organization that has legal authority to set auditing standards for audits of public companies.

Which of the following is correct regarding the types of audits over which the ASB and the PCAOB, respectively, have standard-setting authority in the U.S.? o ASB: Nonpublic company audits o PCAOB: public company audits Which of the following best describes the general character of the three generally accepted auditing standards classified as standards of field work? o Criteria for audit planning and evidence gathering.