Which one of the following types of services offer

Which one of the following types of services offered by a CPA is not an attest service?

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Auditing Questions

INSTRUCTIONS:

PLEASE HIGHLIGHT RESPONSE FOR THE FOLLOWING:

 

  1.

Which one of the following types of services offered by a CPA is not an attest service?

 

 

a.

examination

 

 

b.

review

 

 

c.

performing agreed-upon procedures

 

 

d.

audit

 

 

e.

Accounting

 

 

  2.

Which one of the following terms is not part of the definition of auditing?

 

 

a.

communicating the results

 

 

b.

interested users

 

 

c.

systematic process

 

 

d.

evaluating evidence

 

 

e.

auditing standards

 

 

 3.

Which of the following is not one of the four common levels of assurance?

 

 

a.

reasonable assurance

 

 

b.

negative assurance

 

 

c.

agreed-upon procedures

 

 

d.

compilation without assurance

 

 

e.

relative assurance

 

 

 4.

Which of the following would not be found in the introductory paragraph of the

Standard audit report?

 

a.

A reference to generally accepted auditing standards.

 

 

b.

A list of specific financial statements audited.

 

 

c.

A statement that the financial statements are the responsibility of management.

 

 

d.

A statement that the auditor’s responsibility is to express an opinion, based on the audit.

 

 

e.

A reference to the entity audited.

 

 

 5.

Which of the following statements about understanding internal control is not true:

 

 

a.

The auditor uses the knowledge of the system of internal control to design further audit procedures to collect evidence.

 

 

b.

In the presence of a strong system of internal control, the auditor may choose to collect less evidence about transactions or balances.

 

 

c.

In the audit of a private company, it is necessary to express an opinion on the system of internal control over financial reporting.

 

 

d.

A thorough understanding of the system of internal control assists the auditor in identifying potential types of misstatements.

 

 

e.

A thorough understanding of the system of internal control assists the auditor in understanding the risk of material misstatements.

 

 

 

6.

Use of the auditing procedure confirming should normally involve all of the following except:

 

 

a.

Direct evidence being obtained from outsiders.

 

 

b.

Client’s preparation of the initial request.

 

 

c.

Oral response.

 

 

d.

Auditor control of the mailing.

 

 

e.

Responses received by the auditor.

 

 

7.

Because of the effects of circulation, some audit evidence is more reliable than other audit evidence.  Which of the following is generally considered to be the most reliable?

 

 

a.

Purchase requisitions.

 

 

b.

Suppliers’ invoices.

 

 

c.

Receipted bank deposit slips.

 

 

d.

Cutoff bank statements.

 

 

e.

Paid checks.

 

 

8.

Working papers provide all of the following except:

 

 

a.

A means for coordinating the audit.

 

 

b.

The principal support for the financial statements.

 

 

c.

Evidence that the audit was made in accordance with GAAS.

 

 

d.

The principal support for the auditor’s report.

 

 

e.

A means for supervising the audit.

 

 

  9.

Before accepting an engagement, the auditor should evaluate whether other conditions exist that raise questions as to the prospective client’s auditability.  Which of the following factors would be the least likely to cause concern about an entity’s auditability?

 

 

a.

Related party transactions.

 

 

b.

Lack of audit trail.

 

 

c.

Disregard of responsibility to maintain adequate internal controls.

 

 

d.

Important evidence available only in electronic form.

 

 

e.

Inability to review the details supporting beginning balances.

 

 

 10.

The main purpose of the engagement letter is to:

 

 

a.

Avoid litigation.

 

 

b.

Indicate the likely opinion to be issued.

 

 

c.

Confirm the terms of the engagement.

 

 

d.

Clearly delineate management’s responsibility for the conduct of the audit.

 

 

e.

Clearly delineate the auditor’s responsibility for the conduct of the audit.

 

 

 

 

 

 11.

Which of the following statements about fraud is not true?

 

 

a.

Fraud is defined in generally accepted auditing standards as any act that results in a material misstatement in financial statements that are the subject of an audit.

 

 

b.

Auditors are concerned about two types of misstatements that are relevant to the auditor’s consideration of fraud.

 

 

c.

The types of fraud that are the least frequent are also the most expensive.

 

 

d.

The fraud triangle includes opportunity, incentives, pressures, attitudes and rationalization.

 

 

e.

Auditors should conduct discussions about management overrides of internal controls with employees having varying levels of authority including personnel not directly involved in the financial reporting process

 

 

  12.

Which one of the following is not an inherent limitation in an entity’s internal controls?

 

 

a.

mistakes in judgment

 

 

b.

collusion

 

 

c.

cost versus market

 

 

d.

breakdowns

 

 

e

management override

 

 

 

 13..

In order to emphasize the importance of integrity and ethical values among all personnel or an organization, the CEO and other top managers should do all of the following except:

 

 

a.

Set the tone by example.

 

 

b.

Communicate to all employees.

 

 

c.

Send email messages to all employees promoting ethical values.

 

 

d.

Reduce or eliminate incentives and temptations.

 

 

e.

Provide moral guidance to employees.

 

 

 

14.

Which of the following is incorrect concerning the segregation of duties within an organization?

 

 

a.

The various steps involved in authorizing and executing a transaction should be separated.

 

 

b.

Responsibility for certain accounting operations should be segregated, e.g., the cash receipts person should not reconcile the bank account.

 

 

c.

The IT department should be segregated from the user departments.

 

 

d.

Responsibility for executing, recording, and maintaining assets custody for a transaction should be separated.

 

 

e.

Responsibility for executing transactions may be assigned to those who have access to the assets, but not to the books.

 

 

15.

Which of the following is not an example of incompatible duties?

 

 

a.

The authorized check signer prepares the bank reconciliation.

 

 

b.

The individual who prepares the bank deposit also takes it to the bank.

 

 

c.

The individual who approves the vouchers signs and mails the checks.

 

 

d.

The warehouse manager maintains the perpetual inventory records.

 

 

E

F.

The individual who processes cash remittances from customers also has authority to approve and record credits to customers’ accounts for sales returns and allowances or write-offs.

 

 

16.

Which of the following tests of controls would be most effective in testing controls designed to prevent checks from being issued or recorded for the wrong amount?

 

 

a.

Observation of bank reconciliations.

 

 

b.

Observation of segregation of duties.

 

 

c.

Computer assisted audit techniques such as test data to test computer application control.

 

 

d.

Observe documents being marked or cancelled as “paid”.

 

 

e.

Documentation of general controls over access to computer programs and documentation.

 

 

17.

Which of the following statements is true about an auditor’s responsibility to communicate with respect to a public company’s internal controls?

 

 

a.

The auditor will issue an adverse report on the effectiveness of internal controls if a material weakness in internal controls over financial reporting exists.

 

 

b.

Auditors are required to communicate all significant deficiencies in internal control to management but not necessarily to the audit committee.

 

 

c.

Auditors are required to communicate all significant deficiencies in internal control to the audit committee but not necessarily to management.

 

 

d.

The difference between a material weakness and a significant deficiency is inconsequential.

 

 

e.

The auditor’s judgment is based on either the likelihood of the misstatement or on the potential magnitude of the misstatement.

 

 

18.

The nature of tests of controls relates to the type of evidence obtained.  Which of the following is not an example of a type of evidence relevant to tests of controls?

 

 

a.

Inquiries of entity personnel.

 

 

b.

Inspection of documents.

 

 

c.

Observation of application of the control.

 

 

d.

Inspection of signatures indicating performance of the control.

 

 

e.

Reperformance of the application of the control by entity personnel.

 

 

19.

 

An auditor tests a company’s policy of obtaining credit approval before shipping goods to customers in support of management’s financial statement assertion of

 

 

a.

Valuation or allocation.

 

 

b.

Completeness.

 

 

c.

Existence or occurrence

 

 

d.

Rights and obligations

 

 

20.

 

An auditor is performing substantive tests of transactions for sales. One step is to trace a sample of debit entries from the accounts receivable master file back to the supporting duplicate sales invoices. What would the auditor intend to establish by this step?

 

 

a.

Sales invoices represent existing sales

 

 

b.

All sales have been recorded.

 

 

c.

All sales invoices have been properly posted to customer accounts.

 

 

d.

Debit entries in the accounts receivable master file are properly supported by sales invoices.

 

 

21.

 

To verify that all sales transactions have been recorded, a substantive test of transactions should be completed on a representative sample drawn from

 

 

 

a.

Entries in the sales journal.

 

 

b.

The billing clerk’s file of sales orders.

 

 

c.

A file of duplicate copies of sales invoices for which all prenumbered forms in the series have been accounted.

 

 

d.

The shipping clerk’s file of duplicate copies of bills of lading.

 

 

 

 

 

 

22.

 

A common audit procedure in the audit of payroll transactions involves tracing selected items from the payroll journal to employee time cards that have been approved by supervisory personnel. This procedure is designed to provide evidence in support of the audit proposition that

 

 

 

a.

Only proper employees worked and their pay was properly computed.

 

 

b.

Jobs on which employees worked were charged with the appropriate labor cost.

 

 

c.

Internal controls over payroll disbursements are operating effectively.

 

 

d.

All employees worked the number of hours for which their pay was computed

 

 

 

 

 

23.

 

From the standpoint of good internal control, distributing payroll checks to employees is best handled by the

 

 

a.

Accounting department

 

 

b.

Personnel department

 

 

c.

Treasurer’s department.

 

 

d.

Employee’s departmental supervisor.

 

 

 

 

 

24.

 

In auditing accounts payable, an auditor’s procedures most likely would focus primarily on management’s assertion of

 

 

 

a.

Existence or occurrence

 

 

b.

Presentation and disclosure

 

 

c.

Completeness.

 

 

d.

Valuation or allocation

 

 

 

 

 

 

 

 

 

25.

 

Which of the following audit procedures is best for identifying unrecorded trade accounts payable?

 

 

 

a.

Examining unusual relationships between monthly accounts payable balances and recorded cash payments.

 

 

b.

Reconciling vendors’ statements to the file of receiving reports to identify items received just prior to the balance sheet date.

 

 

c.

Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period.

 

 

d.

Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports.

 

 

 

 

 

 

26.

 

An auditor would be most likely to learn of slow-moving inventory through

 

 

 

a.

Inquiry of sales personnel

 

 

b.

Inquiry of store personnel

 

 

c.

Physical observation of inventory

 

 

d.

Review of perpetual inventory master files

 

 

 

 

 

 

27.

 

The cashier of Baker Company covered a shortage in his cash working fund with cash obtained on December 31 from a local bank by cashing an unrecorded check drawn on the company’s New York bank. The auditor would discover this manipulation by

 

 

 

a.

Preparing independent bank reconciliations as of December 31.

 

 

b.

Counting the cash working fund at the close of business on December 31.

 

 

c.

Investigating items returned with the bank cutoff statements

 

 

d.

Confirming the December 31 bank balances

 

 

 

 

 

 

28.

 

A material weakness in internal control represents a control deficiency that

 

 

 

a.

More than remotely adversely affects a company’s ability to initiate, authorize, record, process, or report external financial statements reliably.

 

 

b.

Results in more than a remote likelihood that internal control will not prevent or detect material financial statement misstatements.

 

 

c.

Exists because a necessary control is missing or not properly designed

 

 

d.

Reduces the efficiency and effectiveness of the entity’s operations.

 

 

 

 

 

 

29.

 

The date of the CPA’s opinion on the financial statements of the client should be the date of the

 

 

 

a.

Closing of the client’s books

 

 

b.

Receipt of the client’s letter of representation.

 

 

c.

Completion of all important audit procedures

 

 

d.

Submission of the report to the client

 

 

 

 

 

30.

 

Which of the following is not a primary purpose of audit documentation?

 

 

 

a.

To coordinate the audit.

 

 

b.

To assist in preparation of the audit report

 

 

c.

To support the financial statements.

 

 

d.

To provide evidence of the audit work performed

 

                 

 

Matching # 1

 

The three types of auditors are listed below.  Indicate the category to which each statement belongs by placing the following letters in the spaces provided:

 

 

IND:

Independent Auditors,

 

 

INT:

Internal Auditors, or

 

 

GOV:

Government Auditors.

 

 

 

 

 

 

a.

They perform audits as employees of various local, state, and federal agencies.

 

 

 

 

 

 

b.

They perform audits as employees of the companies they audit.

 

 

 

 

 

 

c.

They render professional auditing services to their clients.

 

 

 

 

 

 

d.

They are mainly involved with compliance and operational audits.

 

 

 

 

 

 

e.

They perform independent financial statement audits.

 

             

 

 

Matching # 2

 

The three types of audits are listed below.  Indicate the category to which each statement belongs by placing the following letters in the spaces provided:

 

 

FSA:

Financial Statement  Audit,

 

 

CA:

Compliance Audit, or

 

 

OA:

Operational Audit.

 

 

 

 

 

 

1.

The results of such an audit are distributed to a wide spectrum of users such as

 

 

 

creditors, stockholders, regulatory agencies, and the general public.

 

 

 

 

 

 

2.

This type of audit is often called a performance audit.

 

 

 

 

 

 

3.

This audit may be based on criteria established by creditors.

 

 

 

 

 

 

4.

The scope of such an audit may encompass all the activities of a department.

 

 

 

 

 

 

5.

This audit relates to fair presentation of statements in accordance with GAAP.

 

             

 

 

 

 

 

 

 

 

 

 

 

Matching  # 3

 

The ten genera

CONTENT:
Auditing QuestionsNameCourseInstructorDate PLEASE HIGHLIGHT RESPONSE FOR THE FOLLOWING: 1.Which one of the following types of services<
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