ACC 599 Final Exam VERSIONS 1 & 2

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ACC 599 FINAL EXAM VERSIONS 1 & 2VERSIONS 1Question 1The first general standard of the PCAOB requires that an audit be performed by which type ofperson?AnswerAn auditor with seasoned judgment in varying degrees of supervision and review.Anauditor with appropriate technical training and proficiency.An auditor with adequate knowledge of the standards of field work and reporting.An auditor satisfying the independence standardsQuestion 2Which assertion addresses whether all transactions and accounts that should be included in thefinancial statements are included?AnswerExistence.Valuation.Completeness.Rights and ObligationsQuestion 3Which one of the following attributes is not required of an auditor?AnswerIndependence.Bias.Integrity.Technical competenceQuestion 4Which one of the following is a reporting standard requirement?AnswerThe auditor will state explicitly whether the financial statements are fairly presented inaccordance with the applicable financialreporting framework.The auditor will identify in the auditor’s report, those circumstances in which auditing principleshave not been consistently observed in the current period in comparison to the preceding period.The auditor will review adjusting journal entries for accuracy, and if the auditor concludes thoseentries are not reasonable accurate, the auditor must so state in the auditor’s report.The auditor will express an unqualified opinion on the financial statements, or will conductadditional audit procedures until such an opinion can be expressedQuestion 5When obtaining an understanding of internal controls, what is the independent external auditorprimary concerned with?

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AnswerDetecting all errorsDetermining the effectiveness of operationsDetermining whether the internal controls can be relied uponDetermining whether the controls promote efficiencyQuestion 6Which of the following is an inherent limitation of internal controls?AnswerLack of auditor independenceCollusionSeparation of dutiesEmployee peer reviewQuestion 7Which of the following is clearly a test of controls?AnswerWalk-through of the expense cycle from performance of the service to the reporting in thebalance sheetExamination of a sample of purchase order records for electronic, authenticated, authorizationObserving the controller's use of company owned equipmentSending a letter to the client's attorney to determine litigation that is pending between plaintiffand the defendantQuestion 8Which of the following is an example of a detective control in an information system?AnswerAutomated reports to management that specifically identify delinquent receivableA requirement that salaried employees submit written requests to work overtimeAssurance from top management that computer centers are kept lockedThe employment of trustworthy people to enter data into the information systemQuestion 9Which of following is not part of the ethical framework derived from utilitarianism and rightstheories?AnswerIdentification of the legal issuesDetermination of affected parties and their rightsDetermination of the most important rightsDevelopment of alternative courses of actionQuestion 10In determining the types of activities, engagements and interactions an auditor should have witha client, what must the CPA and the audit firm do?Answer

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Follow the rules exactly as they are writtenAssess all of their relationships with every client to ensure that independence is intactFocus on client satisfaction above all other considerationsRealize that ethics are only guidelines and a matter of personal judgmentQuestion 11Which of the following is not an aspect of Rule 201 of the General Standards of the Code ofProfessional Conduct?AnswerA member must not take on an engagement that is beyond the member's professionalcompetenceA member must exercise duties prudently and professionallyA member must adequately plan and supervise the performance of professional servicesA member firm must not advertise services to competing clientsQuestion 12Which of the following represents a situation in which auditors may disclose client informationto outside parties?AnswerBringing working papers to a professional CPA workshop as an example ofquality workComplying with a validly issued and enforceable subpoena or summonsShowing the client’s bank statement to a neighbor who is a shareholder to emphasize its cashpositionExplaining to the local television news station why the client islikely to miss payroll in theforthcoming periodsQuestion 13The significance of the bill of lading is to provide which of the following?AnswerThe warehouse personnel with the product that must be shipped to customersInvoices to customers for proper collectionA credit application for customer approvalEvidence of title transfer of goods to customersQuestion 14A control that may be implemented to ensure all sales that occur are recorded in the generalledger includes which of the following?AnswerUse of prenumbered shipping, invoice and sales documentsUse of prenumbered statements, inventory lists and credit memosReconciliation of invoices with customer statementsUse of pre-authorized price listsQuestion 15

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