(solution) plz answer below question! need at least 93% correct. otherwise

(solution) plz answer below question! need at least 93% correct. otherwise

plz answer below question! need at least 93% correct. otherwise answer will be not accept!!!!!!!!!! no moeny????????????

Question 1 of 45
All of the following are true, except: Valid evidence obtained in an audit for testing the cutoff of gross sales includes
receiving reports for returned merchandise.
An example of a test for completeness in the revenue cycle includes the sampling of
shipping documents and tracing them to the sales journal and general ledger.
Tracing is a process that helps establish that recorded transactions are valid.
The auditor uses professional judgment to determine which audit procedures to
perform.
The direction of testing from recorded amounts toward supporting documentation
provides evidence as to existence of assets and revenues. Question 2 of 45
_______________ would be considered the most reliable type of audit evidence? Confirmations from banks.
Customer accounts receivable files.
Computerized general ledger.
None of these answers are correct.
Purchase orders from vendors. Question 3 of 45
Select all of the following statements that are false. (There are multiple correct answers
and you must select all that are false) If a client has a history of negative cash flow trends and continuing losses, the audit
would most likely issue an unqualified opinion with an explanatory paragraph.
It is true that when evaluating identified misstatements, the auditor only needs to
consider misstatements in the current year, and not misstatements from the prior year.
The auditor would add a paragraph after the opinion paragraph when there is a serious
doubt that the client can continue as a going concern. When auditing pension obligations, the auditor will likely use a specialist to assist the
audit team.
It is true that a misstatement that is intentional is not assessed any differently by the
auditor than a misstatement that is unintentional. Question 4 of 45
Auditing is important in a free market society because __________________. The auditor is an amiable insurance policy for investors.
All of these are correct.
Auditors detect all errors and fraud perpetrated by company employees.
It provides reliable information upon which to judge economic performance.
The public requires auditors to function as divisions of regulatory bodies. Question 5 of 45
The concept of the Third-Party Beneficiary Test was established by the _________________
court case. Credit Alliance Corp. v. Arthur Andersen & Co.
Rosenblum v. Adler
Citizens State Bank v. Timm, Schmidt, & Co.
Ultramares Corp. v. Touche
None of these answers are correct. Question 6 of 45 _____________ is an inherent limitation of internal controls? Collusion.
Separation of duties.
An ethical conflict. Employee peer review.
Lack of auditor independence. Question 7 of 45
If the audit client experiences a(an) _____________________, then the auditor would
consider this to be an indication of a potential going-concern problem? adverse key financial ratios
None of these answers are correct
loss of the controller to a competitor
improper reporting of internal controls by management
large increase to sales in the month previous to year-end Question 8 of 45 Which of the following statements are true? (There are multiple correct answers) It is true that when fraud risk is great in the organization under audit, procedures
applied are likely to be more extensive.
It is true that according to the Sarbanes-Oxley Act, the audit committee must have at
least 3 independent members.
It is true that in most audits, materiality is most commonly expressed as a percentage
of net income.
It is true that planning materiality helps the auditor determine the extent of audit
evidence needed in order to provide an opinion on the financial statements.
It is true that internal controls are the responsibility of management. Question 9 of 45 Which of the following is typically a purpose for performing analytical procedures at the
end of an audit? To provide the client with a value added service in conjunction with audit activities.
To document planning in accordance with GAAS. To ask "hard questions" about the company's results and its relationship to external
factors.
To increase the amount of items reported in the management letter.
None of these answers are correct. Question 10 of 45
Which one of the following statements is true? It is true that effective audit processes, by themselves, are sufficient to achieve audit
quality.
It is true that the court system acts as a deterrent to quality controls for the auditing
profession.
It is true that the going-concern evaluation must be based on separate procedures that
test the client's ability to continue as a going concern.
It is true that an audit opinion is a guarantee that the business is a going concern.
It is true that events or transactions occurring after the balance sheet date and before
the audit report date, can be useful in identifying and evaluating the reasonableness of
estimates. Question 11 of 45 All of the following statements are false, except: Rights theory focuses on evaluating actions in terms of the fundamental rights of the
parties involved.
Communication between an auditor and an audit client is deemed to be privileged
communication in most states.
Rule 102, Integrity and Objectivity,of the AICPA Professional Code of Conduct, does not
apply to a CPA who is a corporate CFO.
The Sarbanes-Oxley Act sought to improve audit quality by removing the auditor
independence requirements.
The SEC and PCAOB independence rules for auditors are identical. Question 12 of 45 All of the following statements are false except: Transparency is a desirable, but not critical, element of effective corporate governance.
A free market can only exist if there is sharing of perfectly reliable information.
The auditor has a responsibility to design the audit to provide absolute assurance of
detecting material fraud.
In an audit, management is considered the "client".
Various types of ways that fraud could be perpetrated should be hypothesized by the
auditor prior to conducting audit testing. Question 13 of 45 All of the following statements are true, except: Ineffective internal controls result in higher risk of material misstatement in the financial
statements than effective internal controls.
The intentional loading of sales at the end of a period to customers that do not need the
goods at that time should not be recorded as revenues.
A consistent pattern of earnings growth would eliminate the auditor's concern for fraud
in revenue recognition.
A tendency for fraud may exist when the granting of stock options is dependent on
reaching an earnings goal.
A company's history of exactly meeting analyst estimates is a factor which could lead
auditors to assess inherent risk at a higher level. Question 14 of 45
Which of the following statements are true? (There are multiple correct answers) It is true that auditors are required to seek out and find all fraud, regardless of its
magnitude.
It it true that for external auditing, the primary scope of services performed includes
audits of financial statements.
It is true that the auditor uses professional judgement to determine which audit
procedures to perform. According to auditing standards, it is true that accounts receivable confirmations are
required to be used on every audit engagement.
It is true that the audit committee must be comprised of outsiders such as the
company's attorney and the audit partner of the company's external audit firm. Question 15 of 45
__________________ would be an example of a physical control to safeguard assets. Hiring only trustworthy cashiers.
Safety audits on the production-line.
Locks on the warehouse doors.
Separation of duties.
All of these are examples of physical controls to safeguard assets. Question 16 of 45
All of the following statements are false, except: Not material and clearly trivial are terms that can be used interchangeably.
Confirmations of bank accounts may help the auditor to determine if material amounts
of accounts receivable have been sold to the bank on a recourse basis.
When business risk is low, the auditor does not have a high concern about the ability of
the organization to operate efficiently.
If the client company has a consistent pattern of earnings growth, the auditor's concern
for fraud in revenue recognition would be eliminated.
Auditors and management should agree on what is considered material. Question 17 of 45 Research consistently shows that there are three factors associated with most frauds.
The three factors are:
1. Incentives or Pressures
2. Opportunities
3. Attitudes or Rationalization
With each factor, there are indicators that the factor may exist. Which of the following indicators is not associated with the Incentives or Pressures
factor? Management compensation schemes.
Significant related-party transactions.
Compliance with debt covenants
Audit firm answers to management and not to the audit committee.
Personal need for financial enhancement. Question 18 of 45 Which of the following statements is false? The external auditing profession includes sole-practitioner firms.
The SEC has the authority to establish GAAP for companies whose stock is publicly
traded.
Auditors must develop industry and client-specific knowledge.
Audit managers are responsible for the overall conduct of each audit.
With respect to work specialization, smaller audit firms are less specialized by function. Question 19 of 45
Which of the following statements are true? (There are multiple answers and you should
choose all that are true). It is true that an auditor's consideration of materiality is a matter of professional
judgment and is influenced by the auditor's perception of the needs of users of financial
statements.
It is true that auditors are constantly challenged to evaluate the quality of a client's
estimates, including areas such as obsolescence of inventory, allowance for doubtful
accounts, and tax provisions among others.
It is true that the audit report can be a verbal presentation to the audit committee about
the client. It is true that materiality judgments are made in light of the surrounding circumstances,
but need not necessarily involve both quantitative and qualitative considerations.
It is true that there are no differences in audit report requirements across the standards
of the AICPA, PCAOB, and IAASB. Question 20 of 45
Consider the following scenario:
Sally Davis, controller of Silicon Valley University, spends three days researching the
accounting statements to find loopholes in the "rules" and to make a case for
recognizing revenue earlier, rather than in later years. In the end, Sally and the other
members of management determine that they will reduce the company's deferred
revenue accounts and begin accounting for all revenues as agreements are signed.
What are the motivations of Silicon Valley University management based solely on the
information above? Opportunity
Rationalization
Pressures
Skepticism
Convenience Question 21 of 45
The public expects which of the following from a firm's external auditors? Recognize that the investing public is the primary user of audit services.
The public expects all of these from a firm's external auditors.
Be neutral to preparers and users of financial information.
Understand and enforce principles that best portray the spirit of FASB concepts.
Take responsibility for the discovery of fraud. Question 22 of 45 Which of the following statements are false? (There are multiple answers) It is true that an example of fraudulent financial reporting is the CFO intentionally
overstating sales to boost profits.
Step 2 of the goodwill impairment test compares the fair value of goodwill with the
carrying value of goodwill.
The Percentage Approach method focuses on the materiality of current year
misstatements and the reversing effect of prior-year misstatements on the income
statement.
The FASB requires that Goodwill should be tested for impairment at least on a quarterly
basis.
A method used by companies to fraudulently inflate revenues includes the use of "side
letters" giving the customer an irrevocable right to return the product. Question 23 of 45 The Utilitarian Theory requires all of the following actions, except: Identify the rights of the affected parties.
None of these answers is correct.
Identify the potential impact of actions on each affected party.
Identify the desirability of each action.
Identify the potential problem. Question 24 of 45 __________________ are most often involved in perpetuating fraudulent financial reporting. The auditors and the attorneys.
The shareholders and the chief operating officer.
The corporate secretary and accounting manager.
The treasurer and the board of directors.
The chief executive and chief financial officers. Question 25 of 45 An auditor uses an aged accounts receivable report to accomplish which of the
following? To uncover lapping
Identify debits in the receivables balance that should be reclassified to payables.
Assess the adequacy of the allowance for doubtful accounts.
Select the type of confirmations that will be sent to banks.
Encourage the client to collect on receivables that are long past due. Question 26 of 45 All of the following are findings from COSO's analysis of fraud, except: One-third of companies changed auditors during the latter part of the fraud.
The is heavy involvement in fraud by the CEO and/or CFO.
The most common fraud involved revenue recognition.
The majority of frauds take place at companies that are traded on the New York Stock
Exchange (NYSE).
The amount and incidence of fraud remains high. Question 27 of 45
If an audit team discovers that fraud risk factors are present on an audit engagement, it
should _______________________. Reduce the amount of evidence required and resort to management inquiry.
Modify procedures to actively search for the existence of fraud.
Turn the audit over to forensic accountants.
Retract from the client and inform regulatory bodies.
Report it findings to the Securities and Exchange Commission. Question 28 of 45 ____________ is an example of alternative procedures for the confirmation of accounts
receivable. Tracing source documents to recorded amounts.
Inquiry of management.
None of these answers are correct.
Review of subsequent collections on account by the client.
Providing an estimate of the allowance for doubtful accounts to be recorded by the
client. Question 29 of 45
Which of the following statements are false? (There are multiple answers and you must
choose all the ones that are false) The repeatability of a process is not a factor to consider when assessing an internal
control deficiency.
U.S. GAAP requires a three-step process to determine the impairment of goodwill.
It is true that when circumstances preclude an auditor from performing certain
procedures and the auditor can be satisfied using other alternative procedures, a
disclaimer of opinion will be rendered.
It is true that an auditor can issue a disclaimer of opinion because of an inability to
obtain sufficient appropriate evidence.
Materiality applies to both interim financial statements and annual financial statements. Question 30 of 45 Select all of the following statements that are true. (There are multiple answers) It is true that auditors are permitted to perform for a contingent fee an audit of the
financial statements if the audit committee approves the agreement in advance of the
services being provided.
It is true that complex audit judgments and decisions often involve accounts that
require subjective estimates by management.
It is true that walkthroughs and inquiries are often used to obtain an understanding of
internal controls. It is true that the audit report is modified to five paragraphs as a result of another audit
firm performing part of the financial statement audit.
It is true that audit evidence consists of both information that corroborates
management's assertions and information that contradicts such assertions. Question 31 of 45
Which of the following procedures has to be completed at or after the end of the period? Evaluation of adjusting entries
Brainstorming
All of these must be completed prior to period end
Engagement letter
Assessment of control risk Question 32 of 45
Which of the following statements are false? (There are multiple answers) It is true that liability concepts developed through court decisions are referred to as
statutory law.
It is true that the auditing standards issued by the PCAOB are identical to the auditing
standards issued by the AICPA.
It is true that the auditor uses professional judgment to determine which audit
procedures to perform.
It is true that the amount of evidence gathered is not important to an auditor since the
quality of the evidence is of primary importance.
It is true that materiality relates to the significance or importance of an item. Question 33 of 45
Assume that the auditor concludes that there may be a going-concern problem. In that
case, which of the following is not typically evaluated to determine the reasonableness
of management's plans to overcome this problem? None of these answers are correct. Management's assumptions about selling off assets and their relationship to current
market prices.
Management's past track record related to delaying unnecessary expenditures.
Management's assumptions about cost savings related to a reduction in the work force
should be recomputed and evaluated to determine any hidden costs.
Management's assumption about increasing prices or market share in relationship to
current industry developments. Question 34 of 45 Which of the following statements are true? (There are multiple correct answers) It is true that the PCAOB is a public board, appointed by Congress, to provide oversight
of the firms that audit public companies registered with the SEC.
It is true that the AICPA's fundamental principles and guidance for auditing standards
can be divided into four sections: purpose of the audit, responsibility of the auditor,
performance of the audit, and reporting of the results.
It is true that all audit procedures must be completed before year end.
It is true that when the risk of material misstatement is increased, the auditor increases
the extent of audit procedures and requires less evidence.
It is true that auditing exists because users need unbiased information on which to
assess management performance and make economic decisions. Question 35 of 45
Which of the following statements is false? Vouching of transactions deals with testing forward.
While inspecting documents, the reliability depends on the nature and source of the
documentation.
The written record that forms the basis for the auditor's conclusions is referred to as
audit documentation.
Underlying accounting data does not include minutes of meetings. A date at which audit evidence is collected earlier than the balance sheet date is
referred to as an interim date. Question 36 of 45
Which of the following is not a principle of Risk Assessment? The organization demonstrates a commitment to integrity and ethical values.
The organization identifies and assesses changes that could significantly impact the
system of internal control.
None of these answers are correct.
The organization considers the potential for fraud in assessing risks to the achievement
of objectives.
The organization identifies risks to the achievement of its objectives across the entity
and analyzes risks as a basis for determining how the risks should be managed. Question 37 of 45 All of the following statements are true, except: Commissions and referral fees are allowed to audit firms as long as the audit client is
informed of the fees.
Contingent fees are prohibited for tax professionals when preparing tax returns for
clients
Auditors need to consider fraud arising from misappropriation of assets and fraudulent
financial reporting.
Managers must use professional judgment to determine whether identified control
deficiencies rise to the level of a significant deficiency or material weakness.
An example of fraudulent financial reporting is the CFO intentionally overstating sales to
boost profits Question 38 of 45
All of the following are main provisions of the Foreign Corrupt Practices Act of 1977
(FCPA), except: Companies that have securities listed on U.S. markets must make and keep financial
records that accurately and fairly reflect the transactions of the company. Certain payments made to an official to expedite the performance of the duties that the
official would already be bound to perform are acceptable.
Designing and maintaining internal accounting controls is the role of internal auditors
when management conducts business in a foreign country.
No U.S. person or companies that have securities listed on U.S. markets may make a
payment to a foreign official for the purpose of obtaining or retaining business.
None of these answers are correct. Question 39 of 45 Which term describes the type of threat which occurs when top management threatens
to replace the audit firm because of a disagreement over an accounting issue? Financial self-interest threat
Management participation threat
Undue influence threat
Adverse interest threat
Competitive threat Question 40 of 45
Which one of the following statements is false? The primary importance of the audit program is its guidance of the overall conduct of
the audit.
Audit documentation serves as support for the financial statements.
Some audit procedures may be performed prior to the end of the year under audit.
An example of physical observation is the auditor's testing of inventory by counting it to
substantiate the existence assertion.
In a reasonableness test, the auditor develops an expected value of an account by using
data wholly or partly independent of the client's accounting information system. Question 41 of 45 Please select all of the following statements that are false. (There are multiple answers
and you should select all that are false) It is true that the experience level of the audit team is not delineated in the audit report.
It is true that complex audit judgments and decisions often involve accounts that
require subjective estimates by management.
In the FASB hierarchy of inputs to consider for assessing fair value, quoted prices on
identical items is associated with Level 1.
The scope paragraph of an unqualified opinion primarily gives information relating to
statements and dates under audit.
It is true that the inventory account does not require any subjective estimates by
management. Question 42 of 45 Of the following types of audit evidence, _________________ is the most reliable? Evidence from the client's organization.
Copies of client prepared documents.
Directly observable evidence.
Evidence from a poorly controlled system.
Facsimiles of documents. Question 43 of 45
Which of the following statements are false? (There are multiple correct answers and
you should select all that are correct) It is true that the auditor should only provide an opinion on the financial statements if
the opinion indicates that the financial statements are fairly stated in all material
respects.
It is true that a client that has a departure from generally accepted accounting
principles that is immaterial will receive a qualified or adverse opinion.
It is true that the auditor considers materiality only at the overall financial statement
level.
It is true that the audit report delineates the responsibility of client management and
that of the audit firm. It is true that determining materiality is based solely on quantitative factors. Question 44 of 45 Which one of the following is a requirement pf the reporting standards included in the
generally accepted auditing standards? The auditor will identify in the auditor's report, those circumstances in which auditing
principles have not been consistently observed in the current period in comparison to
the preceding period.
None of these answers are correct.
The auditor will state explicitly whether the financial statements are fairly presented in
accordance with the applicable financial reporting framework.
The auditor will review adjusting journal entries for accuracy, and if the auditor
concludes those entries 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
conduct additional audit procedures until such an opinion can be expressed. Question 45 of 45
The Sarbanes-Oxley Act strengthened auditor independence by _______________. requiring the lead partner to rotate off the audit engagement at least every five years.
requiring a different audit firm from the one that performs the audit to prepare
the client's tax return.
requiring all audit staff members to be certified public accountants.
requiring auditors to report the nature of any auditor-client disagreements to the SEC.
requiring auditors to provide reports in accordance with the Foreign Corrupt Pract…