ACCT 612 Midterm Exam (UMUC)

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ACCT 612 Midterm Exam (UMUC)

1. In “auditing” financial accounting data, the primary concern is with:
2. ________ risk reflects the possibility that the information upon which the business decision was made was inaccurate. 
3. Which of the following is not a SysTrust Services principle as defined by the AICPA? 
4. The three requirements for becoming a CPA include all but which of the following? 
5. The four categories for describing the size of audit firms include: the Big Four international firms; national firms; regional and local firms; and small firms. Which of the following is not a characteristic of a small firm? 
6. The form that must be filed with the Securities and Exchange Commission whenever a company plans to issue new securities to the public is the: 
7. The International Standards on Auditing (ISAs): 
8. Which of the following is not true for audit firms who audit publicly traded companies? 
9. When the auditor concludes that there is substantial doubt about the entity’s ability to continue as a going concern, the appropriate audit report could be:
10. When the auditor determines that the financial statements are fairly stated, but there is a nonindependent relationship between the auditor and the client, the auditor should issue: 
11. When comparing misstatements with a measurement base, the auditor must consider the pervasiveness of the misstatement. Of the following examples, the most pervasive misstatement is a(n): 
12. Which of the following is incorrect concerning scope limitations? 
13. Which of the following statements is true when the CPA has been engaged to perform an audit of financial statements? 
14. The provisions of the Sarbanes-Oxley Act of 2002 are most likely to allow which of the following non-audit services for audit clients? 
15. When determining whether independence is impaired because of an ownership interest in a client company, materiality will affect ownership: 
16. Which of the following would be considered a violation of the AICPA Code of Conduct? 
17. Auditors may be liable to their clients if they are found guilty of: 
18. A CPA firm normally uses one or a combination of four defenses when there are legal claims by clients. Which one of the following is generally not a defense? 
19. The Securities and Exchange Commission can impose all but which of the following sanctions? 
20. The Sarbanes-Oxley Act of 2002 makes it a felony to destroy or create documents to impede or obstruct a federal investigation. Those provisions were adopted following which of the following legal cases? 
21. An auditor discovers that the company’s bookkeeper unintentionally made an mistake in calculating the amount of the quarterly sales. This is an example of: 
22. When planning the audit, if the auditor has no reason to believe that illegal acts exist, the auditor should: 
23. Auditors have found that generally the most efficient and effective way to conduct audits is to: 
24. If the auditor has obtained a reasonable level of assurance about the fair presentation of the financial statements through understanding internal control, assessing control risk, testing controls, and analytical procedures, then the auditor: 
25. For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence? 
26. When auditors use documentation to support recorded transactions and amounts, the process is usually called: 
27. Which of the following best describes one of the primary objectives of audit documentation? 
28. The permanent files included as part of audit documentation do not normally include: 
29. When inherent risk is high, there will need to be: 
30. Which of the following is not a primary reason for obtaining a good understanding of the client’s industry and external environment? 
31. During audit planning, the auditor uses analytical procedures primarily to: 
32. Which is a liquidity activity ratio? 
33. Which of the following is an incorrect statement regarding the allocation of the preliminary judgment about materiality to balance sheet accounts? 
34. When dealing with audit risk: 
35. When management has an adequate level of integrity for the auditor to accept the engagement but cannot be regarded as completely honest in all dealings, auditors normally: 
36. Which of the following is a correct statement? 
37. To issue a report on internal control over financial reporting for a public company, an auditor must: 
38. Which of the following statements is most correct with respect to separation of duties? 
39. Audit evidence regarding the separation of duties is normally best obtained by: 
40. The person responsible for reconciling sales invoices to customer orders does not access to the company’s master price list in order to correctly compute sales. This is an example of a(n): 
41. What are the six Ethical Principles stated in the Code of Professional Conduct? Briefly discuss each principle. Are these principles enforceable?