Deck 15: International Auditing Issues

Question 1

In Germany, the government certifies the auditor.
True

Answer 1

True

Question 2

Which of the following is not an element of the quality of the auditing profession.

A) reputation of the profession.
B) the quality of the educational system.
C) the certification process.
D) the organization of the auditing firms.

Answer 2

D

Question 3

In terms of the size of the profession,

A) the Anglo-Saxon tradition generates the most accountants, but not the most per capita.
B) the United States is the largest in the world in number of accountants and accountants per capita.
C) the British do not have the most accountants in the world, but they have the most per capita.
D) Japan is more similar to the Anglo-Saxon countries than Germany in terms of the number of accountants per capita.

Answer 3

C

Question 4

Reciprocity is a problem for international audit firms.
True

Question 5

The IFAC is attempting to harmonize audit standards world-wide.

Question 6

Sarbanes-Oxley prohibits auditors from doing non-audit services.
False

Question 7

The identity of a candidate for the auditing profession is important. For example,

A) Mexico has a strict requirement that one must be a Mexican citizen or be fluent in Spanish in order to practice in Mexico.
B) the U.K. requires that candidates be a member of one of the Chartered Institutes or the Chartered Association of Certified Accountants.
C) France does not allow candidates from other EU member countries to practice in France.
D) the Dutch are short on good accountants, so their requirements are not too strict.

Question 8

Which of the following is not a key dimension to auditing?

A) a competent, independent person.
B) quantifiable and verifiable information.
C) established criteria (auditing standards).
D) the existence of a global auditing standards board that will harmonize auditing practices.

Question 9

In terms of educational experience to become a certified accountant,

A) the French rely on the apprenticeship approach.
B) the United States use university training as a prerequisite for certification.
C) the Dutch do not rely very much on university training of accountants.
D) the British have a dual approach that uses different styles of universities to train accountants.

Question 10

Distance is not a problem with international auditing.
False

Question 11

International audits have a challenge because local business practices pay expenses with cash.
True

Question 12

The quality of the auditing profession in each country is a function of

A) the reputation of the accounting and auditing profession
B) the quality of the educational system
C) the certification process
D) all of the above

Question 13

Based on Messier et al's (2005) definition, successful auditing has two requirements: an objective (independent), competent person and quantifiable (and verifiable information).
False

Question 14

Home countries occasionally have laws that extent to subsidiaries of their domestic companies that contradict the laws of host countries of the subsidiaries.
True

Question 15

EU's Fifth Directive permits auditors to operate without restriction throughout the European Union.
False

Question 16

The British model of accounting education is like which of the following models?

A) Integrated system: the test of professional competence is preceded by an integrated education and practical experience approach.
B) Linear system: the test of professional competence is preceded by practical experience, which is preceded by university training.
C) Parallel system: the test of professional competence is preceded by either practical experienced which follows university education or an integrated education and practical experience.
D) All of the above.

Question 17

Some countries have an apprentice approach for auditors which does not require university training.
True

Question 18

Reciprocity in the accounting profession means that

A) practitioners certified in one country should be allowed to practice in another country.
B) the U.S. will grant reciprocity to accountants from Anglo-Saxon traditions, but not from other countries.
C) accountants are allowed to practice but not certify outside of their countries.
D) audit reports should be accepted in different countries.

Question 19

According to the reciprocity agreement between the United States and Canada,

A) Canadian chartered accountants must pass the Uniform CPA exam in order to practice in the United States.
B) Canadians and Americans who are certified in their own country can practice in the other country by registering with the proper accounting board and paying a one-time fee.
C) any accountant, even one who is not certified in either the United States or Canada, can practice in the other country by passing a special exam.
D) a special exam has been developed which focuses on the differences between Canada and the United States.

Question 20

The U.S. model of accounting education is like which of the following models?

A) Integrated system: the test of professional competence is preceded by an integrated education and practical experience approach.
B) Linear system: the test of professional competence is preceded by practical experience, which is preceded by university training.
C) Parallel system: the test of professional competence is preceded by either practical experienced which follows university education or an integrated education and practical experience.
D) All of the above.

Question 21

International auditing standards

A) make it more difficult for developing countries to produce domestic auditing standards
B) are principally generated by FASB
C) are created and reviewed by G11 summits
D) provide incentives to improve and extend the set of international accounting standards

Question 22

The IFAC is

A) an organization of national professional accountancy organizations
B) part of the OECD
C) under control of FASB
D) part of the UN

Question 23

Which country exempts small companies from an audit

A) Germany
B) United Kingdom
C) United States
D) Canada

Question 24

The German model of accounting education is like which of the following models?

A) Integrated system: the test of professional competence is preceded by an integrated education and practical experience approach.
B) Linear system: the test of professional competence is preceded by practical experience, which is preceded by university training.
C) Parallel system: the test of professional competence is preceded by either practical experienced which follows university education or an integrated education and practical experience.
D) All of the above.

Question 25

The French model of accounting education is like which of the following models?

A) Integrated system: the test of professional competence is preceded by an integrated education and practical experience approach.
B) Linear system: the test of professional competence is preceded by practical experience, which is preceded by university training.
C) Parallel system: the test of professional competence is preceded by either practical experienced which follows university education or an integrated education and practical experience.
D) All of the above.

Question 26

A major development in the global accounting firms in recent years has been the

A) decision on the part of the largest firms to concentrate in specific geographic areas rather than attempt to service all markets.
B) merger of some of the largest accounting firms.
C) slowdown in merger activity.
D) all of the above.

Question 27

IFAC's 2000 initiative is

A) supposed to raise audit fees
B) designed to raise global audit standards
C) ease the tax collection problems on MNEs
D) likely to increase Internet E-commerce

Question 28

Which of the following is not a problem that public accounting firms face when the do business overseas.

A) restrictions on the use of the firm's name.
B) restrictions on the scope of practice.
C) tax discrimination.
D) understanding the different audit statement formats.

Question 29

The IFAC has

A) set for international development policy
B) issued international standards on auditing
C) issued numerous security regulations
D) none of the above

Question 30

Companies that switch from small or medium audit firms to more international auditors often give the reason of

A) the need to have one firm auditing all companies within one group
B) better brand recognition
C) superior low balling
D) side payments

Question 31

The IFAD was formed

A) in order to improve Internet E-commerce
B) so as to reduce the dependence on the SEC
C) after the late 90's Asian financial crisis
D) to control dumping

Question 32

The IFAC is active in all of the following areas except

A) education
B) ethics
C) metric standards
D) information technology

Question 33

Which of the following is true concerning the EU's 4th Directive?

A) it is a source of audit requirements, standards and practices.
B) it is a source of audit standards and practices but not audit requirements.
C) it is a source of audit requirements but not standards and practices.
D) it describes the format and content of the audit report.

Question 34

With respect to auditors in the European Union,

A) the 4th Directive states that accountants need to demonstrate education, examination and experience qualifications in order to be able to practice.
B) auditors in one country may be allowed to practice in another country under certain conditions.
C) reciprocity is not extended.
D) auditors are not allowed to engage in consulting due to concerns over independence.

Question 35

Which of the following is not a major reason for the global expansion of public accounting firms?

A) to service clients better.
B) to provide a line of defense against global competitors.
C) to increase the client base outside of the home market.
D) to focus on the industrial instead of developing countries where the accounting tradition is already well-established.

Question 36

Sarbanes-Oxley prohibits all of the following services to audit clients except

A) tax
B) bookkeeping
C) financial information systems design
D) internal audit outsourcing

Question 37

The IFAD objectives include all of the following except

A) Promote cooperation between governments, the accountancy, regulators, standard setters and capital providers
B) Contribute to a common strategy and framework of reference for accountancy development
C) Assist in defining expectations as to how the accountancy profession should carry out its responsibilities
D) Develop near earth orbit commerce

Question 38

Evidence of IFAC global effectiveness problems in enforcing audit standards is

A) a restructuring plan
B) the take-over of the duties by the OECD
C) the take-over of the duties by court at the Hague
D) SEC rejection of IAS standards

Question 39

With respect to accounting services, the General Agreement on Trade in Services (GATS)

A) was enacted in the Uruguay Round of GATT negotiations, and it resulted in the free trade in accounting services.
B) efforts are being concentrated on tariff barriers to the cross-border trade in services.
C) governments are all required to use the same reciprocity rules.
D) wants to ensure that quality of service is not compromised.

Question 40

Auditors are generally appointed by

A) shareholders at the annual meeting
B) local country government
C) management
D) UN