Question 1

Independent professional attestation services improve the quality of information.Quality is best described as an improvement in informational ________.
A)relevance and reliability.
B)financial and nonfinancial qualities
C)historical and prospective qualities
D)internal and external qualities

Accepted Answer

Quality in information is improved by enhancing its relevance and reliability. Independent professional attestation services can help achieve this through auditing and providing assurance on the accuracy of financial and non-financial information. Historical and prospective qualities and internal and external qualities are not directly related to the concept of quality in information.

Question 2

Which of the following statements is true?
A)Often interested users, like banks, ask private companies or non-users to provide audited financial statements.
B)Public users are required to have three audits a year.
C)Public users are required to have an audit of internal financial forecast reports (IFFRs).
D)For efficiency purposes, the three required audits for public companies are performed at the same time.

Accepted Answer

Private companies or non-users may be requested to provide audited financial statements by interested users like banks. It is not necessary for public users to have three audits a year, nor are they required to audit IFFRs. While it may be more efficient to perform all three required audits at the same time, this statement is not necessarily true for all public companies.

Question 3

Which type of entity generally finds a review of historical financial statements to be the most useful?
A)Large public corporations
B)Small public corporations
C)Large private corporations
D)Small private corporations

Accepted Answer

Small private corporations often find a review of historical financial statements most useful because it provides them with a cost-effective way to give lenders, investors, and other interested parties assurance about their financial statements without the expense of a full audit.

Question 4

Assurance services are defined as ________.
A)independent professional services that improve the quality of information, or its context, for decision makers
B)individual provisional services to improve internal controls for financial statement users
C)individual prospective financial statement quality
D)independent information improvement

Accepted Answer

Assurance services are defined as independent professional services that improve the quality of information, or its context, for decision makers. This includes services like financial statement audits, reviews, and compilations, as well as other non-financial assurance services like IT security reviews and sustainability reporting.

Question 5

Among the various processes relating to auditing and assurance standards, the largest umbrella represents ________ services.
A)assurance
B)attestation
C)audit
D)review

Accepted Answer

Assurance services are the broadest category, encompassing attestation, audit, and review services, among others. They provide confidence to decision-makers.

Question 6

What is a compliance audit?
A)an audit to determine whether the entity has conformed with regulations, rules or processes
B)an assessment of the economy, efficiency and effectiveness of an organization's operations
C)an evaluation and improvement of risk management, internal control procedures and elements of the governance process
D)an assessment of the company's financial statements

Accepted Answer

A compliance audit is an audit to determine whether the entity has conformed with regulations, rules or processes. It involves reviewing the organization's activities and practices to ensure they comply with relevant laws and regulations. This type of audit ensures that the organization is following the necessary procedures and regulations.

Question 7

A review of historical financial statements as compared to an audit of historical financial statements ________.
A)is more extensive in terms of the work product required
B)is typically less expensive
C)provides greater assurance
D)provides an opinion

Accepted Answer

A review of historical financial statements is typically less expensive than an audit because it involves less detailed examination and provides a lower level of assurance.

Question 8

Private companies, or non-issuers, in the U.S.are ________.
A)required by the federal government to have quarterly financial statement audits
B)required by the federal government to have annual financial statement audits
C)required by the federal government to have semi-annual financial statement audits
D)not required by the federal government to have financial statement audits

Accepted Answer

Private companies, or non-issuers, in the U.S. are not required by the federal government to have financial statement audits. However, they may choose to have voluntary audits for various reasons, such as obtaining financing or increasing credibility with stakeholders.

Question 9

Which audit involves gathering evidence to determine whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform?
A)A compliance audit
B)A performance audit
C)An integrated audit
D)An internal audit

Accepted Answer

A compliance audit is performed to determine whether an individual or entity has followed the rules, policies, procedures, laws and regulations to which they must adhere. The purpose of this audit is to ensure that the entity in question is complying with legal and regulatory requirements.

Question 10

The term practitioner would be least likely to be used when referring to the performance of ________.
A)audit services
B)attestation services
C)assurance services
D)bookkeeping services

Accepted Answer

The answer of The term practitioner would be least likely...

Question 11

Public companies, or issuers, in the U.S.are ________.
A)required by the federal government to have quarterly financial statement audits
B)required by the federal government to have annual financial statement audits
C)required by the federal government to have semi-annual financial statement audits
D)not required by the federal government to have financial statement audits

Accepted Answer

Public companies in the U.S. are required by the federal government to have annual financial statement audits. This is mandated by the Securities and Exchange Commission (SEC) to ensure transparency and accurate financial reporting to protect investors. Quarterly financial reports must also be filed by public companies, but they may not always be audited.

Question 12

What is the applicable financial reporting framework in the U.S.known as?
A)GAAP
B)GAAS
C)IFRS
D)The Internal Revenue Code

Accepted Answer

The applicable financial reporting framework in the U.S. is known as GAAP (Generally Accepted Accounting Principles). GAAP is a set of accounting standards and procedures that companies use to prepare their financial statements.

Question 13

Which two audits does an integrated audit combine?
A)A financial statement audit and an audit of the effectiveness of ICFR
B)A financial statement audit and a compliance audit
C)A compliance audit and an audit of the effectiveness of ICFR
D)A performance audit and an environmental audit

Accepted Answer

An integrated audit combines a financial statement audit with an audit of the effectiveness of internal control over financial reporting (ICFR), also known as a Sarbanes-Oxley Section 404 audit. The other options listed do not accurately reflect the combination of audits in an integrated audit.

Question 14

Examination of non-financial information falls under _______ services and outside of_______ services.
A)assurance; audit
B)attestation; assurance
C)audit; assurance
D)attestation; audit

Accepted Answer

Examination of non-financial information falls under assurance services, which is a broader category that includes audits but also encompasses other forms of attestation and services that provide assurance on information beyond traditional financial statements. Audit services specifically refer to the examination of financial statements, so non-financial information examination is outside of audit services but within the scope of assurance services.

Question 15

Which of the following is a characteristic of an audit of historical financial statements?
A)It provides limited assurance that no material modifications need to be made to the financial statements.
B)It expresses an opinion on the fair presentation of the financial statements.
C)It is the same as an examination of internal controls.
D)It is broader than a review engagement.

Accepted Answer

An audit of historical financial statements expresses an opinion on the fair presentation of the financial statements, providing reasonable assurance that they are free of material misstatements. This is different from a review engagement, which provides limited assurance and is narrower in scope. It is also not the same as an examination of internal controls, which focuses on the effectiveness of a company's internal controls over financial reporting rather than the accuracy of the financial statements themselves.

Question 16

Within a U.S.context, the applicable financial reporting framework is typically _______.
A)Generally Accepted Accounting Principles (GAAP)
B)International Standard on Quality Control (ISQC)
C)Auditing and Assurance Standards Board (AASB)
D)International Financial Reporting Standards (IFRS)

Accepted Answer

Generally Accepted Accounting Principles (GAAP) is the financial reporting framework used in the United States.

Question 17

The term independent with respect to assurance services implies that the service is ________.
A)performed by someone who was not involved with the creation of the information.
B)performed by someone who was involved with the creation of the information and, therefore, fully understands it.
C)performed by a company employee.
D)is subjective.

Accepted Answer

Independence in assurance services means that the service is performed by someone who was not involved with the creation of the information. This ensures that the service provider provides an unbiased and objective evaluation of the information.

Question 18

Which of the following is not one of the four sections tested on the CPA exam?
A)Auditing and Attestation
B)Business Environment and Concepts
C)Regulation
D)Internal Controls

Accepted Answer

The four sections tested on the CPA exam are Auditing and Attestation, Business Environment and Concepts, Regulation, and Financial Accounting and Reporting. Internal Controls is a topic that is covered within the Auditing and Attestation section.

Question 19

The audit related to which of the following is specifically meant to express an opinion on the effectiveness of the company's system of internal controls over financial reporting?
A)ICFR
B)GAAP
C)FASB
D)AICPA

Accepted Answer

The audit related to ICFR (Internal Controls over Financial Reporting) is specifically meant to express an opinion on the effectiveness of the company's system of internal controls over financial reporting. GAAP (Generally Accepted Accounting Principles), FASB (Financial Accounting Standards Board), and AICPA (American Institute of Certified Public Accountants) are not directly related to the audit of internal controls over financial reporting.

Question 20

What is the final step in becoming a licensed CPA?
A)Taking the CPA exam
B)Meeting the educational requirements
C)Work experience
D)Evidence of personal integrity

Accepted Answer

In addition to meeting educational requirements and passing the CPA exam, individuals seeking to become licensed CPAs must also complete a specified amount of work experience under the supervision of a licensed CPA. Evidence of personal integrity is also important, but it is not the final step in the licensure process.

Quiz 1: Introduction and Overview of Audit and Assurance

Independent professional attestation services improve the quality of information.Quality is best described as an improvement in informational ________.

Which of the following statements is true?

Which type of entity generally finds a review of historical financial statements to be the most useful?

Assurance services are defined as ________.

Among the various processes relating to auditing and assurance standards, the largest umbrella represents ________ services.

What is a compliance audit?

A review of historical financial statements as compared to an audit of historical financial statements ________.

Private companies, or non-issuers, in the U.S.are ________.

Which audit involves gathering evidence to determine whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform?

The term practitioner would be least likely to be used when referring to the performance of ________.

Public companies, or issuers, in the U.S.are ________.

What is the applicable financial reporting framework in the U.S.known as?

Which two audits does an integrated audit combine?

Examination of non-financial information falls under _ services and outside of_ services.

Which of the following is a characteristic of an audit of historical financial statements?

Within a U.S.context, the applicable financial reporting framework is typically _______.

The term independent with respect to assurance services implies that the service is ________.

Which of the following is not one of the four sections tested on the CPA exam?

The audit related to which of the following is specifically meant to express an opinion on the effectiveness of the company's system of internal controls over financial reporting?

What is the final step in becoming a licensed CPA?