Question 1

What is the size of most small local public accounting firms in Canada?
A)fewer than 25 employees
B)between 25 and 49 employees
C)between 50 and 75 employees
D)more than 75 employees

Accepted Answer

According to the CPA Canada publication "A Profile of the Profession," the majority (68%) of public accounting firms in Canada have fewer than 25 employees. Therefore, this is the best choice.

Question 2

What is the purpose of assurance standards issued by the AASB (Auditing and Assurance Standards Board)in Canada?
A)to expose the newly established standards to as many groups as possible
B)to provide current copies of the standards in advance of being placed in the CPA Handbook
C)to provide supporting reference material and other resources
D)to set standards for engagements such as reviews and compilations

Accepted Answer

The purpose of assurance standards issued by the AASB in Canada is to set standards for engagements such as reviews and compilations. These standards provide guidance to practitioners on how to undertake and report on review and compilation engagements. The other options are incorrect as they do not accurately describe the purpose of the assurance standards.

Question 3

Securities regulations in Canada are the responsibility of
A)a national securities commission.
B)provincial securities commissions.
C)the professional accounting organizations.
D)office of the Auditor General of Canada.

Accepted Answer

Securities regulations in Canada are the responsibility of provincial securities commissions. Each province and territory has its own securities regulator, such as the Ontario Securities Commission and the British Columbia Securities Commission, which are responsible for overseeing and enforcing securities laws within their jurisdiction. While there is a Canadian Securities Administrators (CSA) organization that facilitates coordination among the provincial regulators, the ultimate responsibility for enforcing securities regulations falls to the provincial commissions.

Question 4

What are the staff levels and responsibilities at public accounting firms?

Accepted Answer

The answer of What are the staff levels and responsibilities...

Question 5

Large accounting firms are often limited liability partnerships (LLPs)because if their audits are conducted in accordance with CAS (Canadian Auditing Standards),
A)partners not on the engagement would not be liable to pay with their personal assets when the LLP is sued.
B)improved quality control practices can be initiated using technical personnel.
C)more formal requirements are in place when reporting to federal tax authorities.
D)partners are liable to pay with only a limited portion of their personal assets when the LLP is sued.

Accepted Answer

In an LLP, partners not directly involved in the engagement are protected from personal liability, meaning they do not have to pay with their personal assets if the LLP is sued.

Question 6

National accounting firms in 2015 were those with
A)offices in most major cities and revenues over $100 million.
B)international representation in most cities around the world.
C)offices in all major cities in Canada and revenues over $75 million.
D)national and international affiliations providing services in all major centres.

Accepted Answer

National accounting firms in 2015 were typically characterized by having offices in most major cities and generating revenues over $100 million. This definition captures the scale and reach expected of such firms within the national context.

Question 7

The reason for adopting the CASs is to
A)comply with requirements in the Canada Business Corporations Act.
B)respond to the increased litigation risks faced by auditors.
C)be consistent with the international standards of auditing.
D)simplify the auditing process.

Accepted Answer

The reason for adopting the CASs (Canadian Auditing Standards) is to be consistent with the international standards of auditing, which are set by the International Auditing and Assurance Standards Board (IAASB). By aligning with these standards, Canadian auditors can better serve multinational clients, and improve the overall quality of auditing worldwide. While compliance with the Canada Business Corporations Act may require certain reporting and disclosure requirements, it is not the primary reason for adopting the CASs. Similarly, while increased litigation risks may be a concern for auditors, this is not the primary reason for adopting the CASs. Finally, while the CASs may simplify the auditing process in some respects, their primary goal is to improve the quality and consistency of auditing practices.

Question 8

One of the main advantages of a "big" public accounting firm is
A)their lower professional fees due to economies of scale.
B)their ability to share with the client knowledge and experience from similar companies they have audited.
C)their ability to audit nearly all the largest companies worldwide.
D)the increased reliability of their audit reports.

Accepted Answer

The answer of One of the main advantages of a...

Question 9

The most common organizational form used by public accounting firms is
A)sole proprietorship or partnership.
B)professional corporation.
C)corporation.
D)co-operative.

Accepted Answer

The most common form used by public accounting firms is a sole proprietorship or partnership because it allows for shared decision-making and flexibility in management. This also allows for easier sharing of profits amongst partners. Professional corporations are also used but are less common. Corporations are not as common because they are more expensive to form and have stricter requirements for ownership and management. Co-operatives are rarely used in the public accounting industry.

Question 10

The Sarbanes-Oxley Act of 2002 made it a felony to
A)destroy or create documents to impede a federal investigation.
B)have internal control weaknesses.
C)have a significant internal control weakness.
D)engage in transactions with related parties.

Accepted Answer

The Sarbanes-Oxley Act of 2002 made it a felony to destroy or create documents to impede a federal investigation. This is covered under Section 802 of the Act, which imposes criminal penalties on anyone who alters, destroys, mutilates, conceals, or falsifies records or documents with the intent to obstruct, impede or influence a federal investigation.

Question 11

Approximately how many public accounting firms in Canada have more than 50 professional staff?
A)25
B)50
C)75
D)100

Accepted Answer

Based on industry data and research, it is estimated that there are around 50 public accounting firms in Canada that have more than 50 professional staff. Therefore, the best choice is B.

Question 12

The implementation of the Sarbanes-Oxley requirements in the U.S.resulted in increased independence requirements for auditors.The impact of this requirement in Canada was
A)the creation of the CPAB to oversee Canadian audit professionals.
B)revisions to the rules of professional conduct for CPAs.
C)additional training requirements for becoming an auditor.
D)modification of the type of opinion provided in an assurance engagement by an auditor.

Accepted Answer

The implementation of the Sarbanes-Oxley requirements in the U.S. prompted Canada to create the Canadian Public Accountability Board (CPAB) in 2003. The CPAB was established to oversee the work of audit professionals and ensure their independence, among other things. Therefore, choice A best aligns with the impact of the Sarbanes-Oxley requirements in Canada.

Question 13

A PA firm is conducting an audit of a public company that has operations in both Canada and Finland.There is a conflict between ISAs (International Statements on Auditing)and CASs (Canadian Auditing Standards)for the foreign operations that will be consolidated with the Canadian operations.Which reporting standards should the PA firm follow?
A)Finnish reporting standards
B)Canadian reporting standards
C)international financial reporting standards
D)the best of Canadian or international standards

Accepted Answer

Since the company has operations in multiple countries, it would be appropriate to follow international financial reporting standards (IFRS) which are recognized and adopted in both Canada and Finland. Following IFRS would ensure consistency in reporting and enable comparability of financial statements across different locations. Additionally, with the increasing trend towards globalization, IFRS has become the preferred reporting standard for multinational companies as it allows for easier cross-border transactions and understanding of financial information.

Question 14

The Canada Business Corporation Act gave authority to Canadian accounting and auditing standard-setters by stating that financial statements
A)must be compiled in accordance with International Financial Reporting Standards.
B)should be prepared in accordance with the standards in the CPA Canada Handbook.
C)must be audited by accountants that reside in Canada.
D)should be prepared in accordance with local financial reporting standards.

Accepted Answer

The Canada Business Corporation Act requires financial statements to be prepared in accordance with the standards set out in the CPA Canada Handbook. This gives authority to Canadian accounting and auditing standard-setters to establish these standards, which are widely used by Canadian companies. Option A is not entirely accurate, as IFRS is not a requirement under the Act but is instead allowed as an option. Option C is also incorrect as there is no requirement that auditors must reside in Canada, only that they are held to certain professional standards. Option D is also not correct, as the Act requires compliance with the CPA Canada Handbook, which is a comprehensive set of financial reporting standards for Canadian entities.

Question 15

A key difference between the PCAOB in the U.S.and the CPAB in Canada is that
A)the CPAB is involved in the development of auditing standards.
B)the PCAOB is involved in the development of auditing standards.
C)the PCAOB conducts practice inspections of public company auditors.
D)the CPAB conducts practice inspections of public company auditors.

Accepted Answer

The PCAOB (Public Company Accounting Oversight Board) in the U.S. is involved in the development of auditing standards, whereas the CPAB (Canadian Public Accountability Board) in Canada is not.

Question 16

The implementation of the Sarbanes-Oxley requirements in the U.S.resulted in the creation of the PCAOB to oversee listed companies' auditors and develop audit standards.The impact of this requirement in Canada was
A)the creation of new auditing standards to ensure better quality control for audits.
B)revision to the rules of professional conduct for CPAs.
C)additional training requirements for becoming an auditor.
D)the creation of the CPAB to oversee Canadian audit professionals.

Accepted Answer

The implementation of Sarbanes-Oxley requirements in the U.S. led to the creation of the PCAOB to oversee and regulate the work of audit firms that audit publicly traded companies. In Canada, similar measures were implemented, resulting in the creation of the Canadian Public Accountability Board (CPAB) to oversee Canadian audit professionals and ensure compliance with high-quality auditing and ethical standards. Therefore, the best choice is D, the creation of the CPAB to oversee Canadian audit professionals.

Question 17

Most international and national accounting firms in Canada are comprised of professional accountants with the designation
A)CIA.
B)CPA.
C)CFE.
D)CISA.

Accepted Answer

CPA (Chartered Professional Accountant) is the official designation for professional accountants in Canada. The other designations (CIA, CFE, CISA) are specific to other areas of expertise such as internal auditing, fraud examination and IT auditing, respectively.

Question 18

Who is responsible for developing financial statement audit and assurance standards in Canada?
A)AASB (Auditing and Assurance Standards Board)
B)standards staff at CPA Canada
C)provincial securities commissions
D)the accounting firms who conduct financial statement audits

Accepted Answer

The Auditing and Assurance Standards Board (AASB) is responsible for developing financial statement audit and assurance standards in Canada. They are an independent body that operates under the Canadian Institute of Chartered Accountants (now known as Chartered Professional Accountants of Canada) and are responsible for setting auditing and assurance standards applicable to audits of financial statements in Canada.

Question 19

CPAB's purpose is to
A)develop auditing standards.
B)provide training and continuing education to auditors.
C)clarify and communicate the role of the auditor to the public.
D)improve the public's confidence in independent auditing.

Accepted Answer

CPAB's main purpose is to enhance public confidence in independent auditing by providing oversight of auditors who audit public companies in Canada. While CPAB may provide some training and education to auditors, its primary focus is on ensuring that auditors are performing their roles in line with professional standards and that the public can have trust in the financial information provided by public companies.

Question 20

What are the different business organization structures that an accountant may use? What are the advantages of these structures?

Accepted Answer

The answer of What are the different business organization structures...

Quiz 2:The Public Accounting Profession and Audit Quality

What is the size of most small local public accounting firms in Canada?

What is the purpose of assurance standards issued by the AASB (Auditing and Assurance Standards Board) in Canada?

Securities regulations in Canada are the responsibility of

What are the staff levels and responsibilities at public accounting firms?

Large accounting firms are often limited liability partnerships (LLPs) because if their audits are conducted in accordance with CAS (Canadian Auditing Standards) ,

National accounting firms in 2015 were those with

The reason for adopting the CASs is to

One of the main advantages of a "big" public accounting firm is

The most common organizational form used by public accounting firms is

The Sarbanes-Oxley Act of 2002 made it a felony to

Approximately how many public accounting firms in Canada have more than 50 professional staff?

The implementation of the Sarbanes-Oxley requirements in the U.S.resulted in increased independence requirements for auditors.The impact of this requirement in Canada was

The Canada Business Corporation Act gave authority to Canadian accounting and auditing standard-setters by stating that financial statements

A key difference between the PCAOB in the U.S.and the CPAB in Canada is that

The implementation of the Sarbanes-Oxley requirements in the U.S.resulted in the creation of the PCAOB to oversee listed companies' auditors and develop audit standards.The impact of this requirement in Canada was

Most international and national accounting firms in Canada are comprised of professional accountants with the designation

Who is responsible for developing financial statement audit and assurance standards in Canada?

CPAB's purpose is to

What are the different business organization structures that an accountant may use? What are the advantages of these structures?