Question 1

There are many elements of quality control at the firm level. Which element does the statement "an organizational culture that emphasizes that quality should be present for audit and review engagements" fall under?

Accepted Answer

The statement given pertains to the leadership and responsibilities within the firm, specifically in terms of promoting and fostering an organizational culture that values and prioritizes quality in audit and review engagements.

Question 2

There are many elements of quality control at the firm level. Which element does "employees should be adequately trained in the skills needed to conduct audits and reviews" relate to?

Accepted Answer

The element that relates to "employees should be adequately trained in the skills needed to conduct audits and reviews" is the extent of professional development. This refers to the firm's policies and procedures for ensuring that employees have the necessary knowledge, skills, and experience to carry out their responsibilities effectively.

Question 3

There are many elements of quality control at the firm level. Which element does "adequate hiring policies (and documentation of their implementation) that ensure competence and integrity of personnel" relate to?

Accepted Answer

Adequate hiring policies and documentation of their implementation fall under general human resource policies, which are essential for ensuring that the staff employed by the firm have the necessary competence and integrity to perform their job roles effectively. These policies also help to reduce the risk of any potential conflicts of interest that may arise due to personal or business relationships between employees and clients.

Question 4

A PA firm has an organizational structure that assures the technical review of every engagement by a partner who has expertise in the client's industry. This is an example of good

Accepted Answer

This is an example of quality controls as it ensures that every engagement undergoes a technical review by a partner with expertise in the client's industry, which is one of the procedures under quality controls to ensure the quality of audit work.

Question 5

Who do the external auditors and the internal auditors usually report to?

Accepted Answer

Both the external auditors and internal auditors usually report to the audit committee. This committee is typically composed of members of the board of directors and is responsible for overseeing the company's financial reporting and audit processes. Reporting to this committee helps ensure the auditors' independence and provides a level of oversight outside of senior management. While senior management and the CEO may be involved in the audit process, they do not typically supervise the external or internal auditors directly. The director of internal audit may supervise the internal audit team but is not typically involved in supervising external auditors.

Question 6

Gary West is a sole practitioner. He has conducted the audit of Reggie's Farm for the past 12 years. In the current year, Reggie's Farm expanded by acquiring two other farms, installed a new accounting system, and also started to export to the United States. Gary accepted the audit of Reggie's Farm for the upcoming year even though he has no experience with exports to the U.S. or companies the size of Reggie's Farm. Which element of quality control is compromised for Gary's firm?

Accepted Answer

The element of quality control that is compromised for Gary's firm is client acceptance or continuance. The firm should have considered the new risks associated with the changes in the client's business and made an assessment of whether they have the necessary experience and expertise to conduct the audit effectively. By accepting the audit without adequately considering these new risks, the firm is compromising the quality of its services.

Question 7

There are many elements of quality control at the firm level. Which element does the statement "management within a firm should ensure that qualified personnel monitor and address non-compliance with quality-control procedures" fall under?

Accepted Answer

The statement is related to the leadership and responsibilities within the firm element of quality control, which focuses on the responsibility of management to ensure that quality control procedures are being followed and non-compliances are being addressed by qualified personnel.

Question 8

There are many elements of quality control at the firm level. Which element does "work assignments that match employee competence and performance evaluations related to audit quality" relate to?

Accepted Answer

The answer of There are many elements of quality control...

Question 9

CAS 200 provides overall objectives of the independent auditor during the conduct of an audit in three categories: qualifications and conduct, performance of the audit, and reporting of results. How do these standards provide guidance to auditors?

Accepted Answer

CAS 200 provides overall objectives of the independent auditor during the conduct of an audit in three categories, which represent a framework for further discussion of detailed standards. While CAS 200 does provide general guidance on the qualifications and conduct of the auditor, performance of the audit, and reporting of results, it does not provide specific rules about how work should be done for evidence gathering or how the audit report should be developed and distributed.

Question 10

What is one of the ways that high-profile business failures (such as Enron, WorldCom, and Nortel) have affected the auditing profession?

Accepted Answer

High-profile business failures have created increased focus on standards and high-quality audits within the auditing profession. This has led to stricter regulations, more thorough audits, and greater accountability for auditors in the wake of these scandals.

Question 11

Dimitri works at a large public accounting firm. Dimitri referred one of his friends for a junior auditor position. Dimitri's friend was hired despite the fact that he had a criminal record. The partner at the firm did not perform a background check on Dimitri's friend since he was recommended by an employee. Which element of quality control has been compromised?

Accepted Answer

The element of quality control that has been compromised in this situation is general human resource policies. The partner failed to perform a background check, which is a standard HR policy, before hiring an employee. This failure to comply with HR policies could result in a potential risk to the firm's reputation and integrity.

Question 12

CAS 200 explains that as part of general qualifications and conduct, the auditor should exercise due care in the performance of all aspects of auditing. Which of the following is an illustration of due care?

Accepted Answer

The answer of CAS 200 explains that as part of...

Question 13

During which phases of the financial statement audit does the auditor "conduct quality control" when using a risk assessment approach?

Accepted Answer

When using a risk assessment approach, the auditor conducts quality control during all three phases of the financial statement audit - risk assessment, risk response, and reporting phases. This helps in ensuring that the audit is conducted efficiently and effectively, thereby enhancing the quality of the audit.

Question 14

Farah is currently auditing Software Synx, a public company. After a long day of work, Farah goes for a drink with her friend John who mentions that he owns shares of Software Synx. Farah indicates that John should hold on to his shares as they will go up next week when the financial statements are released and show an increase of 12% for revenues. Which element of quality control is compromised by Farah?

Accepted Answer

The answer of Farah is currently auditing Software Synx, a...

Question 15

CAS 200 explains that as part of general qualifications and conduct, the auditor should be professionally competent. Which of the following help the auditor achieve competence?

Accepted Answer

Formal education and practical experience, as well as pursuing continuing education, are key components in achieving professional competence as an auditor. While options A, B, and D are important aspects of auditing, they do not directly relate to the auditor's professional competence.

Question 16

CPAB's purpose is to

Accepted Answer

The purpose of the Canadian Public Accountability Board (CPAB) is to improve the public's confidence in independent auditing. While CPAB does work with auditors to provide training and continuing education, its primary focus is on ensuring that audits are independent and of high quality in order to enhance public trust in the financial reporting process. While CPAB may participate in the development of auditing standards, this is not its main purpose.

Question 17

There are many elements of quality control at the firm level. Which element does the statement "quality control procedures should be developed, documented, implemented, and communicated" fall under?

Accepted Answer

The statement "quality control procedures should be developed, documented, implemented, and communicated" falls under the element of leadership and responsibilities within the firm, as it pertains to establishing and maintaining a strong quality control system within the organization.

Question 18

Jessica is a summer junior at Branes & Castle, a PA firm. Jessica has only completed three accounting courses in university and has not yet taken her auditing class. A team of auditors from Branes & Castle are starting an audit and Jessica was sent to help them. Jessica

Accepted Answer

Jessica can perform work for the audit engagement as long as she is supervised and proper review of her work is performed. The fact that she has completed three accounting courses suggests that she has some basic knowledge of accounting concepts and principles. As long as she is supervised and her work is reviewed by more experienced auditors, it is permissible for her to assist in the audit engagement.

Question 19

Adequate technical training and proficiency in auditing is a requirement of which category of generally accepted auditing standards?

Accepted Answer

The answer of Adequate technical training and proficiency in auditing...

Question 20

There are many elements of quality control at the firm level. Which element does the statement "a firm should establish a formal code of conduct that includes procedures for individuals to disclose differences of opinion and any inappropriate conduct" fall under?

Accepted Answer