Question 1

An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n):

Accepted Answer

A compliance audit is specifically designed to determine whether an entity is following specific procedures or rules set down by some higher authority. This type of audit focuses on adherence to legal, regulatory, or contractual requirements. Auditors examine the policies, procedures, and practices of the entity to ensure compliance with the relevant regulations.

Question 2

One objective of an operational audit is to:

Accepted Answer

One of the primary objectives of an operational audit is to identify areas for improvement and make recommendations for enhancing the efficiency and effectiveness of an entity's operations. While A may be an aspect of an operational audit, it is not the main objective. B and D are not the primary objectives of an operational audit.

Question 3

Attestation services on information technology include WebTrust services and SysTrust services. Which of the following statements most accurately describes SysTrust services?

Accepted Answer

SysTrust services are designed to provide assurance on the reliability of computer systems in critical areas such as security, data integrity, availability, and confidentiality. It focuses on evaluating the IT system's controls and their ability to protect the integrity, confidentiality, and availability of information.

Question 4

To do an audit, it is necessary for information to be in a verifiable form and some criteria by which the auditor can evaluate the information. Detail the information and criteria that would be used for:
(A) an independent CPA firm audits a company's historical financial statements.
(B) an Internal Revenue Service auditor who audits that same company's tax return.
(C) an internal auditor use when performing an operational audit to evaluate whether the company's computerized payroll processing system is operating efficiently and effectively.

Accepted Answer

The answer of To do an audit, it is necessary...

Question 5

Most public companies' audited financial statements are available on the SEC's EDGAR database.

Accepted Answer

The SEC requires public companies to file their audited financial statements on the EDGAR database, making them accessible to the public.

Question 6

What are the five categories of attestation services?

Accepted Answer

The answer of What are the five categories of attestation...

Question 7

Which one of the following is more difficult to evaluate objectively?

Accepted Answer

The efficiency and effectiveness of operations are more difficult to evaluate objectively because it involves analyzing various qualitative factors such as employee morale, customer satisfaction, and innovation, which cannot be measured quantitatively. In contrast, evaluating compliance with government regulations and presentation of financial statements can involve relying on set standards and guidelines, making the evaluation more objective.

Question 8

What is an engagement to attest on internal control over financial reporting?

Accepted Answer

The answer of What is an engagement to attest on...

Question 9

Two types of attestation services provided by CPA firms are audits and reviews. Discuss the similarities and differences between these two types of attestation services. Which type provides the least assurance?

Accepted Answer

The answer of Two types of attestation services provided by...

Question 10

Discuss the similarities and differences between financial statement audits, operational audits, and compliance audits. Give an example of each type.

Accepted Answer

The answer of Discuss the similarities and differences between financial...

Question 11

The Sarbanes-Oxley Act prohibits a CPA firm that audits a public company from providing which of the following types of services to that company?

Accepted Answer

The Sarbanes-Oxley Act prohibits a CPA firm that audits a public company from providing most consulting services to that company. This includes services related to information technology, financial information systems design and implementation, appraisal or valuation services, actuarial services, internal audit outsourcing services, management functions and human resources.

Question 12

CPA firms are never allowed to provide bookkeeping services for clients.

Accepted Answer

CPA firms are allowed to provide bookkeeping services for clients, but they must ensure that there is a clear separation of duties and that the bookkeeping work is not performed by the same individuals who perform audit or tax services for the same client. This is to maintain independence and avoid any conflicts of interest.

Question 13

An examination of part of an organization's procedures and methods for the purpose of evaluating efficiency and effectiveness is what type of audit?

Accepted Answer

An operational audit is designed to review specific processes or procedures within an organization in order to evaluate their efficiency and effectiveness. This type of audit is often focused on identifying areas where improvements can be made to increase productivity and reduce costs. In contrast, a compliance audit is focused on ensuring that an organization is following legal or regulatory requirements, while a financial statement audit is focused on verifying the accuracy of an organization's financial statements. A production audit may be used to evaluate a company's manufacturing operations, but it is not as broad in scope as an operational audit.

Question 14

Which of the following audits can be regarded as generally being a compliance audit?

Accepted Answer

IRS agents' examinations of taxpayer returns are compliance audits as they are conducted to ensure that taxpayers are in compliance with tax laws and regulations. The other options involve more systemic evaluations of controls and operations and may not necessarily focus on compliance with specific laws or regulations.

Question 15

Which of the following is not a SysTrust Services principle as defined by the AICPA?

Accepted Answer

The SysTrust Services principles as defined by the AICPA are security, availability, processing integrity, confidentiality, and privacy. Operational integrity is not included in the list.

Question 16

Three common types of attestation services are:

Accepted Answer

Audits, reviews, and attestations regarding internal controls are the three common types of attestation services. Audits involve a comprehensive examination of an organization's financial statements, internal controls, and compliance with laws and regulations. Reviews are less extensive and focus on providing limited assurance about financial statements. Attestations regarding internal controls involve providing assurance on the effectiveness of an organization's internal controls to prevent or detect fraud or errors.

Question 17

What is a WebTrust engagement? What is a SysTrust engagement? How do they differ?

Accepted Answer

The answer of What is a WebTrust engagement? What is...

Question 18

Section 404 of the Sarbanes-Oxley Act requires public companies to have an external auditor attest to their internal control over financial reporting.

Accepted Answer

Section 404 of the Sarbanes-Oxley Act does require public companies to have an external auditor attest to their internal control over financial reporting.

Question 19

Which of the following services provides the lowest level of assurance on a financial statement?

Accepted Answer

A review is a service where the accountant provides limited assurance on the financial statements, whereas an audit provides a higher level of assurance. Therefore, A review provides the lowest level of assurance on a financial statement.

Question 20

Which of the following are required to have a written report regarding the assertion of another party?

Accepted Answer

The question is incomplete and the options do not provide enough information to accurately answer the question. However, option B does include a code (11eaa634_0d14_0f73_842f_3511fc95f4d3_TB2671_00) which suggests that it may be referring to a specific regulation or policy that requires a written report in certain circumstances. Without further context, it is impossible to determine the exact answer.

Quiz 1: The Demand for Audit and Other Assurance Services

An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n) :