The first general standard of the PCAOB requires that an audit be

performed by which type of person?

a. An auditor with seasoned judgment in varying degrees of
supervision and review.
b. An auditor with appropriate technical training and proficiency.
c. An auditor with adequate knowledge of the standards of field
work and reporting.
d. An auditor satisfying the independence standards.
b. An auditor with appropriate technical training and proficiency.
Which auditing standards apply to private companies?
a. The AICPA Standards.
b. The IASSB Standards.
c. The PCAOB Standards.
d. All of the above.
a. The AICPA Standards.
The AICPA includes which of the following categories that guide
the conduct of an audit?
a. Purpose of an audit and premise upon which an audit is
conducted.
b. Responsibilities.
c. Performance.
d. All of the above.
d. All of the above.
What is the scope of applicability of the auditing standards of the
AICPA?
a. Nonpublic companies traded in non-U.S. markets.
b. Nonpublic companies in the U.S.
c. Public companies traded in non-U.S. markets.
d. Public companies traded in the U.S.
b. Nonpublic companies in the U.S.

To satisfy the fieldwork standards, what must an auditor do?

a. Act with due care.
b. Gather sufficient appropriate evidence.
c. Be independent in mental attitude.
d. Have adequate knowledge about the client's industry.
e. All of the above.
b. Gather sufficient appropriate evidence.
Which one of the following organizations provides auditing
standards for public companies?
a. GAO.
b. AICPA.
c. GAAP.
d. PCAOB.
d. PCAOB.
Which one of the following attributes is not required of an auditor?
a. Independence.
b. Bias.
c. Integrity.
d. Technical competence.
b. Bias.
The standards of competence, independence, and due
professional care are covered by what standards?
a. General standards.
b. Standards of fieldwork.
c. Reporting standards.
d. None of the above.
a. General standards.
What are the PCAOB standards that present guidance in testing
assertions and planning for the audit are known as?
a. General standards.
b. Fieldwork standards.
c. Reporting standards.
d. None of the above.
b. Fieldwork standards.

What are the PCAOB standards that cover the essential elements
of communication, the criteria against which the assertions were
tested, and an explanation of the basis for the auditor's opinion
are known as?
a. General standards.
b. Standards of fieldwork.
c. Standards of reporting.
d. None of the above.
c. Standards of reporting.
Which concept is referred to as the cornerstone of auditing?
a. Due professional care.
b. Independence.
c. Technical training.
d. None of the above.
b. Independence.
Which assertion addresses whether all transactions and accounts
that should be included in the financial statements are included?
a. Existence.
b. Valuation.
c. Completeness.
d. Rights and Obligations
c. Completeness.
Which assertion addresses whether the financial statements items
are properly classified in the financial statements?
a. Completeness.
b. Existence.
c. Valuation.
d. Presentation and Disclosure.
d. Presentation and Disclosure.

Which of the following groups are committed to the convergence

of the auditing standards?
a. IAASB.
b. PCAOB.
c. AICPA.
d. Both A and C.
e. All of the above.
d. Both A (IAASB) and C (AICPA).
Rather than keeping the ten standards, what did the AICPA
develop?
a. Seven Standards.
b. Seven Concepts.
c. Seven Fundamental Principles.
d. Seven Governing Principles.
c. Seven Fundamental Principles.
Which of the following is not a type of audit procedure?
a. Analytical procedures.
b. Scanning.
c. Reviewing.
d. Observation.
c. Reviewing.
What does the quality of the evidence an auditor collects depend
upon?
a. The nature of the procedures.
b. The extent of the procedures.
c. The timing of the procedures.
d. Both A and C.
e. All of the above.
e. All of the above.

Which of the following is not required under the general standards

of GAAS?
a. Technical training of the professionals.
b. Independence of the auditor in fact and appearance.
c. Conduct of an audit with the skill and care of a professional.
d. Review of the all of work and audit documentation of the audit
staff.
e. None of the above are required.
d. Review of the all of work and audit documentation of the audit
staff.
The proper supervision of audit assistants is a requirement of
which of the Generally Accepted Auditing Standards?
a. General Standards.
b. Standards of Fieldwork.
c. Standards of Reporting.
d. Standards of Quality Control.
e. None of the above.
b. Standards of Fieldwork.
Which one of the following is a reporting standard requirement?
a. The auditor will state explicitly whether the financial statements
are fairly presented in accordance with the applicable financial
reporting framework.
b. The auditor will identify in the auditor's report, those
circumstances in which auditing principles have not been
consistently observed in the current period in comparison to the
preceding period.
c. The auditor will review adjusting journal entries for accuracy,
and if the auditor concludes those entries are not reasonable
accurate, the auditor must so state in the auditor's report.
d. The auditor will express an unqualified opinion on the financial
statements, or will conduct additional audit procedures until such
an opinion can be expressed.
e. Both a and b.
e. Both a and b.

Which of the following statements about the auditing standards

issued by the AICPA is true?
a. The auditing standards issued by the AICPA are no longer
recognized by the PCAOB.
b. The auditing standards issued by the AICPA are no longer
recognized by the profession because the AICPA voted itself out
of existence.
c. The auditing standards issued by the AICPA continue to be
issued by that organization for audits of public companies.
d. The auditing standards issued by the AICPA were used by the
PCAOB as a starting point.
d. The auditing standards issued by the AICPA were used by the
PCAOB as a starting point.
Which of the following is a reason why an auditor needs an
understanding of internal controls?
a. To provide individual comments on internal control noncompliance.
b. To become comfortable that the client will pay its audit bills.
c. To assess materiality.
d. To assess the risk of possible misstatements in the financial
statements.
d. To assess the risk of possible misstatements in the financial
statements.
Which of the following is not a reason why an auditor obtains an
understanding of internal controls?
a. Understanding the entity's internal control is a requirement of
GAAS.
b. The auditor must use the information to assess the risk of
material misstatements arising from the lack of internal control.
c. It is the primary basis for the audit report.
d. It assists the auditor in designing the nature, timing and extent
of further audit procedures.
d. It assists the auditor in designing the nature, timing and extent of
further audit procedures.

Which of the following is not a typical accounting cycle?

a. Revenue.
b. Inventory.
c. Cash.
d. Internal Controls.
d. Internal Controls.
Which of the following statements about assertions is true?
a. All assertions are equally important for all accounts.
b. The importance of an assertion depends upon the account.
c. Assertions are not related to accounts.
d. None of the above.
b. The importance of an assertion depends upon the account.
Which of the following assertions would the auditor usually
consider most relevant for accounts payable?
a. Existence.
b. Valuation.
c. Disclosure.
d. Completeness.
d. Completeness.
Which of the following is a use of audit documentation?
a. Assisting the engagement team in planning and performing the
audit.
b. Assisting members of the engagement team responsible for
supervising and reviewing the audit work.
c. Retaining a record of matters of continuing significance to
future audits of the same organization.
d. All of the above.
d. All of the above.
Which of the following factors influence the risk of material
misstatement?
a. The business risks.
b. Management incentives.
c. IT risks.
d. All of the above.
d. All of the above.

What does business risk include?

a. Economic factors.
b. Competitive factors.
c. Regulatory risk.
d. All of the above.
d. All of the above.
At what level does the auditor assess the risk of material
misstatement?
a. The financial statement level.
b. The company level.
c. The assertion level.
d. Both A and C.
e. All of the above.
d. Both A (the financial statement level) and C (the assertion level).
What does the effectiveness of internal controls influence?
a. Inherent risk.
b. Control risk.
c. Risk of material misstatement.
d. Both B and C.
b. Control risk.
What organization continues to set auditing standards for firms
auditing private companies?
a. FASB.
b. GAO.
c. SEC.
d. AICPA.
d. AICPA.
Which of the following statements about the AICPA is true?
a. The AIPCA is historically self-regulated.
b. The AIPCA is regulated by the federal government.
c. The AIPCA is regulated the state governments.
d. The AIPCA is a new organization established by an act of
congress in 2002.
a. The AIPCA is historically self-regulated.

Which document is used by auditors to formally accept a new

client?
a. Management representation letter.
b. Audit Report.
c. Engagement Letter.
d. Audit Contract.
c. Engagement Letter.
Which of the following items is not included in the engagement
letter?
a. The responsibilities of the auditor.
b. The responsibilities of management.
c. The objective of the financial statements.
d. Identification of the applicable financial reporting framework for
the preparation of the financial statements.
c. The objective of the financial statements.
With a substantive audit strategy, what is an auditor likely to do?
a. Extensively tests internal controls.
b. Limit the testing of internal controls.
c. Not assess control risks.
d. Issue an adverse opinion on the financial statements.
b. Limit the testing of internal controls.
Which of the following is a type of control that the PCAOB
recommends the auditor to consider in evaluating whether or not
the organization has sufficiently addressed fraud risk?
a. Controls over significant, unusual transactions, particularly
those that result in late or unusual journal entries.
b. Controls over entries that relate to foreign sales.
c. Controls over related-party transactions.
d. Both A and C
e. All of the above.
Both A ( Controls over significant, unusual transactions, particularly
those that result in late or unusual journal entries) and C (Controls
over related-party transactions).

Which of the following would not affect an auditor's judgment

concerning internal controls?
a. The assertion being tested.
b. The design of the control.
c. The operation of the control.
d. The level of inherent risk.
a. The assertion being tested.
With a dual purpose test, what is an auditor likely to do?
a. Perform a substantive procedure concurrently with a test of a
control.
b. Perform a substantive procedure concurrently with a risk
assessment test.
c. Perform a risk assessment test concurrently with a test of a
control.
d. None of the above.
a. Perform a substantive procedure concurrently with a test of a
control.
Which of the following is not a planning procedure performed to
develop an audit program?
a. Determination of client company risks.
b. Determination of the audit opinion that will be rendered.
c. Development of a preliminary understanding of the quality of
the client's internal control.
d. Anticipation of audit adjustments that will be required.
b. Determination of the audit opinion that will be rendered.
Which of the following factors affect the substantive procedures
performed in an audit?
a. The subjectivity of accounting process.
b. Size of the account.
c. Effectiveness of the relevant controls.
d. All of the above affect the substantive procedure that are
performed.
b. Size of the account.

Which of the following factors suggest that control risk should be

assessed at a low level?
a. A lack of segregation of duties.
b. A lack of approval for significant transactions.
c. A competent objective internal auditor.
d. Both A and C.
c. A competent objective internal auditor.
The Standards of the PCAOB can be broken up in to three
categories, i.e., general, fieldwork, and reporting. Which of the
following standards is one of the general standards?
a. Training and proficiency.
b. Internal control.
c. Sufficient appropriate evidence.
d. Consistency.
a. Training and proficiency.
The Standards of the PCAOB can be broken up into three
categories, i.e., general, fieldwork, and reporting. Which of the
following concepts is considered in the reporting standards?
a. Consistency in the application of accounting principles.
b. Sufficient appropriate evidence.
c. Internal control.
d. Planning and supervision.
a. Consistency in the application of accounting principles.
The Standards of the PCAOB can be broken up into three
categories, i.e., general, fieldwork, and reporting. Which of the
following is considered in the fieldwork standards?
a. Independence.
b. GAAP.
c. Internal control.
d. Disclosure.
c. Internal control.