ACC 490 Final Exam
1. In determining the primary responsibility of the external auditor for a company’s financial statements, the auditor owes primary allegiance to:
2. AICPA auditing standards do not require auditors of financial statements to
3. The risk that the auditors’ own work will lead to the decision that material misstatements do not exist in the financial statements, when in fact such misstatements do exist, is
4. Confirmations of accounts receivable provide evidence primarily about these two assertions:
5. One of the typical characteristics of management fraud is
6. With respect to the concept of materiality, which one of the following statements is correct?
7. Which of the following is an advantage of computer-assisted audit tools and techniques (CAATTs)?
8. The primary purpose for obtaining an understanding of an audit client’s internal control is to
9. In most audits of large companies, internal control risk assessment contributes to audit efficiency, which means
10. Which of the following is a device designed to help the audit team obtain evidence about the control environment and about the accounting and control procedures of an audit client?
11. Which of the following statements is correct? As a result of the Sarbanes-Oxley Act of 2002,
12. Which of the following is an inappropriate description of management’s role in preparing financial statements and reports on internal control over financial reporting? Management has the primary responsibility for:
13. The second standard of fieldwork requires the auditor to do all of the following except:
14. The Sarbanes-Oxley Act prohibits public accounting firms from providing certain services to audit clients that are public companies. Which of the following services is not prohibited?
15. According to the AICPA’s ethical standards, an auditor would be considered independent in which of the following instances?
16. An engagement letter should be written before the start of an audit because:
17. If the auditor has concerns about the integrity of management, which of the following would not be an appropriate action?
18. Which of the following would not be considered a limitation of the audit risk model?
19. The auditor concludes that a public company has significant deficiencies in its internal controls over financial reporting. Which of the following is a proper response to this finding?
20. Which of the following would be considered a significant deficiency in an organization’s control environment?
21. Which of the following controls would be most effective in assisting the organization in achieving the completeness objective?
22. Segregation of duties is best accomplished when the auditor can determine that:
23. The auditor wishes to gather evidence to test the assertion that the client’s capitalization of leased equipment assets is properly valued. Which of the following sources of evidence will the auditor find to be the most persuasive (most reliable and relevant)?
24. An auditor determines that management integrity is high, the risk of account misstatements is low, and the client’s information system is reliable. Which of the following conclusions can be reached regarding the need to perform direct tests of account balances?
25. An auditor observes inventory held by the client and notes that some of the inventory appears to be old, but in good condition. Which of the following conclusions is justified by the audit procedure? I. The older inventory is obsolete. II. The inventory is owned by the company. III. Inventory needs to be reduced to current market value.
26. Which of the following statements is not true concerning the auditor’s documentation?
27. Which of the following statements are correct regarding access controls: I. Proper implementation of access controls requires the firm to identify all users and the access they should have to data. II. Retina scans cannot be duplicated and thus are the best method to authenticate users. III. Passwords are the most widely used method of authentication.
28. Which of the following procedures is least likely to be performed by an auditor using generalized audit software (GAS)?