Reference no: EM132712593

Problem 1: Within the context of quality control, the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide its personnel with

a. Technical training that assures proficiency as a valuation expert.

b. Professional education that is required in order to perform with due professional care.

c. Knowledge required to fulfill assigned responsibilities.

d. Knowledge required to perform a peer review.

Problem 2: Before accepting an engagement to audit a new client, a CPA is required to obtain

a. An assessment of fraud risk factors likely to cause material misstatements.

b. An understanding of the prospective client's industry and business.

c. The prospective client's signature to a written engagement letter.

d. The prospective client's consent to make inquires of the predecessor, if any.

Problem 3: Which of the following procedures would an auditor most likely perform in planning a financial statement audit?

a. Inquiring of a client's legal counsel concerning pending litigation

b. Comparing the financial statements to anticipated results

c. Examining computer-generated exception reports to verify the effectiveness of internal controls

d. Searching for unauthorized transactions that may aid in detecting unrecorded liabilities.

Problem 4: Hilaga Corp. maintains a large internal audit staff that reports directly to the accounting department. Audit reports prepared by the internal auditors indicate that the system is functioning as it should and that the accounting records are reliable. An independent auditor will probably.

a. Eliminate test of controls.

b. Increase the depth of study and evaluation of administrative controls.

c. avoid duplicating the work performed by the internal audit staff.

d. Place limited reliance on the work performed by the internal audit staff.

Problem 6:  To obtain an understanding of an entity's control environment, an auditor should concentrate on the substance of management's policies and procedures rather than their form because

a. Management may establish appropriate policies and procedures but not act them.

b. The board of directors may not be aware of management's attitude toward the control environment.

c. The auditor may believe that the policies and procedures are inappropriate for that particular entity.

d. The policies and procedures may be so weak that no reliance is contemplated by the auditor.