Multiple-choice

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授课：XXX Multiple choice (2 marks each)

Part 1

a. When people speak of an assurance engagement, which function of an auditor’s

work are they referring to?

1) Lending credibility to a client’s financial statements

2) Detecting fraud and embezzlement in a company

3) Lending credibility to an auditee’s financial statements

4) Performing a program results audit in a government agency

b. Company A hired Sampson & Delila, public accountants, to audit the financial

statements of Company B and deliver the audit report to Megabank. Which is the

client?

1) Megabank

2) Sampson & Delila

3) Company A

4) Company B

c. What is the objective of an audit of financial statements?

1) An expression of opinion on the fairness with which they present financial

position, results of operations, and cash flows in conformity with GAAP

2) An expression of opinion on the fairness with which they present financial

position, results of operations, and cash flows in conformity with the

ISA

3) An expression of opinion on the fairness with which they present financial

position, results of operations, and cash flows in conformity with GAAS

4) To obtain systematic and objective evidence about financial assertions

and report the results to interested users

d. Bankers who are processing loan applications from companies seeking large loans

will probably ask for financial statements audited by an independent auditor.

Why?

1) Financial statements are too complex for bankers to analyze themselves.

2) Bankers are too far away from company headquarters to perform accounting

and auditing themselves.

3) The consequences of making a bad loan are undesirable.

4) Bankers generally see a potential conflict of interest between company

managers who want to get loans and their needs for reliable financial

statements.

e. Which of the following forms of auditing is considered to have the most limited

objectives?

1) Operational auditing希望对大家有所帮助，多谢您的浏览！

授课：XXX 2) Performance auditing

3) Management auditing

4) Financial statement auditing

f. Independent auditors of financial statements perform audits that reduce and

control what?

1) The business risk faced by investors

2) The information risk faced by investors

3) The complexity of financial statements

4) Quality reviews performed by other public accounting firms

g. A public accountant developed a system for clients to enter transaction data

by remote terminal directly into the accountant’s computer. The accountant’s

system processes the data and prints monthly financial statements. When

delivered to the clients, what should these financial statements include?

1) A standard unqualified audit report, because the financial statements

contain no material misstatements because the accountant’s system has

adequate controls

2) An adverse audit report

3) A report containing a description of the character of the examination

and the degree of responsibility the accountant is taking

4) A description of the remote terminal system and related controls

h. An auditor expresses an opinion with absolute assurance in which of the

following:

1) Audit

2) Review

3) Compilation

4) None of the above

i. An auditor finds that a client has not capitalized material finance leases in

the financial statements. When considering how the materiality of this departure

from GAAP should influence the audit opinion, what are the auditor’s options?

1) An unqualified opinion or qualified opinion

2) A disclaimer of opinion or qualified opinion

3) An unqualified opinion with a modification to the scope paragraph to

explain the nature of the GAAP departure

4) A qualified opinion or adverse opinion

j. A company accomplished an early repayment of debt resulting in a large gain and

is therefore showing an unusually large net income. The nature of the transaction

is appropriately disclosed in the notes to the financial statements. What are

the auditor’s reporting choices?希望对大家有所帮助，多谢您的浏览！

授课：XXX 1) Give a qualified opinion and explain that the large net income is unusual

and may be misleading.

2) Give an adverse opinion and explain that the large net income is such

that the financial statements, as a whole, are misleading.

3) Explain the situation and give a disclaimer of opinion.

4) Give the standard unqualified audit report.

k. ABC Incorporated is currently evaluating proposals to acquire a new company to

improve its competitiveness. The managers of ABC must choose between two

proposals and decided to engage an accountant in public practice to provide

advice regarding the tax implications of each proposed investment. The terms

of the engagement require the accountant to write a report to ABC outlining the