Warning signs that cause the auditor to question management integrity must be taken seriously and pursued vigorously. Which of the following may lead the auditor to suspect management dishonesty? a. The client has been named as a defendant in a product liability suit. b. The client has experienced a decrease in revenue from increased import competition. c. A new statutory regulation making customer licenses more difficult to obtain may adversely affect the client's operations. d. The president and chief executive officer of the client corporation has held numerous meetings with the controller for the purpose of discussing accounting practices that will maximize reported profits

Warning signs that cause the auditor to
question management integrity must be
taken seriously and pursued vigorously.
Which of the following may lead the auditor
to suspect management dishonesty?
a. The client has been named as a
defendant in a product liability suit.
b. The client has experienced a decrease in
revenue from increased import
competition.
c. A new statutory regulation making
customer licenses more difficult to obtain
may adversely affect the client's
operations.
d. The president and chief executive
officer of the client corporation has
held numerous meetings with the
controller for the purpose of
discussing accounting practices that
will maximize reported profits
by

1 Answer

Answer :

The president and chief executive
officer of the client corporation has
held numerous meetings with the
controller for the purpose of
discussing accounting practices that
will maximize reported profits
by

Related questions

What is the most likely course of action that will be taken by an auditor in assessing management integrity? a. Tour the client premises. b. Research the prospective client’s related parties. c. Research the background and histories of officers d. Review the minutes of the board of directors

Description : What is the most likely course of action that will be taken by an auditor in assessing management integrity? a. Tour the client premises. b. Research the prospective client’s related parties. c. Research the background and histories of officers d. Review the minutes of the board of directors

Last Answer : Research the background and histories of officers

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

A CPA establishes quality control policies and procedures for deciding whether to accept a new client or continue to perform services for a current client. The primary purpose for establishing such policies and procedures is a. To enable the auditor to attest to the integrity or reliability of a client. b. To comply with the quality control standards established by regulatory bodies. c. To minimize the likelihood of association with clients whosemanagement lacks integrity.d. To lessen the exposure to litigationresulting from failure to detectirregularities in client financialstatements

Description : A CPA establishes quality control policies and procedures for deciding whether to accept a new client or continue to perform services for a current client. The primary purpose ... resulting from failure to detect irregularities in client financial statements association with clients whose

Last Answer : To minimize the likelihood of association with clients whose management lacks integrity

The most likely explanation why the auditor’s examination cannot reasonably be expected to bring all illegal acts by the client to the auditor’s attention is that a. Illegal acts are perpetrated by management override of internal control. b. Illegal acts by clients often relate to operating aspects rather than accounting aspects. c. The client’s internal control may be so strong that the auditor performs only minimal substantive testing. d. Illegal acts may be perpetrated by the only person in the client’s organization

Description : The most likely explanation why the auditor's examination cannot reasonably be expected to bring all illegal acts by the client to the auditor's attention is that a. Illegal acts are perpetrated by ... testing. d. Illegal acts may be perpetrated by the only person in the client's organization

Last Answer : Illegal acts by clients often relate to operating aspects rather than accounting aspects

When an auditor believes that an understanding with the client has not been established, he or she should ordinarily a. Perform the audit with increased professional skepticism. b. Decline to accept or perform the audit. c. Review the client’s financial reports. d. Obtain information about the client’s business and the industry where it operates

Description : When an auditor believes that an understanding with the client has not been established, he or she should ordinarily a. Perform the audit with increased professional skepticism. b. Decline to accept ... reports. d. Obtain information about the client's business and the industry where it operates

Last Answer : Decline to accept or perform the audit.

Which of the following will an auditor least likely discuss with the former auditors of a potential client prior to acceptance? a. Disagreements with management regarding accounting principles b. Integrity of management c. Fees charged for services d. Reasons for changing audit firms

Description : Which of the following will an auditor least likely discuss with the former auditors of a potential client prior to acceptance? a. Disagreements with management regarding accounting principles b. Integrity of management c. Fees charged for services d. Reasons for changing audit firms

Last Answer : Fees charged for services

Which of the following will an auditor least likely discuss with the former auditors of a potential client prior to acceptance? a. Disagreements with management regarding accounting principles b. Integrity of management c. Fees charged for services d. Reasons for changing audit firms

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Last Answer : Fees charged for services

An auditor is required to obtain a basic understanding of the client's internal control to plan the audit. The auditor may then decide to perform tests of controls on alinternal control procedures a. That would aid in preventing fraud. b. Documented in the flowchart. c. Considered to be weaknesses that might allow errors to enter the accounting system. d. Considered to be strengths for which the auditor desires further reduction in the assessed level of control risk.l

Description : An auditor is required to obtain a basic understanding of the client's internal control to plan the audit. The auditor may then decide to perform tests of controls on all internal control ... to be strengths for which the auditor desires further reduction in the assessed level of control risk.

Last Answer : Considered to be strengths for which the auditor desires further reduction in the assessed level of control risk.

Before continuing the client relationship, the auditor should perform the following except: a. Communicate with the predecessor auditor. b. Evaluate client in case of change of client’s businesc. Evaluate client’s integrity. d. Evaluate financial condition of the cliens

Description : Before continuing the client relationship, the auditor should perform the following except: a. Communicate with the predecessor auditor. b. Evaluate client in case of change of client’s business c. Evaluate client’s integrity. d. Evaluate financial condition of the clien

Last Answer : Communicate with the predecessor auditor

What will an auditor who has been proposed for an audit engagement usually do prior to accepting a new client? a. Draft the financial statements of the client as a measure of goodwilb. With the permission from the prospective client, contact the predecessor auditor to determine if there are any disagreements between the client and the audit firms. c. Obtain the potential client's permission to talk to the former auditor and review work papers. d. Perform a peer review on the potential client in accordance with professional standardsl

Description : What will an auditor who has been proposed for an audit engagement usually do prior to accepting a new client? a. Draft the financial statements of the client as a measure of goodwill b ... review work papers. d. Perform a peer review on the potential client in accordance with professional standards

Last Answer : With the permission from the prospective client, contact the predecessor auditor to determine if there are any disagreements between the client and the audit firms

Audit programs are modified to suit the circumstances on particular engagements. A complete audit program for an engagement generally should be developed a. Prior to beginning the actual audit work. b. After the auditor has completed an evaluation of the existing internal accounting control. c. After reviewing the client's accounting records and procedures. d. When the audit engagement letter is prepared

Description : Audit programs are modified to suit the circumstances on particular engagements. A complete audit program for an engagement generally should be developed a. Prior to beginning the actual audit work. ... the client's accounting records and procedures. d. When the audit engagement letter is prepared

Last Answer : After the auditor has completed an evaluation of the existing internal accounting contro

An engagement letter should be written before the start of an audit because a. It specifies the client's responsibility for preparing schedules and making the records available to the auditor. b. It may limit the auditor's legal liability by specifying the auditor's responsibilities. c. It specifies the basis for billing the audit for the upcoming year. d. All of the above

Description : An engagement letter should be written before the start of an audit because a. It specifies the client's responsibility for preparing schedules and making the records available to the auditor. b. It may ... It specifies the basis for billing the audit for the upcoming year. d. All of the above

Last Answer : All of the above

Which of the following auditor concerns most likely could be so serious that the auditor concludes that a financial statement audit cannot be conducted? a. The entity has no formal written code of conduct b. The integrity of the entity’s management is suspect c. Procedures requiring segregation of duties are subject to management override d. Management fails to modify prescribed controls for changes in conditions

Description : Which of the following auditor concerns most likely could be so serious that the auditor concludes that a financial statement audit cannot be conducted? a. The entity has no formal written ... subject to management override d. Management fails to modify prescribed controls for changes in conditions

Last Answer : The integrity of the entity’s management is suspect

Ethically, the auditor could: a. Advertise only as to his expertise in preparing income tax returns. b. Base his audit fee on a percentage of the proceeds of his client’s stock issue. c. Perform an examination for a financially distressed client at less than his customary fees. d. Own preferred stock in a corporation which is an audit client.

Description : Ethically, the auditor could: a. Advertise only as to his expertise in preparing income tax returns. b. Base his audit fee on a percentage of the proceeds of his client's stock issue. c. Perform ... at less than his customary fees. d. Own preferred stock in a corporation which is an audit client.

Last Answer : Perform an examination for a financially distressed client at less than his customary fees.

The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered." This is an example of a. Expectation gap. b. An attitude of professional skepticism. c. Due diligence. d. An ethical requirement

Description : The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered." This is an example of a. Expectation gap. b. An attitude of professional skepticism. c. Due diligence. d. An ethical requirement

Last Answer : An attitude of professional skepticism.

Which of the following is least likely included in an auditor’s inquiry of management while obtaining information to identify the risks of material misstatement due to fraud? a. Are financial reporting operations controlled by and limited to one location? b. Does it have knowledge of fraud or suspect fraud? c. Does it have programs to mitigate fraud risks? d. Has it reported to the audit committee the nature of the company's internal control?

Description : Which of the following is least likely included in an auditor's inquiry of management while obtaining information to identify the risks of material misstatement due to fraud? a. Are financial reporting ... d. Has it reported to the audit committee the nature of the company's internal control?

Last Answer : Are financial reporting operations controlled by and limited to one location?

An extensive understanding of the client's business and industry and knowledge about the company's operations are essential for doing an adequate audit. For a new client, most of this information is obtained a. From the Securities and Exchange Commission. b. From the predecessor auditor. c. From the permanent file. d. At the client's premises

Description : An extensive understanding of the client's business and industry and knowledge about the company's operations are essential for doing an adequate audit. For a new client, most of this information is obtained ... . From the predecessor auditor. c. From the permanent file. d. At the client's premises

Last Answer : At the client's premises

An extensive understanding of the client's business and industry and knowledge about the company's operations are essential for doing an adequate audit. For a new client, most of this information is obtained a. From the Securities and Exchange Commission. b. From the predecessor auditor. c. From the permanent file. d. At the client's premises.

Description : An extensive understanding of the client's business and industry and knowledge about the company's operations are essential for doing an adequate audit. For a new client, most of this information is obtained ... From the predecessor auditor. c. From the permanent file. d. At the client's premises.

Last Answer : At the client's premises.

Before accepting an engagement to audit a new client, a CPA is required to obtain a. An understanding of the prospective client’s industry and business. b. The prospective client’s signature to the engagement letter. c. A preliminary understanding of the prospective client’s control environment. d. The prospective client’s consent to make inquiries of the predecessor auditor, if any.

Description : Before accepting an engagement to audit a new client, a CPA is required to obtain a. An understanding of the prospective client's industry and business. b. The prospective client's signature to ... . d. The prospective client's consent to make inquiries of the predecessor auditor, if any.

Last Answer : The prospective client’s consent to make inquiries of the predecessor auditor, if any.

The auditor is not liable to his client for a. Negligence. b. Bad faith. c. Errors of judgment d. Dishonesty

Description : The auditor is not liable to his client for a. Negligence. b. Bad faith. c. Errors of judgment d. Dishonesty

Last Answer : Errors of judgment

Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding a. Disagreements the predecessor had with the client concerning auditing procedures and accounting principles. b. The predecessor’s evaluation of matters of continuing accounting significance. c. The degree of cooperation the predecessor received concerning the inquiry of the client’s lawyer. d. The predecessor’s assessments of inherent risk and judgments about materiality

Description : Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding a. Disagreements the predecessor had with the client concerning auditing ... lawyer. d. The predecessor's assessments of inherent risk and judgments about materiality

Last Answer : Disagreements the predecessor had with the client concerning auditing procedures and accounting principles.

Which of the following does an auditor least likely perform in assessing audit risk? a. Understand the economic substance of significant transactions completed by the client. b. Understand the entity and the industry in which it operates. c. Gather audit evidence in support of recorded transactions. d. Obtain an understanding of the client's system of internal contro

Description : Which of the following does an auditor least likely perform in assessing audit risk? a. Understand the economic substance of significant transactions completed by the client. b. Understand the entity ... of recorded transactions. d. Obtain an understanding of the client's system of internal contro

Last Answer : Gather audit evidence in support of recorded transactions

To obtain an understanding of a continuing client’s business in planning an audit, an auditor most likely would a. Read specialized industry journals. b. Review prior year working papers and the permanent file for the client. c. Reevaluate the client’s internal control environment. d. Perform tests of details of transactions and balances

Description : To obtain an understanding of a continuing client's business in planning an audit, an auditor most likely would a. Read specialized industry journals. b. Review prior year working papers and ... the client's internal control environment. d. Perform tests of details of transactions and balances

Last Answer : Review prior year working papers and the permanent file for the client

Which of the following statements is correct? a. Sufficiency refers to the quality of evidence, while appropriateness refers to the quantity of evidence. b. The reliability of evidence is influenced not by its nature but by its source. c. The performance of consulting services for audit clients does not, in and of itself, impair the auditor’s independence. d. A belief that management and those charged with governance are honest and have integrity relieves the auditor of the need to maintain professional scepticism.

Description : Which of the following statements is correct? a. Sufficiency refers to the quality of evidence, while appropriateness refers to the quantity of evidence. b. The reliability of evidence is ... are honest and have integrity relieves the auditor of the need to maintain professional scepticism.

Last Answer : The performance of consulting services for audit clients does not, in and of itself, impair the auditor’s independence

Which of the following procedures would an auditor be most likely to perform in planning a financial statement audit? a. Reviewing investment transactions of the audit period to determine whether related parties were created. b. Performing analytical procedures to identify areas that may represent specific risks. c. Obtaining a written representation letter from the client to emphasize management's responsibilities. d. Reading the minutes of stockholder and director meetings to discover whether any unusual transactions have occurred.

Description : Which of the following procedures would an auditor be most likely to perform in planning a financial statement audit? a. Reviewing investment transactions of the audit period to determine ... the minutes of stockholder and director meetings to discover whether any unusual transactions have occurred.

Last Answer : Performing analytical procedures to identify areas that may represent specific risks.

A successor auditor is required to communicate with the previous auditor. The primary concern in this communication is a. Information which will help the successor auditor in determining whether the client management has integrity. b. To learn about client by examining predecessor's working papers. c. To enable successor auditor to perform a more efficient audit. d. To save successor auditor time and money in gathering data.

Description : A successor auditor is required to communicate with the previous auditor. The primary concern in this communication is a. Information which will help the successor auditor in determining whether the client ... a more efficient audit. d. To save successor auditor time and money in gathering data.

Last Answer : Information which will help the successor auditor in determining whether the client management has integrity.

For initial audits, additional matters the auditor may consider in the overall audit strategy and audit plan include the following except a. Major issues including the application of accounting principles or any auditing and reporting standards discussed with management. b. Confirmation of material accounts receivable balance at the end of the year. c. Planned audit procedure to obtain sufficient appropriate audit evidence regarding opening balances. d. Assignment of firm personnel with appropriate levels of capabilities and competence to respond to anticipated significant risks

Description : For initial audits, additional matters the auditor may consider in the overall audit strategy and audit plan include the following except a. Major issues including the application of ... firm personnel with appropriate levels of capabilities and competence to respond to anticipated significant risks

Last Answer : Confirmation of material accounts receivable balance at the end of the year.

A CPA who has been retained by a client that operates in an industry totally new to him a. May not accept such an engagement. b. May accept the engagement only if the accounting firm specializes in the audit of commercial banks. c. May accept the engagement after attaining a suitable level of understanding of the transactions and accounting practices unique to commercial banking. d. May accept the engagement because training as a CPA transcends unique industry characteristics

Description : A CPA who has been retained by a client that operates in an industry totally new to him a. May not accept such an engagement. b. May accept the engagement only if the ... to commercial banking. d. May accept the engagement because training as a CPA transcends unique industry characteristics

Last Answer : May accept the engagement after attaining a suitable level of understanding of the transactions and accounting practices unique to commercial banking.

In assessing the technical competence of an internal auditor, an external auditor most likely would obtain information about the a. Organizational level to which the internal auditor reports. b. Quality of working paper documentation, reports, and recommendations. c. Influence of management on the internal auditor's duties. d. Entity's commitment to integrity and ethical values.

Description : In assessing the technical competence of an internal auditor, an external auditor most likely would obtain information about the a. Organizational level to which the internal auditor reports. b. Quality of ... on the internal auditor's duties. d. Entity's commitment to integrity and ethical values.

Last Answer : Quality of working paper documentation, reports, and recommendations

Which of the following is a violation Confidentiality rule of the Code of Ethics? a. The CPA, in response to a court subpoena, submits auditor-prepared workpapers as evidence of possible illegal acts perpetrated by the client. b. The CPA discloses to the board of directors a scheme concocted by top management to intentionally inflate earningsc. The CPA warns Client B as to theinadvisability of acquiring Client A.The CPA bases this warning onknowledge of Client A's financialcondition and a belief that themanagement of Client A lacksintegrity. This knowledge wasobtained by the CPA as a result ofauditing Client A during the pastseveral year is.d. The CPA, when questioned in court,admits to knowledge of certain illegalacts perpetrated by the client.

Description : Which of the following is a violation Confidentiality rule of the Code of Ethics? a. The CPA, in response to a court subpoena, submits auditor-prepared workpapers as evidence of possible illegal ... CPA, when questioned in court, admits to knowledge of certain illegal acts perpetrated by the client.

Last Answer : The CPA warns Client B as to the inadvisability of acquiring Client A. The CPA bases this warning on knowledge of Client A's financial condition and a belief that the management of Client A lacks integrity ... was obtained by the CPA as a result of auditing Client A during the past several year is.

Which of the following is an incorrect statement relating to the theoretical framework of auditing? a. Effective internal control structure reduces the probability of fraud or irregularities in an organization. b. Application of generally accepted accounting principles results in a fair presentation of financial statements. c. When examining financial data foropinion thereon, the auditor actsexclusively in the capacity of an auditor.d. In collecting evidence, auditorsshould maintain an attitude of trustabout their clients' assertions. the purpose of expressing an independent

Description : Which of the following is an incorrect statement relating to the theoretical framework of auditing? a. Effective internal control structure reduces the probability of fraud or irregularities in ... collecting evidence, auditors should maintain an attitude of trust about their clients' assertions.

Last Answer : In collecting evidence, auditors should maintain an attitude of trust about their clients' assertions.

The responsibility for the detection and prevention of noncompliance with laws and regulations rests with a. The auditor b. The client's legal counsel c. The auditor’s legal counsel d. The client management

Description : The responsibility for the detection and prevention of noncompliance with laws and regulations rests with a. The auditor b. The client's legal counsel c. The auditor’s legal counsel d. The client management

Last Answer : The client management

The responsibility for the detection and prevention of errors, fraud and noncompliance with laws and regulations rests with: a. Auditor b. Client's legal counsel c. Internal auditor d. Client management

Description : The responsibility for the detection and prevention of errors, fraud and noncompliance with laws and regulations rests with: a. Auditor b. Client's legal counsel c. Internal auditor d. Client management

Last Answer : Client management

A successor auditor most likely would make specific inquiries of the predecessor auditor regarding a. Specialized accounting principles of the client's industry. b. Disagreements with management as to auditing procedures. c. The competency of the client's internal audit staff. d. The uncertainty inherent in applying sampling procedures.

Description : A successor auditor most likely would make specific inquiries of the predecessor auditor regarding a. Specialized accounting principles of the client's industry. b. Disagreements with management as to ... the client's internal audit staff. d. The uncertainty inherent in applying sampling procedures.

Last Answer : Disagreements with management as to auditing procedures

The independent auditor lends credibility to client financial statements by a. Stating in the auditor’s management letter that the examination was made in accordance with PSAs b. Attaching an auditor’s opinion to the client’s financial statements. c. Testifying under oath about client financial statements. d. Maintaining clear-cut distinctions between management representations and auditor’s representations.

Description : The independent auditor lends credibility to client financial statements by a. Stating in the auditor's management letter that the examination was made in accordance with PSAs b. ... statements. d. Maintaining clear-cut distinctions between management representations and auditor's representations.

Last Answer : Attaching an auditor’s opinion to the client’s financial statements.

An investor, while reading the financial statements of Star Corporation, learned that the statements are accompanied by an unqualified auditor's report. From this the investor may conclude that: a. The auditor has ascertained that Silver's financial statements have been prepared accurately. b. The auditor is satisfied that Silver is operationally efficient. c. Any disputes over significant accounting issues have been settled to the auditor's satisfaction. d. Informative disclosures in the financial statements but not necessarily in the notes to financial statements are to be regarded as reasonably adequate

Description : An investor, while reading the financial statements of Star Corporation, learned that the statements are accompanied by an unqualified auditor's report. From this the investor may conclude that: a ... but not necessarily in the notes to financial statements are to be regarded as reasonably adequate

Last Answer : Any disputes over significant accounting issues have been settled to the auditor's satisfaction.

To be independent, the auditor: a. Must be impartial when dealing with the client. b. Cannot place any reliance on the client's verbal and written assertions. c. Is responsible only to third-party users of the financial statements. d. Cannot perform any consulting servicesfor an audit client.

Description : To be independent, the auditor: a. Must be impartial when dealing with the client. b. Cannot place any reliance on the client's verbal and written assertions. c. Is responsible only to third-party users of the financial statements. d. Cannot perform any consulting servicesfor an audit client.

Last Answer : Must be impartial when dealing with the client

Operational audits generally have been conducted by internal and COA auditors, but may be performed by certified public accountants. A primary purpose of an operational audit is to provide: a. A measure of management performance in meeting organizational goalsb. The results of internal examinations of financial and accounting matters to a company's top-level management. c. Aid to the independent-auditor, who is conducting the examination of the financial statements. d. A means of assurance that internal accounting controls are functioning as planned.

Description : Operational audits generally have been conducted by internal and COA auditors, but may be performed by certified public accountants. A primary purpose of an operational audit is to provide: ... statements. d. A means of assurance that internal accounting controls are functioning as planned

Last Answer : A measure of management performance in meeting organizational goals

Which of the following best describes why publicly-traded corporations follow the practice of having the outside auditor appointed by the board of directors or elected by the stockholders? a. To comply with the regulations of the Accounting Standards Council. b. To emphasize auditor independence from the management of the corporation. c. To encourage a policy of rotation of the independent auditors. d. To provide the corporate owners with an opportunity to voice their opinion concerning the quality of the auditing firm selected by the director

Description : Which of the following best describes why publicly-traded corporations follow the practice of having the outside auditor appointed by the board of directors or elected by the stockholders? a. ... opportunity to voice their opinion concerning the quality of the auditing firm selected by the director

Last Answer : To emphasize auditor independence from the management of the corporation

Information risk refers to the risk that a. The client may not be able to remain in business. b. Errors and frauds would not be detected by the auditor's procedures. c. The auditor may express an unqualified opinion on financial statements that arematerial misstated.d. The client's financial statementsmay be materially false andmisleading

Description : Information risk refers to the risk that a. The client may not be able to remain in business. b. Errors and frauds would not be detected by the auditor's procedures. c. ... financial statements that arematerial misstated. d. The client's financial statements may be materially false and misleading

Last Answer : The client's financial statements may be materially false and misleading

Which of the following is an indication of lack of objectivity of an auditor? a. The auditor believes that accounts receivable may not be collectible, but accepts management's opinion without an independent evaluation. b. In preparing client's tax return, the CPA encourages client to take a deduction which the CPA believes is valid, but for which there is some but not complete support. c. Both a and b above would be a violation d. Neither would be a violation

Description : Which of the following is an indication of lack of objectivity of an auditor? a. The auditor believes that accounts receivable may not be collectible, but accepts management's opinion without an independent evaluation. ... . c. Both a and b above would be a violation d. Neither would be a violation

Last Answer : The auditor believes that accounts receivable may not be collectible, but accepts management's opinion without an independent evaluation.

The auditor is most likely to presume that a high risk of fraud exists if a. The client is a multinational companythat does business in numerous foreigncountries.b. The client does business with severalrelated parties.c. Inadequate segregation of dutiesplaces an employee in a position toperpetrate and conceal thefts.d. Inadequate employee training results inlengthy EDP exception reports eachmonth

Description : The auditor is most likely to presume that a high risk of fraud exists if a. The client is a multinational company that does business in numerous foreign countries. b. The client ... perpetrate and conceal thefts. d. Inadequate employee training results in lengthy EDP exception reports each month

Last Answer : Inadequate segregation of duties places an employee in a position to perpetrate and conceal thefts

The auditor's defense of contributory negligence is most likely to prevail when a. Third party injury has been minimal. b. The client is privately held as contrasted with a public company. c. Undetected errors have resulted in materially misleading financial statements. d. The auditor fails to detect fraud resulting from management override of the control structure

Description : The auditor's defense of contributory negligence is most likely to prevail when a. Third party injury has been minimal. b. The client is privately held as contrasted with a public company ... statements. d. The auditor fails to detect fraud resulting from management override of the control structure

Last Answer : The auditor fails to detect fraud resulting from management override of the control structure

The auditor's defense of contributory negligence is most likely to prevail when a. Third party injury has been minimal. b. The client is privately held as contrasted with a public company. c. Undetected errors have resulted in materially misleading financial statements. d. The auditor fails to detect fraud resulting from management override of the control structure.

Description : The auditor's defense of contributory negligence is most likely to prevail when a. Third party injury has been minimal. b. The client is privately held as contrasted with a public company. ... . d. The auditor fails to detect fraud resulting from management override of the control structure.

Last Answer : The auditor fails to detect fraud resulting from management override of the control structure.