Privity of contract exists between the a. Auditor and the Securities and Exchange Commission. b. Auditor and client. c. Auditor and third parties. d. All of the above

Privity of contract exists between the
a. Auditor and the Securities and Exchange
Commission.
b. Auditor and client.
c. Auditor and third parties.
d. All of the above
by

1 Answer

Answer :

Auditor and client
by

Related questions

Privity of contract exists between the a. Auditor and the Securities and Exchange Commission. b. Auditor and client. c. Auditor and third parties. d. All of the above

Description : Privity of contract exists between the a. Auditor and the Securities and Exchange Commission. b. Auditor and client. c. Auditor and third parties. d. All of the above

Last Answer : Auditor and client

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.

Because an external auditor is paid a fee by a client company, he a. Is absolutely independent and may conduct an audit. b. May be sufficiently independent to conduct an audit. c. Is never considered to be independent. d. Must receive approval of the Securities and Exchange Commission before conducting an audit.

Description : Because an external auditor is paid a fee by a client company, he a. Is absolutely independent and may conduct an audit. b. May be sufficiently independent to conduct an audit. c. Is ... to be independent. d. Must receive approval of the Securities and Exchange Commission before conducting an audit.

Last Answer : May be sufficiently independent to conduct an audit.

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

Which of the following best describes the passing of confidential information from a client to its auditor? The information: a. Should in no circumstances be conveyed to third parties. b. Is not legally protected and can be subpoenaed by a competent court. c. Can only be released for peer reviews after receiving permission from the client. d. Should be conveyed to the public if it affects the "correctness" of the financial statement

Description : Which of the following best describes the passing of confidential information from a client to its auditor? The information: a. Should in no circumstances be conveyed to third parties. b. Is not ... d. Should be conveyed to the public if it affects the "correctness" of the financial statement

Last Answer : Is not legally protected and can be subpoenaed by a competent cour

Which of the following best describes the passing of confidential information from a client to its auditor? The information: a. Should in no circumstances be conveyed to third parties. b. Is not legally protected and can be subpoenaed by a competent court. c. Can only be released for peer reviews after receiving permission from the client. d. Should be conveyed to the public if it affects the "correctness" of the financial statements

Description : Which of the following best describes the passing of confidential information from a client to its auditor? The information: a. Should in no circumstances be conveyed to third parties. b. Is not ... d. Should be conveyed to the public if it affects the "correctness" of the financial statements

Last Answer : Is not legally protected and can be subpoenaed by a competent court.

The responsibility for the fairness of the financial assertions that are embodied in the financial statements and in the notes to the financial statements rests: a. With the audit committee. b. With management. c. With Securities and Exchange Commission. d. Equally with management and the stockholders

Description : The responsibility for the fairness of the financial assertions that are embodied in the financial statements and in the notes to the financial statements rests: a. With the audit committee. ... management. c. With Securities and Exchange Commission. d. Equally with management and the stockholders

Last Answer : With management

All of the following are represented to the Financial Reporting Standards Council, except: a. Securities and Exchange Commission b. Bureau of Internal Revenue c. Commission on Higher Education d. Board of Accountancy

Description : All of the following are represented to the Financial Reporting Standards Council, except: a. Securities and Exchange Commission b. Bureau of Internal Revenue c. Commission on Higher Education d. Board of Accountancy

Last Answer : Commission on Higher Education

Auditing standards are a. Statutory in nature. b. Rules imposed by the Securities and Exchange Commission. c. General guidelines to help auditors. d. Rules imposed by the PICPA

Description : Auditing standards are a. Statutory in nature. b. Rules imposed by the Securities and Exchange Commission. c. General guidelines to help auditors. d. Rules imposed by the PICPA

Last Answer : General guidelines to help auditors

Which of the following is not explicitly referred to in the Code of Ethics as source of technical standards? a. Commission on Audit (COA) b. Auditing and Assurance Standards Council (AASC) c. Securities and Exchange Commission (SEC) d. Relevant legislation

Description : Which of the following is not explicitly referred to in the Code of Ethics as source of technical standards? a. Commission on Audit (COA) b. Auditing and Assurance Standards Council (AASC) c. Securities and Exchange Commission (SEC) d. Relevant legislation

Last Answer : Commission on Audit (COA)

The criteria for evaluating quantitative information vary. For example, in the audit of historical financial statements by CPA firms, the criteria are usually: a. Generally accepted auditing standards. b. Acceptable financial reporting framework c. Regulations of the Securities and Exchange Commission d. Regulations of the Bureau of Internal Revenue

Description : The criteria for evaluating quantitative information vary. For example, in the audit of historical financial statements by CPA firms, the criteria are usually: a. Generally accepted auditing ... Regulations of the Securities and Exchange Commission d. Regulations of the Bureau of Internal Revenue

Last Answer : Acceptable financial reporting framework

The following are represented both to the Financial Reporting Standards Council (FRSC) and Auditing and Assurance Standards Council (AASC), except: a. Bangko Sentral ng Pilipinas b. Securities and Exchange Commission c. Bureau of Internal Revenue d. Board of Accountancy

Description : The following are represented both to the Financial Reporting Standards Council (FRSC) and Auditing and Assurance Standards Council (AASC), except: a. Bangko Sentral ng Pilipinas b. Securities and Exchange Commission c. Bureau of Internal Revenue d. Board of Accountancy

Last Answer : Bureau of Internal Revenue

The market for auditing services is driven by a. Congress at the state level b. A demand by external users of financial statements c. The regulatory authority of the Securities and Exchange Commission d. Pronouncements issued by the Auditing Standards and Practices Council

Description : The market for auditing services is driven by a. Congress at the state level b. A demand by external users of financial statements c. The regulatory authority of the Securities and Exchange Commission d. Pronouncements issued by the Auditing Standards and Practices Council

Last Answer : A demand by external users of financial statements

The criteria for evaluating quantitative information vary. For example, in the case of an independent audit of financial statements by CPA firms, the criteria are usually the: a. Philippine Standards on Auditing b. Philippine Financial Reporting Standards c. National Internal Revenue Code d. Securities and Exchange Commission Regulations

Description : The criteria for evaluating quantitative information vary. For example, in the case of an independent audit of financial statements by CPA firms, the criteria are usually the: a. ... Financial Reporting Standards c. National Internal Revenue Code d. Securities and Exchange Commission Regulations

Last Answer : Philippine Financial Reporting Standards

The market for auditing services is driven by a. The regulatory authority of the Securities and Exchange Commission. b. A demand by external users of financial statements. c. Pronouncements issued by the Auditing and Assurance Standards Council. d. Congress.

Description : The market for auditing services is driven by a. The regulatory authority of the Securities and Exchange Commission. b. A demand by external users of financial statements. c. Pronouncements issued by the Auditing and Assurance Standards Council. d. Congress.

Last Answer : A demand by external users of financial statements.

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.

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

In an engagement to perform agreed-upon procedures, an auditor is engaged to: a. Use accounting expertise as opposed to auditing expertise to collect, classify, and summarize financial information. b. Provide a moderate level of assurance that the information is free of material misstatement. c. Provide a high, but not absolute, level of assurance that the information is free of material misstatement. d. Carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings

Description : In an engagement to perform agreed-upon procedures, an auditor is engaged to: a. Use accounting expertise as opposed to auditing expertise to collect, classify, and summarize financial information. b ... and the entity and any appropriate third parties have agreed and to report on factual findings

Last Answer : Carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings

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.

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

Which of the following is not likely a threat to independence? a. Acting as an advocate on behalf of an assurance client in litigation or in resolving disputes with third parties. b. Long association of a senior member of the assurance team with the assurance client. c. Threat of replacement over a disagreement with the application of an accounting principle. d. Owning immaterial indirect financial interest in an audit client.

Description : Which of the following is not likely a threat to independence? a. Acting as an advocate on behalf of an assurance client in litigation or in resolving disputes with third parties. b. ... the application of an accounting principle. d. Owning immaterial indirect financial interest in an audit client.

Last Answer : Owning immaterial indirect financial interest in an audit client.

Which of the following is not likely a threat to independence? a. Acting as an advocate on behalf of an assurance client in litigation or in resolving disputes with third parties. b. Long association of a senior member of the assurance team with the assurance client. c. Threat of replacement over a disagreement with the application of an accounting principle. d. Owning immaterial indirect financial interest in an audit client.

Description : Which of the following is not likely a threat to independence? a. Acting as an advocate on behalf of an assurance client in litigation or in resolving disputes with third parties. b. ... the application of an accounting principle. d. Owning immaterial indirect financial interest in an audit client.

Last Answer : Owning immaterial indirect financial interest in an audit client.

Certain fundamental beliefs called "postulates" underlie auditing theory. Which of the following is not a postulate of auditing? a. Economic assertions can be verified. b. The auditor acts exclusively as an auditor. c. An audit has a benefit only to the owners. d. No long-term conflict exists between the auditor and the management of the entity under audit

Description : Certain fundamental beliefs called "postulates" underlie auditing theory. Which of the following is not a postulate of auditing? a. Economic assertions can be verified. b. The auditor acts exclusively ... long-term conflict exists between the auditor and the management of the entity under audit

Last Answer : An audit has a benefit only to the owners

After discovering that a related-party transaction exists, the auditor should be aware that the a. Transaction is assumed to be outside the ordinary course of business. b. Substance of the transaction could be significantly different from its form. c. Adequacy of disclosure of the transaction is secondary to its legal form. d. Financial statements should recognize the legal form of the transaction rather

Description : After discovering that a related-party transaction exists, the auditor should be aware that the a. Transaction is assumed to be outside the ordinary course of business. b. Substance of the ... to its legal form. d. Financial statements should recognize the legal form of the transaction rather

Last Answer : Substance of the transaction could be significantly different from its form.

Generally, the decision to notify parties outside the client's organization regarding a noncompliance with laws and regulations a. Independent auditor. b. Management. c. Outside legal counsel. d. Internal auditors.

Description : Generally, the decision to notify parties outside the client's organization regarding a noncompliance with laws and regulations a. Independent auditor. b. Management. c. Outside legal counsel. d. Internal auditors.

Last Answer : Management

Which of the following is true of the report based on agreed-upon-procedures? a. The report is restricted to those parties who have agreed to the procedures to be performed. b. The CPA provides the recipients of the report limited assurance as to reasonableness of the assertion(s) presented in the financial information. c. The report states that the auditor has not recognized any basis that requires revision of financial statements. d. The report should state that the procedures performed are limited to analytical procedures and inquiry

Description : Which of the following is true of the report based on agreed-upon-procedures? a. The report is restricted to those parties who have agreed to the procedures to be performed. b. The CPA ... . d. The report should state that the procedures performed are limited to analytical procedures and inquiry

Last Answer : The report is restricted to those parties who have agreed to the procedures to be performed

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

Which of the following best describes the purpose of the engagement letter? a. The engagement letter conveys to management the detailed steps to be applied in the audit process. b. The engagement letter relieves the auditor of some responsibility for the exercise of due care. c. By clearly defining the nature of the engagement, the engagement letter helps avoid and resolve misunderstandings between CPA andclient regarding the precise nature of the work to be performed and the type of report to be issued. d. The engagement letter should be signed by both the client and the CPA and should be used only for independent audits

Description : Which of the following best describes the purpose of the engagement letter? a. The engagement letter conveys to management the detailed steps to be applied in the audit process. b. The engagement letter ... be signed by both the client and the CPA and should be used only for independent audits

Last Answer : By clearly defining the nature of the engagement, the engagement letter helps avoid and resolve misunderstandings between CPA and client regarding the precise nature of the work to be performed and the type of report to be issued

The understanding between the client and the auditor as to the degree of responsibilities to be assumed by each is normally set forth in a(an) a. Management letter. b. Representation letter. c. Engagement letter. d. Comfort letter

Description : The understanding between the client and the auditor as to the degree of responsibilities to be assumed by each is normally set forth in a(an) a. Management letter. b. Representation letter. c. Engagement letter. d. Comfort letter

Last Answer : Engagement letter

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 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

At the beginning of the current audit engagement, the auditor should perform key preplanning activities which include all of the following except: a. Performing procedures regarding client acceptance or continuance. b. Evaluating compliance with ethical requirements. c. Establishing an understanding of the terms of the engagement. d. Considering internal contro

Description : At the beginning of the current audit engagement, the auditor should perform key preplanning activities which include all of the following except: a. Performing procedures regarding client acceptance ... c. Establishing an understanding of the terms of the engagement. d. Considering internal contro

Last Answer : Considering internal contro

When the continuing auditor intends to use information about the entity and its environment obtained in prior periods, the auditor shoulda. Assess control risk as "high" for theassertions affected by the prior-periodinformation.b. Seek permission with the client in usingthe prior period information obtained bythe auditor.c. Determine whether changes haveoccurred that may affect therelevance of such information in thecurrent audit.d. Determine whether to equitably reducethe audit fee due to lower audit effortexpended during the engagement

Description : When the continuing auditor intends to use information about the entity and its environment obtained in prior periods, the auditor should a. Assess control risk as "high" for the assertions ... whether to equitably reduce the audit fee due to lower audit effort expended during the engagement

Last Answer : Determine whether changes have occurred that may affect the relevance of such information in the current audit.

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

Preplanning the audit involves several key activities which include the following except: a. Investigating the client's background. b. Communicating with the prospective client's prior auditor to inquire about any disagreements with the client. c. Understanding the client's reasons for obtaining an audit. d. Determining the likelihood of issuing an unqualified audit opinion on the client's financial statements.

Description : Preplanning the audit involves several key activities which include the following except: a. Investigating the client's background. b. Communicating with the prospective client's prior auditor to ... the likelihood of issuing an unqualified audit opinion on the client's financial statements.

Last Answer : Determining the likelihood of issuing an unqualified audit opinion on the client's financial statements.

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

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

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.

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

The factor that distinguishes an error from an irregularity is a. Whether it is peso amount or a process. b. Whether it is a caused by the auditor or the client. c. Materiality. d. Intent.

Description : The factor that distinguishes an error from an irregularity is a. Whether it is peso amount or a process. b. Whether it is a caused by the auditor or the client. c. Materiality. d. Intent.

Last Answer : Intent.

When preparing the financial statements, it is acceptable for the auditor to prepare a. The footnotes for client. b. The statement for client. c. A draft of the statements and footnotes for client. d. A draft of the statements for client.

Description : When preparing the financial statements, it is acceptable for the auditor to prepare a. The footnotes for client. b. The statement for client. c. A draft of the statements and footnotes for client. d. A draft of the statements for client.

Last Answer : A draft of the statements and footnotes for client.

The Philippine Accountancy Act of 2004 provides that all Working papers made during an audit shall be the property of the auditor. These working papers shall include the following, except: a. Working papers prepared by the CPA and his staff. b. Analysis and schedule prepared and submitted to the auditor by his client's staff. c. Excerpts or copies of documents furnished to the auditor. d. Any report submitted by the auditor to his client.

Description : The Philippine Accountancy Act of 2004 provides that all Working papers made during an audit shall be the property of the auditor. These working papers shall include the following, except: a. Working ... of documents furnished to the auditor. d. Any report submitted by the auditor to his client.

Last Answer : Any report submitted by the auditor to his client.

The audit program usually cannot be finalized until the a. Reportable conditions have been communicated to the audit committee of the board of directors. b. Engagement letter has been signed by the auditor and the client. c. Consideration of the entity’s internal control has been completedd. Search for unrecorded liabilities has beenperformed and documented

Description : The audit program usually cannot be finalized until the a. Reportable conditions have been communicated to the audit committee of the board of directors. b. Engagement letter has been ... s internal control has been completed d. Search for unrecorded liabilities has been performed and documented

Last Answer : Consideration of the entity’s internal control has been completed