Professional Documents
Culture Documents
a. SEC
to consider.
c. Journal entries will supply evidence necessary to detect fraud.
d. The advent of new technology prevents fraud, thereby leading
to less fraud over time.
a. Management may physically alter evidence to perpetrate and
conceal the fraud.
Which of the following items are registered audit firms not required to report to
the audit committee?
a. Critical accounting policies and practices.
b. Alternative treatments of financial information within generally accepted
accounting principles that have been considered by management, as well as the
preferred treatment of the audit firm.
c. A list of all audit procedures performed.
d. Significant written communications between the audit firm and management.
c. A list of all audit procedures performed.
Chapter 3
The quality of an organization's internal controls affect which of
the following?
a. The reliability of financial data.
b. The ability of management to make good decisions.
c. The ability to remain in business.
d. All of the above.
d. All of the above.
c. Management.
of internal control.
c. The organization identifies and assesses changes that could
significantly impact the system of internal control.
d. All of the above.
b. The organization obtains or generates and uses relevant, quality
information to support the functioning of other components of
internal control.
Mark Pulley is an auditor at Pulley and Hurst, LLC. If Pulley's fiveyear-old daughter owns shares of stock in McBurgers
Corporation, then what is Pulley considered to have?
a. An immaterial indirect interest in McBurgers Corporation.
b. A material indirect interest in McBurgers Corporation.
c. A loophole for claiming independence from McBurgers
Corporation.
d. A direct financial interest in McBurgers Corporation.
d. A direct financial interest in McBurgers Corporation.
Julie Webb, CPA takes out an automobile loan with First National
Bank of Wellville (FNBW) while attending the University of
Wellville. Julie graduates one year later and is hired as an auditor
by Best and Driftwood, LLP. Her first assigned audit is with First
National Bank of Wellville, a client of Best and Driftwood. As a
new audit assistant, Julie continues to pay her automobile loan
payments each month. Which of the following best describes
Julie's independence status?
a. Impaired because Julie has a direct financial interest in FNBW.
b. Impaired because Julie has a material indirect financial interest
in FNBW.
c. Not impaired because Julie has a immaterial indirect financial
interest in FNBW.
d. Not impaired because Julie is permitted to take normal loans
from FNBW.
d. Not impaired because Julie is permitted to take normal loans
from FNBW.
Which one of the following has the most affect on the reliability of
financial statements?
a. The size of the client.
b. The industry of the client.
c. The client's internal control structure.
d. The client's trend of earnings.
c. The client's internal control structure.
a. Subsequent date.
b. Cutoff period.
c. Significant date.
d. Interim date.
d. Interim date.