Strayer ACC403 week 3 assignment, discussion and quiz

“Audit Risks”Please respond to the following:From the e-Activity, analyze whether or not investors who were misled by relying on financial statements could hold the audit firm liable for audit failure either by common or securities laws. Provide a rationale for your response.According to an article in the CPA Journal, the accounting profession has long contended that an audit conducted in accordance with generally accepted auditing standards (GAAS) provides reasonable assurance that there are no material misstatements contained within financial statements. Suggest at least two (2) alternative methods that auditors can use to provide a more concrete level of assurance to investors. Provide support for your responses with examples of such methods in use..strayer.edu/webapps/blackboard/execute/uploadAssignment?content_id=_14608370_1&course_id=_135741_1&assign_group_id=&mode=view”>Week 3 Homework SubmissionClick the link above to submit your assignment.Chapter 5: Problems 5-18, 5-20(a-d), and 5-22(a-e)Chapter 6: Problems 6-23(a-b), 6-25, and 6-32(a-gQuiz 2Acct403 Quiz 2
Question 1

Which of the following is least likely to cause uncertainty about the
ability of an entity to continue as a going concern?
Answer

The entity is suing a competitor for a minor
patent infringement.

The entity has lost a major customer.

The entity has significant recurring operating
losses.

The entity has working capital deficiencies.

Question 2

If most or all users’ decisions that are based on the financial
statements are likely to be significantly affected, the materiality level is:
Answer

unrestricted.

material.

pervasive.

risky.

Question 3

The standard unqualified audit report for a non-public entity
must:
Answer

have a report
title that includes the word “CPA.”

be addressed
to the company’s stockholders and creditors.

be dated.

include an
explanatory paragraph.

Question 4

The audit report date on a standard unqualified report
indicates:
Answer

the last day
of the fiscal period.

the date on
which the financial statements were filed with the Securities and Exchange
Commission.

the last date
on which users may institute a lawsuit against either client or auditor.

the last day
of the auditor’s responsibility for the review of significant events that
occurred after the date of the financial statements.

Question 5

The standard unqualified audit report for public entities
includes the following three paragraphs:
Answer

introductory,
scope and management’s responsibility.

materiality,
scope and report.

introductory,
scope and opinion.

scope,
fieldwork and conclusion.

Question 6

The auditor’s responsibility section of the standard unqualified
audit report states that the audit is designed to:
Answer

discover all
errors and/or irregularities.

discover
material errors and/or irregularities.

conform to
generally accepted accounting principles.

obtain
reasonable assurance whether the statements are free of material
misstatement.

Question 7

Auditing standards for public companies are established by the:
Answer

SEC.

FASB.

PCAOB.

IRS.

Question 8

The auditor’s responsibility section of the standard audit
report states that the auditor is:
Answer

responsible
for the financial statements and the opinion on them.

responsible
for the financial statements.

responsible
for the opinion on the financial statements.

jointly
responsible for the financial statements with management.

Question 9

The term “explanatory paragraph” was replaced in the
AICPA auditing standards with:
Answer

going concern
paragraph.

emphasis-of-matter
paragraph.

departure from
principles paragraph.

consistency
paragraph.

Question 10

If the phrase “except for” is present in the opinion
paragraph of the audit report, the auditor has issued a(n):
Answer

adverse
opinion.

disclaimer of
opinion.

unqualified
opinion.

qualified
opinion.

Question 11

The first step to be followed when deciding the appropriate
audit report in a given set of circumstances is to:
Answer

decide the
appropriate type of report for the condition.

write the
report.

determine
whether any conditions exists requiring a departure from a standard
unqualified report.

decide the
materiality for each condition.

Question 12

Items that materially affect the comparability of financial
statements generally require disclosure in the footnotes. If the client refuses
to properly disclose the item, the auditor will most likely issue:
Answer

a disclaimer.

an unqualified
opinion.

a qualified
opinion.

an adverse
opinion.

Question 13

When the auditor determines that the financial statements are
fairly stated, but there is a nonindependent relationship between the auditor
and the client, the auditor should issue:
Answer

an adverse
opinion.

a disclaimer
of opinion.

either a
qualified opinion or an adverse opinion.

either a
qualified opinion or an unqualified opinion with modified wording.

Question 14

A misstatement in the financial statements can be considered
material if knowledge of the misstatement will affect a decision of:
Answer

the PCAOB.

a reasonable
user of the financial statements.

an accountant.

the SEC.

Question 15

Whenever the client imposes restrictions on the scope of the
audit, the auditor should be concerned that management may be trying to prevent
discovery of misstatements. In such cases, the auditor will likely issue a:
Answer

disclaimer of
opinion in all cases.

qualification
of both scope and opinion in all cases.

disclaimer of
opinion whenever materiality is in question.

qualification
of both scope and opinion whenever materiality is in question.

Question 16

The Sarbanes-Oxley Act ________ a CPA firm from doing both
bookkeeping and auditing services for the same public company client.
Answer

encourages

prohibits

allows

allows on a
case-by-case basis

Question 17

When a member observes the profession’s technical and ethical
standards and strives to continually improve her competence and quality of services,
she is exercising:
Answer

due care.

integrity.

independence.

objectivity.

Question 18

The CPA must not subordinate his or her professional judgment to
that of others in any:
Answer

engagement.

audit
engagement.

engagement excluding
tax services.

engagement
where the opinion of a specialist is used.

Question 19

Interpretations of the rules regarding independence allow an
auditor to serve as:
Answer

a director or
officer of an audit client.

an underwriter
for the sale of a client’s securities.

a trustee of a
client’s pension fund.

an honorary
director for a not-for-profit charitable or religious organization.

Question 20

Rule 301 of the AICPA’s Code of Professional Conduct requires
CPAs to maintain the confidentiality of client information. This rule would be
violated if a CPA disclosed information without a client’s consent as a result
of a:
Answer

subpoena or
summons.

peer review.

complaint
filed with the trial board of the Institute.

request by a
client’s largest stockholder.

Question 21

The financial interests of a CPA’s family members can affect the
CPA’s independence. Which of the following parties wouldnotbe included as a “direct
financial interest” of the CPA?
Answer

Spouse

Dependent
child

Relative
supported by the CPA

Sibling living
in the same city as the CPA

Question 22

Ethics are:
Answer

needed in the
professions, but is not needed for society in general.

a set of moral
principles or values.

not formed by
life experiences.

always
incorporated in laws.

Question 23

Which of the following services are allowed by the SEC whenever
a CPA also audits the company?
Answer

Internal audit
outsourcing

Legal services
unrelated to the audit

Appraisal or
valuation services

Services
related to assessing the effectiveness of internal control over financial
reporting

Question 24

A CPA firm:
Answer

can sell
securities to a client for whom they perform an attestation service.

can receive a
commission for a client that they are engaged to perform an attestation
service for.

cannot receive
a referral fee for recommending the services of another CPA.

can receive a
commission from a nonattestation client as long as the situation is
disclosed.

Question 25

The Sarbanes-Oxley Act requires a cooling off period of ________
before a member of an audit team can work for a client in a key management
position?
Answer

One year

Eighteen
months

Three years

Five years

Question 26

Of the four parts of the AICPA’s Code of Professional Conduct,
which part is enforceable?
Answer

Ethical
Rulings

Rules of
Conduct

Principles

Interpretations

2 points
Question 27

Freedom from ________ means the absence of relationships that
might interfere with objectivity or integrity.
Answer

independence.

acts
discreditable.

impartiality.

conflicts of
interest.

Question 28

Which of the following is required for a firm to designate
itself “Member of the American Institute of Certified Public
Accountants” on its letterhead?
Answer

At least one
of the partners must be a member of the AICPA.

All partners
must be members of the AICPA.

The partners
whose names appear in the firm name must be members of the AICPA.

A majority of
the partners must be members of the AICPA.

Question 29

The AICPA’s Code of Professional Conduct requires independence
for all:
Answer

attestation
engagements.

services
performed by accountants in public practice.

accounting and
auditing services performed.

professional
work performed by CPAs.

Question 30

The members of a client’s “audit committee” should be:
Answer

members of
management.

directors who
are not a part of company management.

non-directors
and non-managers.

directors and
managers.