MULTIPLE CHOICE QUESTIONS FROM CPA EXAMINATIONS
1-13 (OBJECTIVES 1-1, 1-3, 1-5) The following questions deal with audits by CPA firms.
Choose the best response.
a. Which of the following best describes why an independent auditor is asked to express an opinion on the fair presentation of financial statements?
(1) The opinion of an independent party is needed because a company may not be objective with respect to its own financial statements.
(2) It is management’s responsibility to seek available independent aid in the appraisal of the financial information shown in its financial statements.
(3) It is difficult to prepare financial statements that fairly present a company’s fi- nancial position, operations, and cash flows without the expertise of an indepen- dent auditor.
(4) It is a customary courtesy that all stockholders of a company receive an indepen- dent report on management’s stewardship of the affairs of the business.
19Chapter 1 / THE DEMAND FOR AUDIT AND OTHER ASSURANCE SERVICES
b. Which of the following professional services is an attestation engagement?
(1) A consulting service engagement to provide computer-processing advice to a
client
(2) The preparation of financial statements from a client’s financial records
(3) An income tax engagement to prepare federal and state tax returns
(4) An engagement to report on compliance with statutory requirements
c. Which of the following attributes is likely to be unique to the audit work of CPAs as
compared to the work performed by practitioners of other professions?
(1) Independence
(2) Competence
(3) Due professional care
(4) Complex body of knowledge
1-14 (OBJECTIVES 1-6, 1-7) The following questions deal with types of audits and auditors.
Choose the best response.
a. Operational audits generally have been conducted by internal auditors and govern-
mental audit agencies but may be performed by certified public accountants. A pri-
mary purpose of an operational audit is to provide
(1) a means of assurance that internal accounting controls are functioning as planned.
(2) the results of internal examinations of financial and accounting matters to a
company’s top-level management.
(3) a measure of management performance in meeting organizational goals.
(4) aid to the independent auditor who is conducting the audit of the financial
statements.
b. Which of the following best describes the operational audit?
(1) It requires the constant review by internal auditors of the administrative controls
as they relate to the operations of the company.
(2) It concentrates on implementing financial and accounting control in a newly or-
ganized company.
(3) It focuses on verifying the fair presentation of a company’s results of operations.
(4) It concentrates on seeking aspects of operations in which waste could be reduced
by the introduction of controls.
c. Compliance auditing often extends beyond audits leading to the expression of opin-
ions on the fairness of financial presentation and includes audits of efficiency, econ-
omy, effectiveness, and
(1) adherence to specific rules or procedures.
(2) accuracy.
(3) evaluation.
(4) internal control
