THE CPA PROFESSION
b. The Responsibilities principle underlying AICPA auditing standards includes a requirement that
(1) the audit be adequately planned and supervised.
(2) the auditor’s report state whether or not the financial statements conform to generally accepted accounting principles.
(3) professional judgment be exercised by the auditor.
(4) informative disclosures in the financial statements be reasonably adequate.
c. Who establishes auditing standards applicable to private companies and other non- public entities in the U.S.?
(1) The Private Company Audit Standards Board
(2) The Financial Accounting Standards Board
(3) The Auditing Standards Board of the AICPA
(4) The Public Company Accounting Oversight Board
2-14 (OBJECTIVE 2-8) The following questions concern quality control standards. Choose the best response.
a. The nature and extent of a CPA firm’s quality control policies and procedures depend on
The CPA
Firm’s Size
The Nature of the
CPA Firm’s Practice
Cost–Benefit
Considerations
(1) Yes Yes Yes
(2) Yes Yes No
(3) Yes No Yes
(4) No Yes Yes
b. Which of the following is an element of a CPA firm’s quality control system that should be considered in establishing its quality control policies and procedures?
(1) Complying with laws and regulations
(2) Using statistical sampling techniques
(3) Managing human resources
(4) Considering audit risk and materiality
c. One of a CPA firm’s basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this objective is provided through
(1) continuing professional education.
(2) a system of quality control.
(3) a system of peer review.
(4) compliance with generally accepted reporting standards.
