ACCT 555 ACCT555 Week 4 Midterm Exam with Answers / 2020
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DeVry ACCT 555 Week 4 Midterm Answers
Q 1. (TCO F) Which of the following procedures should an suditor generally perform regarding subsequent events?
Q 2. (TCO A) An auditor reads the letter of transmittal accompanying a county’s comprehensive annual financial report and identifies a material incomsistency with the fiancial statements. The auditor determines that the financial statements do nto required revision. Which of the following actions should the suditor take?
Q 3 (TCO F) An auditor’s independence is considered impaired if the auditor has
Q 4 (TCO B) Morris, CPA suspects that a pervasive scheme of illegal bribes exists throughout the operations of Worldwide Import-Export, Inc., a new audit client. Morris notified the audit committee and Worldwide’s legal counsel, but neither could assist Morris in determining whether the amount sinvolved were material to the financial statemetns or whether senior management was involved in the scheme. Under these circumstances, Morris should
Q 5 (TCO F) Which is not a characteristic of the reliability of evidence?
Q 6 (TCO C) Accounting to PCAOB standards, the nature and extent of required planning activities for an issuer audit are influenced by all of the following factors, except for
Q 7 (TCO F) “The accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria by a competent, independent person” is a definition of
Q 8 (TCO F) If an auditor’s risk assessment is based on the effective operation of controls, the auditor will likely
Q 9 (TCO F) A benefit obtained from comparing the client’s data with industry averages is that it provides a(n)
Q 10 (TCO G) Which is correct with respect to the use of analytical procedures?
Q 11 (TCO G) Which ratio is best used to assess a company’s ability to meet its long-term debt obligations?
Q 12 (TCO A) Match the following definitions to the appropriate terms.
Q 13 (TCO B) The following is a portion of a qualified scope and opinion report due to a scope restriction. (Note: A separate report was issued on the effectiveness of internal control over financial reporting.)
Q 14 (TCO C) The following situation involves a possible violation of the AICPA’s code ofprofessional conduct. For this situation, (1) determine the applicable rule number from the code, (2) decide whether or not the code has been violated, and (3) briefly explain how the situation violates (or does not violate) the code. Your answer should be set up something like this: Rule # ____ Violation? Yes or No. Provide a one-or two-line explanation.
Q 15 (TCO C) The following situation involves a possible violation of the AICPA’s code of professional conduct. For this situation, (1) determine the applicable rule number from the code, (2) decide whether or not the code has been violated, and (3) briefly explain how the situation violates (or does not violate) the code. Your answer should be set up something like this: Rule # ___ Violation? Yes or No. Provide a one-or two-line explanation.
Q 16 (TCO C) Brandt CPAs has obtained Big-Bucks, a new publicly held client. Big-Bucks has various accounting-related needs that Brandt CPAs would like to fulfill. Partner-in-change D. Brandt has discussed with Big-Bucks the possibility of performing the annual audit of Big-Bucks, as well as preparing the tax returns, business plan, and quarterly write-up services and providing consultation on the viability and valuation of mining gas reserves in Tennessee. An outside expert would be hired by Brandt CPAs to provide expert advice to the CPA firm on mining gas reserves. Additionally, Brandt CPA’s audit manager, who will be assigned to this audit, has previously been approached by Big-Bucks to come work for the company as chief financial officer. The audit manager has refused the offer, because his cousin’s sister-in-law is a 10% shareholder in Big-Bucks, and he does not want her to have any say in his employment. Under the Sarbanes-Oxley Act of 2002, what issues do you see, and how would you advise Brandt CPAs? Is there ever a time when Brandt CPAs could perform any of these services for Big-Bucks?
Q 17 (TCO D) Discuss the sanctions the Securities and Exchange Commission can impose on auditors.
Q 18 (TCO F) Match five of the terms (A-H) with the definitions provided below (1-5).
Q 19 (TCO G) Discuss the four primary purposes of analytical procedures performed during the planning phase of an audit.
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