DeVry ACCT 444 Week 1 Quiz
The Sarbanes-Oxley Act applies to which of the following companies?
- All companies
- Privately held companies
- Public companies
- All public companies and privately held companies with assets greater than $500 million
Which one of the following is not one of the three general standards?
- Proper planning and supervision
- Independence of mental attitude
- Adequate training and proficiency
- Due professional care
Which of the following actions should a CPA firm take to comply with the AICPA’s quality control standards?
- Establish procedures that comply with the standards of the Sarbanes-Oxley Act.
- Use attributes sampling techniques in testing internal controls.
- Consider inherent risk and control risk before determining detection risk.
- Establish policies to ensure that the audit work meets applicable professional standards.
Three common types of attestation services are
- audits, reviews, and other attestation services.
- audits, verifications, and other attestation services.
- reviews, verifications, and other attestation services.
- audits, reviews, and verifications.
Jackson & Company, CPAs, plan to audit the financial statements of Perigee Technologies, an issuer as defined under the Sarbanes-Oxley Act of 2002. Which of the following situations would impair Jackson’s independence?
- Provision of personal tax services to Johnson, the accounts payable manager of Perigee
- Preparation of Perigee’s routine annual tax return, where Jackson’s fee will be calculated as a percentage of the tax refund obtained
- Audit of Perigee’s internal control is performed contemporaneously with the annual financial statement audit
- Discovering that Lowe, the chief financial officer of Perigee, started his accounting career 10 years earlier as a staff accountant for Jackson & Company and continues to maintain ties with current partners at the firm
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The concept of materiality would be least important to an auditor when considering the
- adequacy of disclosure of a client’s illegal act.
- discovery of weaknesses in a client’s internal control.
- effects of a direct financial interest in the client on the CPA’s independence.
- the decision whether to use positive or negative confirmations of accounts receivable.
An auditor strives to achieve independence in appearance to
- maintain public confidence in the profession.
- be in a position to offer other services to the client.
- comply with the generally accepted accounting principles.
- maintain a biased mental attitude.
Several months after an unqualified audit report was issued, the auditor discovered the financial statements were materially misstated. The client’s CEO agrees that there are misstatements, but refuses to correct them. She claims that confidentiality prevents the CPA from informing anyone.
- The CEO is correct and the auditor must maintain confidentiality.
- The CEO is incorrect, but because the audit report has been issued, it is too late.
- The CEO is correct, but to be ethically correct the auditor should violate the confidentiality rule and disclose the error.
- The CEO is incorrect, and the auditor has an obligation to issue a revised audit report, even if the CEO will not correct the financial statements.
The phrase U.S. generally accepted accounting principles is an accounting term that
- includes broad guidelines of general application but not detailed practices and procedures.
- encompasses the conventions, rules, and procedures necessary to define U.S. accepted accounting practice at a particular time.
- provides a measure of conventions, rules, and procedures governed by the AICPA.
- is included in the audit report to indicate that the audit has been conducted in accordance with generally accepted auditing standards (GAAS).
Which of the following items impairs independence under U.S. ethics standards but does not necessarily impair independence under the IFAC Code of Ethics for Professional Accountants?
- An immaterial direct financial interest in an audit client
- Employment at a client of an immediate family member of the engagement partner in a key accounting position
- The auditor also provides internal audit outsourcing services
- Contingent fee arrangements for audit engagements