AUD — Auditing & Attestation — Quiz 1

Questions in this quiz (8)

1. Which of the following is a core principle of the AICPA Code of Professional Conduct?

   • Confidentiality
   • Integrity
   • Audit Evidence
   • Professional Skepticism

2. Which situation most likely creates a self-review threat to auditor independence?

   • The auditor previously prepared the client’s financial statements
   • The auditor’s sibling works in the client’s HR department
   • The auditor provides bookkeeping services for a non-attest client
   • The auditor attends a client-sponsored networking event

3. Which factor is most important when determining whether to accept an audit engagement?

   • The client’s revenue growth
   • Management’s integrity
   • The size of the audit fee
   • The client’s industry competition

4. Which action best demonstrates professional skepticism?

   • Accepting management explanations without verification
   • Relying on prior-year audit conclusions
   • Critically assessing audit evidence regardless of past experience
   • Avoiding confrontation with management

5. Which organization establishes auditing standards for public companies in the United States?

   • AICPA
   • FASB
   • PCAOB
   • SEC

6. Which of the following is a familiarity threat to independence?

   • Auditor owns stock in the client
   • Auditor has a long-standing relationship with client management
   • Auditor performs internal audit services
   • Auditor is pressured by client to reduce audit procedures

7. An auditor discovers a material misstatement due to fraud. What is the auditor’s primary responsibility?

   • Ignore it if it is immaterial to operations
   • Report it to management and those charged with governance
   • Immediately report to the public
   • Withdraw from the engagement without communication

8. Which condition most likely indicates a risk of material misstatement due to fraud?

   • Strong internal controls
   • Stable financial performance
   • Significant management pressure to meet earnings targets
   • Independent audit committee