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Which of the following statements accurately describes US CPA firms that are not sole proprietorships?1) Most derive the majority of their revenues from tax services.2) The most common organizational structure is the LLP structure.3) The firm will be subject to an annual peer review.4) The number of other professionals within a firm usually equals the number of partners in the firm.
You have been engaged to audit the financial statements of a US public company. Which of the following statements is correct>1) Your firm must be registered with the PCAOB.2) Your firm will be subject to auditing and quality control standards issued by the SEC.3) Your firm must be either a National or Big Four CPA firm.4) You will be engaged to audit both the quarterly and annual financial statements of your client.
Which of the following best describes what is meant by US auditing standards?1) Acts to be performed by the auditor.2) Measures of the quality of the auditor"s performance.3) Procedures to be used to gather evidence to support financial statements.4) Audit objectives generally determined on audit engagements.
The Responsibilities principle underlying AICPA auditing standards includes a requirement that:1) Field work be adequately planned and supervised.2) The auditor"s report state whether or not the financial statements conform to GAAP.3) Professional judgment must be exercised by the auditor.4) Informative disclosures in the financial statements be reasonably adequate.
What is the general character of the responsibilities characterized by the Performance principles?1) The competence, independence, and professional care of persons performing the audit.2) Criteria for the content of the auditor"s report on financial statements and related footnote disclosures.3) The criteria of audit planning and evidence gathering.4) The need to maintain an independence in mental attitude in all matters pertaining to the audit.
The nature and extent of a CPA firm"s quality control policies and procedures depend on : Firm size Nature of Practice Cost-benefit1) Yes Yes Yes2) Yes Yes No3) Yes No Yes4) No Yes Yes
Which of the following are elements of a CPA firm"s quality control that should be considered in establishing its quality control policies and procedures? Human Resources Monitoring Engagement Perf1) Yes Yes Yes2) Yes Yes No3) Yes No Yes4) No Yes Yes
One purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to:1) Enable the CPA firm to attest to the reliability of the client.2) Satisfy the CPA firm"s duty to the public concerning the acceptance of new clients.3) Provide reasonable assurance that the integrity of the client is considered.4) Anticipate before performing any field work whether an unqualified opinion can be issued.
Created by SOX to oversee auditors of public companies. They establish auditing and quality control standards and perform inspections of registered accounting firms.
Possess appropriate competence and capabilities.Comply with ethical requirements.Professional skepticism and judgment.
Obtain reasonable assurance that fin stmts are free of material misstatement.Plan work and supervise Determine and apply levels of materiality.Identify and asses risks of material misstatement based on understanding of entity, environment, and internal controls.
Express opinion on fin stmts in a written report.Determine whether fin stmts were presented fairly in accordance with financial reporting framework.

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