ACCT 444 Week 1 Quiz

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Public companies Chapter 1 Question 4. 4. (TCO 1) An operational audit has as one of its objectives to (Points : 3) make recommendations for improving performance. determine whether the financial statements fairly present the entity’s operations. evaluate the feasibility of attaining the entity’s operational objectives. report on the entity’s relative success in attaining profit maximization. Chapter 1 Question 5. 5. (TCO 1) Which of the following services do not need to be preapproved by the audit committee of an issuer? (Points : 3) Nonaudit services related to internal control over financial reporting Tax services Nonaudit services that are less than 5 % of total revenues from the audit client Services provided by the auditor on a recurring basis Question 8. 8. (TCO 3) 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. (Points : 3) The CEO is incorrect, but because the audit report has been issued, it is too late. The CEO is correct and the auditor must maintain confidentiality. 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. Chapter 4 Question 9. 9. (TCO 1) Which of the following terms identifies a requirement for audit evidence? (Points : 3)
Adequate Disconfirming Reasonable Appropriate Chapter 1 Question 10. 10. (TCO 1) The auditor of an issuer may provide which of the following tax services? (Points : 3) Tax services for immediate family members of corporate officers Tax planning services Tax services for officers of the issuer Services related to confidential tax transactions 5. (TCO 1) 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? (Points : 3) 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 Provision of personal tax services to Johnson, the accounts payable manager of Perigee Audit of Perigee’s internal control is performed contemporaneously with the annual financial statement audit Preparation of Perigee’s routine annual tax return, where Jackson’s fee will be calculated as a percentage of the tax refund obtained
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Page 3: 8. (TCO 3) The financial interests

ACCT 444 Week 1 Quiz

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