The primary purpose of éstablisHing qUi to accepting a new client is to: 1. Enable the CPA firm to attest to the reliability of the client. 2. Satisfy the CPA fırm's duty to the public concerning the acceptance of new clients. 3. Minimize the likelihood of association with clients whose management lacks integrity. 4. Anticipate before performing any fieldwork whether an unmodified opinion can be expressed. O 2 O 1 O 3
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- The following questions concern quality control standards. Choosethe best response.a. The nature and extent of a CPA firm’s quality control policies and procedures dependon The CPA The Nature of the Cost-benefitFirm’s Size CPA Firm’s Practice Considerations(1) Yes Yes Yes(2) Yes Yes No(3) Yes No Yes(4) No Yes Yesb. Which of the following are elements of a CPA firm’s quality control that should beconsidered in establishing its quality control policies and procedures?Human Resources Monitoring Engagement Performance(1) Yes Yes No(2) Yes Yes Yes(3) No Yes Yes(4) Yes No Yesc . One purpose of establishing quality control policies and procedures for decidingwhether 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…22.Which of the following typical controls in the Employee Evaluation under the Hire-to-Retire process where audit client would be most concerned/relevant where promotions and salary increase grant are based on merit? Group of answer choices Managers receive training on how to conduct performance evaluations. A performance improvement program is in place and there is a process to evaluate usage and results. Performance evaluation forms are clear and contain clear guidelines on how they should be conducted. Analytics are performed on employee evaluations to identify anomalies. All employees are required to receive a performance evaluation at least once a year.Performance Principle. Identify how each of the following statements relates to the performance principle by considering which element(s) of the principle are related to that statement. (A statement may be related to more than one element.) Use the following elements inproviding your response:∙ Reasonable assurance∙ Planning and supervision∙ Materiality∙ Risk assessment∙ Audit evidencea. Evaluating the effectiveness of the client’s internal control in preventing or detectingmisstatements.b. Obtaining an understanding of the client’s business and industry.c. Acknowledging that the risk of failing to detect a material misstatement cannot bereduced to zero.d. Obtaining confirmations from the client’s customers as to the ending balances inaccounts receivable.e. Preparing a written audit plan.f. Designing audit procedures to identify misstatements that would have a significanteffect on financial statement users’ decisions.g. Considering the likelihood that the account balance contains a…
- Q1. Based on Sarbanes-Oxley, who is ultimately responsible for the independence of the external auditor? (In your response, identify all of the requirements placed upon the Audit Committee by Sarbanes-Oxley, and why you think the Act placed these responsibilities with this group). Q2. Which of the following is an example of the appropriate implementation of a system of quality control? (in your response, describe the purpose of a system of quality control for an audit firm, and what the six elements of quality control are).29. S1. When the chief audit executive concludes that management has accepted a level of risk that may be unacceptable to the organization, the chief audit executive must discuss the matter with middle management. S2. The scope of the engagement must include consideration of relevant systems, records, personnel, and physical properties, including those under the control of third parties. Which of the following statements is/are true? Group of answer choices Statement II only Statements I and II Statement I only None of the statements22. An internal auditor is conducting an evaluation of significant risks that could keep the organization from achieving its objectives Which of the following are potential techniques used by the internal auditor to identify significant risks? I. The internal auditor compiles a listing of the most common risks facing the company II. The internal auditor consults with an outside expert to get an opinion on the marketability of a new product III. The internal auditor conducts interviews and surveys management on potential risks IV. The internal auditor puts on a workshop for key managers on identifying risks Group of answer choices I, II, III and IV II, III and IV only I, II and III only None of the choices I and II only
- Question: Management by exception: Select one: a. means that only unfavorable differences will be investigated. b. means that all differences will be investigated. c. causes managers to be buried under voluminous paperwork. d. means that material differences will be investigated.Choose the one correct answer. The following are usually considered in the preparation of management letter [I] the letter should indicate that it is only for management's use [II] A description of the reportable conditions discovered [III] Auditor's suggestion to improve the client's internal control. *yes, no, yesno, yes, yesyes, yes, noyes, yes, yesRefer to Exhibit 2.5 and answer the following questions. a. (Sections 101, 104, and 105) How does the establishment and operation of the PCAOB help to ensure quality external audits? How will audit firm inspections and investigations by the PCAOB help ensure high audit quality? b. (Sections 201-203) How do Sections 201-203 address audit ()r independence concerns? c. (Section 206) What is a cooling-off period, and how does it address auditor independence concerns? d. (Section 301) How do the audit committee requirements help ensure effective corporate governance? e. (Sections 302 and 906) How do the officer certification requirements help to address the risk of fraud in publicly traded organizations? What is the likelihood that a CFO who is committing fraudulent financial reporting would sign the certification falsely, and what are your reactions to that possibility? f. (Section 401) How does this section relate to the Enron fraud? g. (Section 404) How do the management assessment and audit or attestation of internal controls contained in this section help to address the risk of fraud in publicly traded organizations? h. (Section 407) Why is it important that at least one member of the audit committee be a financial expert? What are the financial reporting implications if the audit committee does not have any individuals serving on it who possess financial expertise? i. (Section 802) How does this section relate to the Enron fraud?
- 1. Which of the following statements is correct concerning an auditor's required communication with those charged with governance? Question 24 options: Individual misstatements discovered, regardless of materiality If matters are communicated in writing, the report is appropriate for general use This communication should include disagreements with management about significant audit adjustments, whether or not satisfactorily resolved If matters are communicated in writing, the report is required to be distributed to both those charged with governance and managementWhich of the following elements of a system of quality control is related to firms receiving independence confirmations from its professionals with respect to clients?a. Acceptance and continuance of client relationships and specific engagements.b. Engagement performance.c. Monitoring.d. Relevant ethical requirements.5. In this stage of the operations audit process, assess conformity with the program, schedule, and objectives, and then assess the performance of the audit team. * a. Reviewing and improving the audit program b. Monitoring the audit program c. Establishing the audit program d. Implementing the audit program 6. In the management activity of " commitment and tone from the top," which of the following will not be used by an operations auditor to assess whether or not the entity meets the audit objectives? * a. Clear expectations b. Efficiency as a priority c. Established base lines d. Risk assessment 7. These performance measures highlight potential opportunities to convert given resources to the end product with less waste. * a. Economy performance measures b. Efficiency performance measures c. Equity performance measures d. Effectiveness…