第13版SolutionARENSAuditing13eChapter 5.docx

第13版SolutionARENSAuditing13eChapter 5.docx

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第13版SolutionARENSAuditing13eChapter5

Chapter5

Multiple-ChoiceQuestions

1.

easy

d

Whileperformingservicesfortheirclients,professionalshaveadutytoprovidealevelofcarewhichis:

a.freefromjudgmenterrors.

b.superior.

c.greaterthanaverage.

d.reasonable.

2.

easy

b

Auditorswhofailtoexerciseduecareintheirperformanceofprofessionalservicesmaybeliablefor:

a.punitiveliability.

b.breachofcontract.

c.excessliability.

d.criminalcharges.

3.

easy

b

Whichofthefollowingmaygiverisetoabusinessfailure?

a.Anerroneousauditopinionisissued.

b.Managementmaymakeill-advisedbusinessdecisions.

c.Auditorsmayfailtouncoveremployeefraud.

d.Poorlytrainedauditorsmayperformacompany’saudit.

4.

easy

b

A（n）_____failureoccurswhenanauditorissuesanerroneousopinionastheresultofanunderlyingfailuretocomplywithauditingstandards.

a.business

b.audit

c.ethics

d.process

5.

easy

a

Thestandardofduecaretowhichtheauditorisexpectedtoadhereisreferredtoasthe:

a.prudentpersonconcept.

b.commonlawdoctrine.

c.duecareconcept.

d.vigilantpersonconcept.

6.

Auditorsmaybeliabletotheirclientsfor:

easy

Punitivedamages

Compensatorydamages

a

a.

Yes

Yes

b.

No

No

c.

Yes

No

d.

No

Yes

7.

easy

b

Underthelawsofagency,partnersofaCPAfirmmaybeliablefortheworkofothersonwhomtheyrely.Thiswouldnotinclude:

a.employeesoftheCPAfirm.

b.employeesoftheauditclient.

c.otherCPAfirmsengagedtodopartoftheauditwork.

d.specialistsemployedbytheCPAfirmtoprovidetechnicaladviceontheaudit.

8.

easy

d

“Absenceofreasonablecarethatcanbeexpectedofapersoninasetofcircumstances”defines:

a.pecuniarynegligence.

b.grossnegligence.

c.extremenegligence.

d.ordinarynegligence.

9.

easy

c

Anexampleofabreachofcontractwouldlikelyinclude:

a.anauditor’srefusaltoreturntheclient’sgeneralledgerbookuntiltheclientpaidlastyear’sauditfees.

b.abank’sclaimthatanauditorhadadutytouncovermaterialerrorsinfinancialstatementsthathadbeenreliedoninmakingaloan.

c.aCPAfirm’sfailuretocompleteanauditontheagreed-upondatebecausethefirmhadabacklogofotherworkwhichwasmorelucrative.

d.anauditor’sclaimthattheclientstaffisunqualified.

10.

easy

c

Privityofcontractexistsbetween:

a.auditorandthefederalgovernment.

b.auditorandthirdparties.

c.auditorandclient.

d.auditorandclientattorney.

11.

easy

b

Auditcontracts（engagementletters）:

a.maybeeitheroralorwritten.

b.mustbewritten.

c.mustbewrittenandnotarized.

d.mustbewritteniftheclientisregulatedbytheSecuritiesandExchangeCommission.

12.

easy

d

AnindividualwhoisnotpartytothecontractbetweenaCPAandtheclient,butwhoisknownbybothandisintendedtoreceivecertainbenefitsfromthecontractisknownas:

a.athirdparty.

b.acommonlawinheritor.

c.atort.

d.athird-partybeneficiary.

13.

easy

d

Lawsthathavebeendevelopedthroughcourtdecisionsratherthanbypassagethroughlegislativebodiesare:

a.statutorylaws.

b.judiciallaws.

c.federallaws.

d.commonlaws.

14.

easy

a

Lawsthathavebeenpassedthroughstatelegislaturesare:

a.statutorylaws.

b.judiciallaws.

c.federallaws.

d.commonlaws.

15.

easy

d

Theassessmentagainstadefendantofthefulllosssufferedbyaplaintiffregardlessofotherparties’liabilityinthewrongdoingiscalled:

a.separateandproportionateliability.

b.sharedliability.

c.unitaryliability.

d.jointandseveralliability.

16.

easy

c

_____riskrepresentsthepossibilitythattheauditorconcludesafterconductinganadequateauditthatthefinancialstatementswerefairlystatedwhentheywereactuallymisstated.

a.Business

b.Process

c.Audit

d.Failure

17.

easy

a

Theassessmentagainstadefendantofthatportionofthedamagecausedbythedefendant’snegligenceiscalled:

a.separateandproportionateliability.

b.jointandseveralliability.

c.sharedliability.

d.unitaryliability.

18.

easy

a

Inthird-partysuits,whichoftheauditor’sdefensescontendslackofprivityofcontract?

a.Lackofduty.

b.Non-negligentperformance.

c.Contributorynegligence.

d.Absenceofcausalconnections.

19.

easy

c

Whichofthefollowingauditor’sdefensesusuallymeansnon-relianceonthefinancialstatementsbytheuser?

a.Lackofduty.

b.Non-negligentperformance.

c.Lackofcausalconnections.

d.Contributorynegligence.

20.

easy

a

ThereareanumberofthingsthattheAICPA,representingtheprofessionasawhole,candotoreducetheCPA’sexposuretolawsuits.Oneofthemisto:

a.sanctionmembersforimproperconductandperformance.

b.dealonlywithclientspossessingintegrity.

c.hirequalifiedauditorsandtrainandsupervisethem.

d.performqualityaudits.

21.

easy

b

Inconnectionwiththeauditoffinancialstatements,anindependentauditorcouldberesponsibleforfailuretodetectamaterialfraudif:

a.statisticalsamplingtechniqueswerenotusedontheauditengagement.

b.theauditorplannedtheauditinanegligentmanner.

c.accountantsperformingimportantpartsoftheworkfailedtodiscoveracloserelationshipbetweenthetreasurerandthecashier.

d.thefraudwasperpetratedbyoneemployeewhocircumventedtheexistinginternalcontrols.

22.

medium

b

Whichofthefollowingmostaccuratelydescribesconstructivefraud?

a.Absenceofreasonablecare.

b.Lackofslightcare.

c.Knowledgeandintenttodeceive.

d.Extremeorunusualnegligencewithouttheintenttodeceive.

23.

medium

c

Whichofthefollowingmostaccuratelydescribesfraud?

a.Absenceofreasonablecare.

b.Lackofslightcare.

c.Knowledgeandintenttodeceive.

d.Extremeorunusualnegligencewithouttheintenttodeceive.

24.

medium

a

Whichofthefollowingisanillustrationofliabilitytoclientsundercommonlaw?

a.Clientsuesauditorfornotdiscoveringatheftofassetsbyanemployee.

b.Banksuesauditorfornotdiscoveringthatborrower’sfinancialstatementsaremisstated.

c.Combinedgroupofstockholderssueauditorfornotdiscoveringmateriallymisstatedfinancialstatements.

d.Federalgovernmentprosecutesauditorforknowinglyissuinganincorrectauditreport.

25.

medium

c

Whichofthefollowingisanillustrationofliabilityunderthefederalsecuritiesacts?

a.Clientsuesauditorfornotdiscoveringatheftofassetsbyanemployee.

b.Banksuesauditorfornotdiscoveringthatborrower’sfinancialstatementsaremisstated.

c.Combinedgroupofstockholderssueauditorfornotdiscoveringmateriallymisstatedfinancialstatements.

d.auditorsuesclientfornotcooperatingduringengagement.

26.

medium

c

Athird-partybeneficiaryisonewhich:

a.hasfailedtoestablishlegalstandingbeforethecourt.

b.doesnothaveprivityofcontractandisunknowntothecontractingparties.

c.doesnothaveprivityofcontract,butisknowntothecontractingpartiesandintendedtobenefitunderthecontract.

d.mayestablishlegalstandingbeforethecourtafteracontracthasbeenconsummated.

27.

medium

c

IftheCPAnegligentlyfailedtoproperlyprepareandfileaclient’staxreturn,theCPAmaybeliablefor:

a.thepenaltiestheclientowestheIRS.

b.thepenaltiesandinteresttheclientowes.

c.thepenaltiesandinteresttheclientowes,plusthetaxpreparationfeetheCPAcharged.

d.thepenaltiesandinterest,thetaxpreparationfee,andtheamountoftaxthatwasunderpaid.

28.

medium

d

Historically,mostmajorlawsuitsagainstCPAfirmshavedealtwith:

a.disputesoverincometaxpreparationservices.

b.disputesarisingintheperformanceofMAScontracts.

c.disputesovertheaccuracyofbookkeepingservices.

d.auditedandunauditedfinancialstatements.

29.

medium

c

“Privilegedcommunication”betweenclientandauditoris:

a.availableinallfederalcourts.

b.notavailableinanycourt.

c.availableinseveralstates.

d.availableformattersinvolvingincometaxesonly.

30.

medium

Whichofthefollowingstatementsistrue?

a

Grossnegligencemayconstituteconstructivefraud

Fraudrequirestheintenttodeceive

Allfraudshouldbedetectedduringaudit

a.

Yes

Yes

No

b.

No

Yes

Yes

c.

Yes

No

Yes

d.

No

No

No

31.

medium

b

Failureofapartytomeetitsobligations,therebycausinginjurytoanotherpartytowhomadutywasowed,is:

a.breachofcontract.

b.tortactionfornegligence.

c.constructivefraud.

d.fraud.

32.

medium

d

TortactionsagainstCPAsaremorecommonthanbreachofcontractactionsbecause:

a.therearemoretortsthancontracts.

b.theburdenofproofisontheauditorratherthanonthepersonsuing.

c.thepersonsuingneedproveonlynegligence.

d.theamountsrecoverablearenormallylarger.

33.

medium

c

Theprincipalissuetoberesolvedincasesinvolvingallegednegligenceisusually:

a.theamountofthedamagessufferedbyplaintiff.

b.whethertoimposepunitivedamagesondefendant.

c.thelevelofcareexercisedbytheCPA.

d.whetherdefendantwasinvolvedinfraud.

34.

medium

c

Intheauditingenvironment,failuretomeetauditingstandardsisoften:

a.anacceptedpractice.

b.asuggestionofnegligence.

c.conclusiveevidenceofnegligence.

d.tantamounttocriminalbehavior.

35.

medium

b

AcommonwayforaCPAfirmtodemonstrateitslackofdutytoperformisbyuseofa（n）:

a.expertwitness’testimony.

b.auditcontract,orengagementletter.

c.managementrepresentationletter.

d.confirmationlett