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Chapter 1 - Role of Public Accountant
Chapter 2 - Professional Standards
Chapter 3 - Professional Ethics
Miscellaneous
Chapter 4 - Legal Liability
100
The Sarbanes-Oxley Act requires that auditors of publicly traded companies in the United States perform an __________ audit that includes providing assurance on both the financial statements and the effectiveness of internal control over financial reporting.
What is integrated?
100
If financial statements are not fairly presented on an overall basis, the most likely type of audit opinion will be a(n):
What is adverse?
100
The public accounting profession acknowledges the critical importance of independence __________ and independence ______________.
What are of mind and in appearance?
100

The three elements of the Fraud Triangle.

What are rationalization, opportunity, and pressure (motive/incentive)?

100
A landmark case establishing that auditors should be held liable to third parties not in privity of contract for gross negligence, but not for ordinary negligence.
What is Ultramares v. Touche and Co.?
200
The ______________________ was created in 2002 to oversee and discipline CPAs and public accounting firms that audit public (issuer) companies.
What is the Public Company Accounting Oversight Board?
200

A peer review is a study and appraisal by an independent evaluator of a CPA firm's work.  The two types of peer reviews are a(n) __________ review and a(n) _______________ review

What are systems and engagement reviews?

200
Solicitation of CPA exam questions and answers is an example of an _____ _______________ to the profession.
What is an act discreditable?
200
This body ordinarily has the authority to suspend or revoke a CPA's license to practice public accounting.
What is a state board of accountancy?
200
A federal securities statute covering registration statements for securities to be sold to the public.
What is Securities Act of 1933?
300
An examination designed to provide an opinion, the CPA's highest level of assurance that the financial statements follow GAAP, or another acceptable basis of accounting is known as an ______________.
What is an audit?
300
Primary responsibility for the financial statements lies with _______________.
What is management?
300
According to requirements of the NYSE, NASDAQ and ASE, _______ ____________ must consist of at least three independent and financially literate individuals, and the chairman must have accounting or financial management expertise. Responsible for appointing, compensating, and overseeing the public accounting firm.
What are audit committees?
300
For an individual CPA any __________ _____________ _________ in an attest client impairs independence. An example is an investment in the client, such as owning capital stock or providing loans to the client.
What is direct financial interest?
300
In general, to establish CPA liability, a client must prove these four elements.
What are duty, breach of duty, losses (damages), and causation?
400

An audit is NOT a guarantee that there are no misstatements due to error or fraud (do not verify 100% of transactions) – an audit provides _____________ ____________ that there are no material misstatements

What is reasonable assurance?

400

Sufficiently important to influence decisions made by reasonable users of financial statements. It is dependent upon both the dollar amount and the nature of the item.

What is materiality?

400
The communications between CPAs and their clients are ____________, but they are not privileged under common law.
What is confidential?
400
This form of organization is likely to restrict the personal liability of CPAs not involved on a particular audit that their firm has conducted
What is a limited liability partnership?
400
A CPA is considered 5% responsible for an investor's loss. Under this concept it most likely that the CPA will be held liable for 100% of the damages if the other defendants are bankrupt.
What is joint and several liability?
500

This institution establishes auditing standards for auditors of nonpublic (nonissuer) companies.

What is the Auditing Standards Board?

500
The risk that the auditors may unknowingly fail to appropriately modify their opinion on financial statements that are materially misstated.
What is audit risk?
500
A __________ _____________ refers to an individual, firm, or entity that is capable of influencing an attest engagement.
What is a covered member?
500

The ____________ is a voluntary national organization of more than 400,000 members and establishes standards and rules to guide CPAs.

What is the AICPA?

500
Ordinarily a claim of negligence against a CPA states that the CPAs performed their duties in this manner.
What is without due professional care?