Audit CPA Prep 2022

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Audit CPA Prep 2022 1. An audit firm has a responsibility to adopt a system of quality control and establish policies and procedures to provide reasonable assurance that personnel comply with ____... __________. ans: B). A firm of independent auditors has a responsibility to adopt a system of quality control in conducting an audit practice. Thus, a firm should establish quality control procedures to provide it with reasonable assurance that its personnel comply with generally accepted auditing standards (GAAS) in its audit engagements. 2. An audit firm has a responsibility to _______________ in accordance with the applicable legal and regulatory requirements. ans: A), B), and C). A firm of independent auditors has a responsibility to adopt a system of quality control in conducting an audit practice. Thus, a firm should establish quality control procedures to provide it with reasonable assurance that its personnel comply with generally accepted auditing standards in its audit engagements. AU-C 250 states that "the auditor should remain alert to the possibility that other audit procedures applied may bring instances of noncompliance or suspected noncompliance with laws and regulations to the auditor's attention." Also, AU-C 220 states that, "within the context of the firm's system of quality control, engagement teams have a responsibility to implement quality control procedures that are applicable to the audit engagement." 3. Quality control for a CPA firm applies to all ____________ services. ans: C) and D). Quality control for a CPA firm does not explicitly apply to consulting and tax services, but quality control does apply to all review and compilation services. 4. Quality control policies and procedures applicable to a CPA firm should encompass the element(s) of ________________. ans: A) and B). The quality control policies and procedures applicable to a firm's accounting and auditing practice encompass the following elements: •Independence, integrity, and objectivity •Personnel management •Acceptance and continuance of clients and engagements •Engagement performance •Monitoring 5. A CPA firm must appropriately document _______ to properly administer a quality control system. ans: A), C), and D). QC 10 states that the firm should establish policies and procedures requiring (a) appropriate documentation to provide evidence of the operation of each element of its system of quality control, (b) retention of documentation for a period of time sufficient to permit those performing monitoring procedures and peer review of the firm to evaluate the firm's compliance with its system of quality control or for a longer period if required by law or regulation, and (c) documentation of complaints and allegations and responses to them. 6. The form and content of documentation evidencing the operation of each of the elements of the system of quality control depend on factors such as __________________. ans: A), B), and C). QC 10 states, "The form and content of documentation evidencing the operation of each of the elements of the system of quality control is a matter of judgment and depends on a number of factors, including the following: •The size of the firm and the number of offices •The nature and complexity of the firm's practices and organization." 7. Public accounting firms establish a monitoring process involving _____________ to provide reasonable assurance that policies relating to the system of quality control are relevant, adequate, and operating effectively. ans: B) and C). QC 10 indicates that the firm should establish a monitoring process to provide reasonable assurance that policies relating to the system of quality control are relevant, adequate, and operating effectively. This process should include an ongoing consideration and evaluation of the firm's system of quality control, including inspection or a periodic review of engagement documentation, reports, and clients' financial statements for a selection of completed engagements. 8. An effective system of quality control provides reasonable assurance that the firm and personnel follow policies and procedures pertaining to _________________. ans: A), B), and C). QC 10 indicates that the firm must establish and maintain a system of quality control, which should include policies and procedures addressing each of the following elements:a.Leadership responsibilities for quality within the firm (the tone at the top) b.Relevant ethical requirements c.Acceptance and continuance of client relationships and specific engagements d.Human resources e.Engagement performance f.Monitoring 9. An e [Show More]

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