ch7 quiz questions and solutions

ch7
Student: ___________________________________________________________________________

1.

All companies must follow the guidelines of AS5.
True

2.

Most public companies must follow the guidelines of AS5.
True

3.

False

When auditing a public company, the auditor must form an opinion on the effectiveness of internal control over financial reporting, or issue a disclaimer in the event of a scope limitation.
True

9.

False

The likelihood of an event is "more than remote" when it is "highly possible."
True

8.

False

The PCAOB makes it clear that the CEO and CFO are responsible for the internal control over financial reporting and the preparation of the statements.
True

7.

False

Based on PCAOB guidelines, the audit of ICFR and financial statements audit should be conduced as an "integrated audit."
True

6.

False

In a public company, management's report on internal control must be signed by the members of the audit committee. True

5.

False

In a public company, management must assess and report on internal control over financial reporting.
True

4.

False

False

In order for an external auditor to complete an audit of a publicly traded entity, the entity's management must comply with all of the following except:
A. Accept responsibility for the effectiveness of the entity's internal control over financial reporting
B. Evaluate the effectiveness of the entity's internal control over financial reporting using suitable control criteria C. Support its evaluation with sufficient evidence, including documentation
D Present an oral assessment of the effectiveness of the entity's internal control over financial reporting as
. of the end of the entity's most recent fiscal year

10. An "integrated audit" as stated in Section 404 of the Sarbanes-Oxley Act means
A. The auditor must consider the integrated thoughts and ideas of everyone on the audit staff
B The auditor must conduct two audits, one on the effectiveness of internal control and one on the financial