Quiz 2

Topics: Financial audit, Annual report, Auditing Pages: 4 (609 words) Published: July 30, 2012
Question :
(TCO 4) To succeed in an action against the auditor, the client must be able to show that:

Student Answer: the auditor was fraudulent.
the auditor was grossly negligent.
there was a written contract.
there is a close causal connection between the auditor's behavior and the damages suffered by the client. Instructor Explanation:Page 121
Points Received: 2 of 2

2.Question :
(TCO 4) The principal issue to be resolved in cases involving alleged negligence is usually:

Student Answer: the amount of the damages suffered by plaintiff. whether to impose punitive damages on defendant.
the level of care exercised by the CPA.
whether defendant was involved in fraud.
Instructor Explanation:Page 119
Points Received: 2 of 2

3.Question :
(TCO 4) The prudent person concept establishes that:

Student Answer: the CPA firm is not expected to make only perfect judgments. an audit in accordance with GAAS is subject to limitations and cannot be relied upon for complete assurance that all errors and irregularities will be found. the courts do not require that the auditor become the insurer or guarantor of the accuracy of the statements. all three of the above are true.

Instructor Explanation:Page 115
Points Received: 2 of 2

4.Question :
(TCO 4) The objective of the ordinary audit of financial statements is the expression of an opinion on:

Student Answer: the fairness of the financial statements. the accuracy of the financial statements.
the accuracy of the annual report.
the accuracy of the annual report.
Instructor Explanation:Page 142
Points Received: 2 of 2

5.Question :
(TCO 4) If the auditor believes that the financial statements are not fairly stated or is unable to reach an conclusion because of insufficient evidence, the auditor:

Student Answer: should...
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