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Accept the engagement with the understanding that

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Reference no: EM13482846

1. CPA Smith is the executive in charge of the Pompano office of the audit firm. He is responsible for the practice in all areas of audit, tax, and consulting, but he does not serve as a field audit partner or a reviewer. CPA Jonas is the partner in charge of the ZEB, Inc. audit (an SEC filing). The audit firm's independence is impaired if:

A. Smith owns ZEB common stock

B. Smith's brother owns 10 shares of ZEB common stock

C. Jonas's sister-in-law is a sales representative with a territory in California

D. Jonas's fellow partner CPA Paul in the Deerfield office has a wife who owns ZEB stock through a mutual fund held in her own employer's employee benefit plan

2. The engineering department at Comet Company built a piece of equipment in the company's own shop for use in the company's operations. The auditor reviewed all work orders that were capitalized as part of the equipment costs. Which of the following is the auditing standards board transaction assertion most closely related to the auditor's testing?
A. Occurrence
B. Completeness
C. Accuracy
D. Classification

3. Which of the following situations would not indicate a fraud risk factor related to misappropriation of assets?

A. Management disregards the need for protection of physical assets by overriding existing controls

B, There is an adversarial relationship between the entity and its employees

C. The organizational structure is complex or unstable

D. Management or employees are subject to overwhelming personal financial obligation.

4. Seth & Co. audits Mole Corporation. Sophia is the engagement partner on the audit with an office in Grand Rapids. Which of the following would NOT be considered a covered member?

A. Sam, who is a member of the attest engagement team with an office in South Haven
B. Ben, who is a tax partner and provided 50 hours of tax service to Mole Company during the year of the audit with an office in South Haven
C. Julie, a partner in Seth & Company, with the office in Grand Rapids
D. Vicky a partner in Seth & Company, with an office in South Haven

5. B.B King has been approached by JC Inc. to perform an audit of his music company. B.B. King has never audited a music company before. B.B. King can

A.Decline the engagement because he does not have the specialized industry knowledge.

B.Recommend another auditor and receive a fee for the referral.

C.Accept the engagement if he can obtain the required knowledge before the end of the engagement.

D.Accept the engagement with the understanding that additional hours will be required to learn and understand the nature of the business.

Reference no: EM13482846

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