MaoEn/USCPA_AUD_Data huggingface dataset:
The auditor should determine whether providing a nonaudit service would create a threat to independence, either by itself or in aggregate with other nonaudit services provided, with respect to any audit it performs in accordance with Generally Accepted Government Auditing Standards. A critical component of this determination is:
	A.	
Consideration of management’s ability to effectively oversee the nonaudit service to be performed.
	B.	
Ability of a professional staff member who was not a member of the audit team to review the work performed.
	C.	
Ability to remove the auditor involved in the nonaudit service from the audit team.
	D.	
Ability of outside auditors to independently review the nonaudit service.

Choice "A" is correct. A critical component of the determination of whether providing  a nonaudit service would create a threat to independence is consideration of management’s ability to effectively oversee the nonaudit service to be performed.
Choice "B" is incorrect. Use of a professional staff member who was not a member of the audit team to review the work performed is an important safeguard to address a threat to independence but does not represent a critical component of determining whether a nonaudit service would create a threat to independence.
Choice "C" is incorrect. Removal of an auditor involved in a nonaudit service is an important safeguard to address a threat to independence but does not represent a critical component of determining whether a nonaudit service would create a threat to independence.
Choice "D" is incorrect. Use of outside auditors to independently review nonaudit services is an important safeguard to address a threat to independence but does not represent a critical component of determining whether a nonaudit service would create a threat to independence.
Which of the following procedures would be generally performed when evaluating the accounts receivable balance in an engagement to review financial statements in accordance with Statements on Standards for Accounting and Review Services?
	A.	
Vouch a sample of subsequent cash receipts from customers.
	B.	
Review subsequent bank statements for evidence of cash deposits.
	C.	
Confirm individually significant receivable balances with customers.
	D.	
Perform a reasonableness test of the balance by computing days' sales in receivables.

Choice "D" is correct.  When evaluating the accounts receivable balance under a review engagement, the accountant would perform analytical procedures such as computing the current period's days' sales in receivables ratio. Once computed, this ratio could be compared to the client's prior period's ratio and /or an industry average ratio to determine if the reported accounts receivable balance (and its relationship to sales) is reasonable.
Choice "A" is incorrect. Audit testing, which includes tests of accounting records by obtaining sufficient supporting auditing evidence, is not part of a review engagement.
Choice "B" is incorrect. This audit procedure (test) would not be performed in a review engagement, but may be done in an audit engagement.
Choice "C" is incorrect. Confirmation is an audit procedure that is not required in a review engagement.
Unaudited financial statements for the prior year presented in comparative form with audited financial statements for the current year should be clearly marked to indicate their status and
I.
The report on the prior period should be reissued to accompany the current period report.
II.
The report on the current period should include as a separate paragraph a description of the responsibility assumed for the prior period's financial statements.
	A.	
II only.
	B.	
I only.
	C.	
Both I and II.
	D.	
Either I or II.

Choice "D" is correct. Either I or II.
Unaudited financial statements for the prior year presented in comparative form with audited financial statements for the current year should be clearly marked to indicate their status ("unaudited"), and either the report on the prior period should be reissued or the report on the current period should include a separate explanatory paragraph describing the responsibility assumed for the prior period's financial statements.
Choices "B", "A", and "C" are incorrect, based on the above explanation.
A cooling-off period of how many years is required before a member of an issuer's audit engagement team may begin working for the registrant in a key position?
	A.	
One year.
	B.	
Three years.
	C.	
Four years.
	D.	
Two years.

Choice "A" is correct. The Securities and Exchange Commission requires a cooling-off period of one year for a former member of an audit client engagement team before he or she can be employed in a financial oversight role for that same client. This requirement is necessary to preserve auditor (firm) independence.
Choices "D", "B", and "C" are incorrect based on the explanation above.
According to rules issued under the Sarbanes-Oxley Act, which of the following non-audit services is an accounting firm permitted to provide for an issuer audit client without impairing the accounting firm's independence?
	A.	
Providing an expert opinion in order to advocate the client's position in a regulatory investigation.
	B.	
Providing factual accounts in testimony explaining positions taken during the performance of any services provided to the client.
	C.	
Providing legal services to the client in a foreign jurisdiction.
	D.	
Providing an expert opinion in order to advocate the client's interest in litigation.

Choice "B" is correct. An auditor of an issuer is permitted to provide factual accounts in testimony explaining positions taken during the performance of any services provided to the client. This does not impair the auditor's independence.
Choice "A" is incorrect. Independence would be impaired if the auditor of an issuer provided an expert opinion in order to advocate the client's interest in litigation. 
Choice "C" is incorrect. Independence would be impaired if the auditor of an issuer provided legal services to a client.
Choice "D" is incorrect. Independence would be impaired if the auditor of an issuer provided an expert opinion in order to advocate the client's position in a regulatory investigation.
Each of the following is a required attribute of an issuer's audit committee financial expert, except:
	A.	
An understanding of generally accepted accounting principles.
	B.	
An understanding of internal controls related to financial reporting.
	C.	
Significant audit experience as a certified public accountant.
	D.	
The ability to assess the application of accounting principles in connection with estimates, accruals, and reserves.

Choice "C" is correct. Significant audit experience as a certified public accountant is not a required attribute of an issuer's audit committee financial expert. A financial expert qualifies through education, past experience as a public accountant, or past experience as a principal financial officer, controller, or principal accounting officer for an issuer.
Choice "A" is incorrect. An understanding of generally accepted accounting principles is a required attribute of an issuer's audit committee financial expert.
Choice "B" is incorrect. An understanding of internal controls related to financial reporting is a required attribute of an issuer's audit committee financial expert.
Choice "D" is incorrect. The ability to assess the application of accounting principles in connection with estimates, accruals, and reserves is a required attribute of an issuer's audit committee financial expert.
The inability to complete which of the following activities most likely would prevent an accountant from accepting and completing an engagement for a review of financial statements performed in accordance with Statements on Standards for Accounting and Review Services?
	A.	
Performing inquiries and analytical procedures.
	B.	
Performing tests of details of major account balances.
	C.	
Having previous experience in the client's industry.
	D.	
Obtaining an understanding of internal control to assess control risk.

Choice "A" is correct. The requirements of a review completed in accordance with SSARS include the requirement that inquiries be made to appropriate individuals and analytical procedures be performed.
Choice "B" is incorrect. The inability to perform detail testing on major account balances would not prevent a review to be performed in accordance with SSARS. Detail testing is an auditing procedure, not a procedure performed during a review engagement.
Choice "C" is incorrect. While an accountant should obtain sufficient knowledge regarding the company's industry and business during the review engagement, he or she is not required to have previous experience in the client's industry.
Choice "D" is incorrect. Obtaining an understanding of internal control is not required for a review performed in accordance with SSARS.
Which of the following is not true about an auditor's report on a review of interim financial information of a publicly held company?
	A.	
It is similar to an audit report in that both provide an opinion regarding whether the financial statements are in conformity with generally accepted accounting principles.
	B.	
It is different from an audit report in that the audit report provides positive assurance whereas the review report provides negative assurance.
	C.	
It is similar to a review report under SSARS in that both make reference to the performance of inquiry and analytical procedures.
	D.	
It is different from a review report under SSARS in that the reference to professional standards is included in the Basis for Review Results section.

Choice "A" is correct. A review report on the interim financial information of a publicly held company does not provide an opinion on the financial statements.
Choice "B" is incorrect. It is true that an audit report provides positive assurance whereas the review report provides negative assurance.
Choice "C" is incorrect. It is true that both types of review reports make reference to the performance of inquiry and analytical procedures.
Choice "D" is incorrect. It is true that the interim review report for issuers' includes reference to professional standards in the Basis for Review section. This is different than SSARS, where the reference to professional standards is included in the accountant's responsibility paragraph. There is no Basis for Review Results section under SSARS.
Arnold Astor, CPA, is a local tax practitioner who has been asked to sit on the Board of BigLarge Corporation, a multinational issuer. Astor has never had any involvement either as an employee or as an auditor with publically traded companies but does teach an accounting principles class at the community college. Under the provisions of Sarbanes-Oxley Act of 2002:
	A.	
The Board of Directors would likely evaluate Astor's qualifications to serve on the audit committee and be designated as a financial expert based on mix of knowledge and experience.
	B.	
Astor must petition the SEC for a waiver of prior experience requirements to be considered a financial expert.
	C.	
The audit committee would immediately certify Astor's qualifications as a financial expert based on his CPA license and academic experience with GAAP and experience with internal control.
	D.	
Astor qualifies as a financial expert based on achievement of a CPA certificate.

Choice "A" is correct. Qualification as a financial expert is a judgmental issue is typically made by the Board of Directors. The Sarbanes-Oxley Act is silent as to what group has the authority to designate an individual a financial expert but in practice, the board most often makes that decision. The Act provides some guidance but does not prescribe specific qualifications.
Choice "B" is incorrect. The Act provides some guidance but does not prescribe specific qualifications. The idea of a petition to the SEC is a distracter.
Choice "C" is incorrect. The Act provides some guidance but does not prescribe specific qualifications. In addition, the audit committee would likely not regulate or evaluate the expertise of its own membership. The Board of Directors would likely make the decisions regarding the designation of financial experts.
Choice "D" is incorrect. The Act provides some guidance but does not prescribe specific qualifications. The achievement of the CPA license generally does not qualify an individual as a financial expert.
How many audits of public companies per year does a CPA firm that is registered with the Public Company Accounting Oversight Board (PCAOB) have to perform before it receives an annual inspection from the PCAOB?
	A.	
More than 50 audits.
	B.	
More than 100 audits.
	C.	
More than 10 audits.
	D.	
One audit.

Choice "B" is correct. The Sarbanes-Oxley Act requires the PCAOB to perform an annual inspection of each registered public accounting firm that regularly provides audit reports for more than 100 issuers.
Which of the following procedures would be generally performed when evaluating the accounts receivable balance in an engagement to review financial statements in accordance with Statements on Standards for Accounting and Review Services?
	A.	
Review subsequent bank statements for evidence of cash deposits.
	B.	
Confirm individually significant receivable balances with customers.
	C.	
Perform a reasonableness test of the balance by computing days' sales in receivables.
	D.	
Vouch a sample of subsequent cash receipts from customers.

Choice "C" is correct.  When evaluating the accounts receivable balance under a review engagement, the accountant would perform analytical procedures such as computing the current period's days' sales in receivables ratio. Once computed, this ratio could be compared to the client's prior period's ratio and /or an industry average ratio to determine if the reported accounts receivable balance (and its relationship to sales) is reasonable.
Choice "A" is incorrect. This audit procedure (test) would not be performed in a review engagement, but may be done in an audit engagement.
Choice "B" is incorrect. Confirmation is an audit procedure that is not required in a review engagement.
Choice "D" is incorrect. Audit testing, which includes tests of accounting records by obtaining sufficient supporting auditing evidence, is not part of a review engagement.
Green, CPA, is aware that Green's name is to be included in the annual report of National Company, a publicly held entity, because Green has audited the annual financial statements included therein. National's quarterly financial statements are also contained in the annual report. Green has not audited but has reviewed these interim financial statements. Green should request that:
I.
Green's name not be included in the annual report.
II.
The interim financial statements be marked as unaudited.
	A.	
Both I and II.
	B.	
Either I or II.
	C.	
II only.
	D.	
I only.

Choice "C" is correct. Because the CPA has not audited the interim financial statements of this publicly held entity, the CPA (Green) should request that the first-quarter interim financial statements be marked as unaudited.
Choices "D", "A", and "B" are incorrect. As long as the CPA has completed his or her review, his name may be included in the annual report.
According to the Sarbanes-Oxley Act (SOX), the assertions on financial reports that the CEO and the CFO must make regarding internal controls include all of the following, except:
	A.	
The controls have been evaluated for effectiveness within 90 days prior to the report issuance.
	B.	
Conclusions as to the effectiveness of the controls per their evaluation.
	C.	
Any identified internal control weaknesses will be rectified within 60 days after the report is issued.
	D.	
The assurance that the controls were set up to ensure that material information is available.

Choice “C” is correct. SOX does not require an assertion that any identified internal control weaknesses will be rectified within 60 days after the report is issued.
Choice “A” is incorrect. The evaluation of internal controls must take place within 90 days prior to the issuance of the report.
Choice “B” is incorrect. Conclusions as to the effectiveness of the controls must be included in the report.
Choice “D” is incorrect. Controls must be set up to ensure that material information is made available, and this assurance must be included in the report.
When a former partner of a registered public accounting firm who left the firm two years ago accepts a financial reporting oversight role at an issuer audit client, the independence of the registered public accounting firm is considered impaired unless which of the following is true?
	A.	
The former partner has no remaining capital balance in the registered public accounting firm.
	B.	
The former partner exerts only limited influence over the registered public accounting firm's operations and financial policies.
	C.	
The former partner was employed by the registered public accounting firm for a period of 2 years or less.
	D.	
The former partner discloses the relationship to the issuer audit client's board of directors.

Choice "A" is correct. The independence of the registered public accounting firm would not be considered impaired if the former partner has no remaining capital balance in the registered public accounting firm.
Choice "B" is incorrect. The independence of the registered public accounting firm would be considered impaired when the former partner is able to exert influence over the registered public accounting firm's operations and financial policies. To preserve the independence of the registered accounting firm, the former partner must be unable to influence the firm's operations or financial policies.
Choice "C" is incorrect. The number of years employed at a registered public accounting firm does not determine whether independence is impaired or not. However, there is a required one-year "cooling-off period" for engagement team members who provided 10 hours or more of service during the audit period for the current (or immediately preceding) fiscal year. In addition, if a former partner will be in an "accounting role" or "financial reporting oversight role" with an SEC audit client, he or she may not have a capital balance with the firm, influence over the accounting firm's operations or financial policies, or a financial arrangement with the accounting firm that is related to the firm's current revenues, profits, or earnings.
Choice "D" is incorrect. Disclosure of the relationship to the issuer audit client's board of directors is not enough to ensure the registered public accounting firm's relationship is not impaired. Under SEC rules, if a former partner will be in an "accounting role" or "financial reporting oversight role" with an SEC audit client, he or she may not have a capital balance with the firm, influence over the accounting firm's operations or financial policies, or a financial arrangement with the accounting firm that is related to the firm's current revenues, profits, or earnings.
The Sarbanes-Oxley Act of 2002 requires that the members of the audit committee of a public company be independent. Receipt of which of the following would destroy independence within the meaning of the law?
President's Salary
Board Member's Salary
	A.	
No
No
	B.	
No
Yes
	C.	
Yes
No
	D.	
Yes
Yes

Choice "C" is correct. Audit committee members must be members of the public company's board of directors and may receive compensation for their service on the board. However, they cannot accept compensation from the public company or be affiliated with it in any other way. Thus, an audit committee member may receive compensation for serving as a director, but not for being the company's president. Receipt of a president's salary would destroy independence.
Choices "D", "B", and "A" are incorrect, based on the above explanation.
The standard that an auditor should be independent of mind and appearance in providing audits is included in the Generally Accepted Government Auditing Standard ethics principle of:
	A.	
Serving the public interest.
	B.	
Professional behavior.
	C.	
Integrity.
	D.	
Objectivity.

Choice "D" is correct. Objectivity includes independence of mind and appearance when providing audits, maintaining an attitude of impartiality, having intellectual honesty, and being free of conflicts of interest.
Choice "A" is incorrect. The public interest is defined as the collective well-being of the community of people and entities served by the auditor. Auditor services should be designed to meet those needs.
Choice "B" is incorrect. Professional behavior includes an auditor's honest effort in the performance of professional services in accordance with the relevant technical and professional standards.
Choice "C" is incorrect. Integrity includes auditors conducting their work with an attitude that is objective, fact-based, nonpartisan, and non-ideological with regard to the audited entities and users of the auditor’s reports.