MaoEn/USCPA_AUD_Data huggingface dataset:
Plinth Industries, an issuer, employs several former employees of its auditor, Lawrence & Whitney, CPAs. Adams, CEO, began his career with L&W, but left ten years ago; Brooks, CFO, was with L&W until 18 months ago, and James, internal auditor, left L&W six months prior to the start of the current year's audit. Which of the following properly describes the effect of these potential conflicts of interest?
A.
L&W may not audit Plinth due to the employment of James within the one-year period preceding the audit.
B.
L&W may not audit Plinth because the CEO and CFO are both former L&W employees.
C.
L&W may not audit Plinth due to the employment of Brooks within the two-year period preceding the audit.
D.
L&W may audit Plinth.,"Choice "D" is correct. L&W may audit Plinth since none of the situations described presents a conflict of interest as described in SOX Title II.
Choice "A" is incorrect. The conflict of interest provisions of SOX Title II apply only to the issuer's CEO, CFO, Controller, or Chief Accounting Officer (or to any person serving in an equivalent position), not to an internal auditor.
Choices "B" and "C" are incorrect. Neither Adams nor Brooks was employed by L&W within the one-year period preceding the audit, so neither position poses a conflict of interest as described in SOX Title II."
Pursuant to the Sarbanes-Oxley Act of 2002, an accountant who destroys documents to impede an investigation by a U.S. agency can be:
A.
Fined and/or imprisoned not more than 10 years.
B.
Fined and/or imprisoned not more than 20 years.
C.
Temporarily or permanently limited on the activities, functions, or operations conducted on behalf of a registered public accounting firm.
D.
Suspended or barred from being associated with a registered public accounting firm, or be required to end such association.,"Choice "B" is correct. Under Title VIII (Corporate and Criminal Fraud Accountability) of the Sarbanes-Oxley Act of 2002, the penalty for intentionally destroying documents to impede, obstruct, or influence an investigation will be a fine, imprisonment for not more than 20 years, or both.
Choice "A" is incorrect. The maximum term of imprisonment is 20 years, not 10 years.
Choice "C" is incorrect. The penalty relates to fines and imprisonment, not suspension or disbarment from a public accounting firm or the activities of the firm.
Choice "D" is incorrect. The penalty relates to fines and imprisonment, not suspension or disbarment from a public accounting firm or the activities of the firm."
Which of the following statements with respect to the Public Company Accounting Oversight Board rules on independence is correct?
A.
Public confidence would usually not be impaired by the existence of circumstances that reasonable people might believe are likely to influence independence.
B.
Auditors should be independent in fact but are not obligated to avoid situations that could lead outsiders to doubt their independence.
C.
Auditors must be without bias with respect to a client in order to maintain the impartiality necessary for the dependability of audit findings.
D.
Independence implies the attitude of a prosecutor that recognizes an obligation for fairness to management and other stakeholders.,"Choice "C" is correct. An auditor is not independent if they are not, or a reasonable, knowledgeable investor would conclude that they are not, capable of exercising objective and impartial judgment. In order to exercise such judgment, the auditor must be without bias with regard to the client.
Choice "A" is incorrect. If circumstances exist that reasonable people might believe could likely influence independence, the accountant would not be considered independent because the auditor must be capable of exercising objective and impartial judgment.
Choice "B" is incorrect. Auditors must be independent with respect to an audit client so that a reasonable, knowledgeable investor would not conclude that the accountant is not capable of exercising objective and impartial judgment.
Choice "D" is incorrect. Independence is considered from the point of view of a reasonable and knowledgeable investor."
An accountant is most likely required to follow Statements on Standards for Accounting and Review Services (SSARS) when the accountant has:
A.
Used the information in a general ledger to prepare financial statements outside of an accounting software system.
B.
Proposed correcting journal entries to be recorded by the client that change client-prepared financial statements.
C.
Provided a client with a financial statement format that does not include dollar amounts, to be used by the client in preparing financial statements.
D.
Typed client-prepared financial statements, without modification, as an accommodation to the client.,"Choice "A" is correct. SSARS apply when an accountant prepares, compiles, or reviews financial statements. Using information in the general ledger to prepare financial statements outside an accounting software system is considered a preparation engagement.
Choice "B" is incorrect. Proposing correcting journal entries does not constitute preparation of financial statements. Even entering general ledger transactions or processing payments (general bookkeeping) in an accounting system does not constitute a preparation engagement because it is considered merely "assisting " in preparing the financial statements (bookkeeping service.)
Choice "C" is incorrect. Providing a client with a financial statement format does not constitute preparation of financial statements and, therefore, this does not fall within the guidelines of SSARS.
Choice "D" is incorrect. Typing or reproducing client-prepared financial statements, without modification, as an accommodation to a client does not constitute preparation of financial statements because the accountant has not prepared those statements."
For an engagement to prepare financial statements, which of the following items should be identified in the engagement letter as management's responsibility?
A.
The accuracy of significant judgments to be used in the preparation of the financial statements.
B.
The inclusion of the financial reporting framework description on the face of the financial statements.
C.
The determination of the level of assurance over the financial statements.
D.
The preparation of financial statement disclosures.,"Choice "A" is correct. One of management's responsibilities in a preparation engagement is for the accuracy and completeness of the accounting records, which includes the accuracy of significant judgments provided to the accountant who has been engaged to prepare the financial statements.
Choice "B" is incorrect. The accountant, not management, is responsible for including a description of the financial reporting framework on the face of the financial statements or in a note to the financial statements when preparing financial statements in accordance with a special purpose framework.
Choice "C" is incorrect. No assurance of the financial statements is given in a preparation engagement.
Choice "D" is incorrect. The accountant, not management, is responsible for the preparation of the financial statement disclosures in a preparation engagement."
When an accountant compiles a client's financial statements accompanied by supplemental information, which of the following is a required element of the accountant's separate report on the supplemental information?
A.
A list of the procedures performed by the accountant during the compilation.
B.
A statement that the information has been compiled from information that is the representation of management without audit or review.
C.
A statement that the accountant did not become aware of any material modifications that should be made to the information.
D.
A confirmation of the independence of the accountant with respect to the information presented.,"Choice "B" is correct. When an accountant compiles a client's financial statements accompanied by supplemental information, the accountant's separate report on the supplemental information should include a statement that the information has been compiled from information that is the representation of management without audit or review.
Choice "A" is incorrect. When the compiled financial statements are accompanied by supplemental information, a list of procedures performed is not required in an accountant's separate report on supplemental information. A list of procedures performed is included in an agreed-upon procedures report.
Choice "C" is incorrect. When an accountant reviews a client's financial statements accompanied by supplemental information, the accountant's separate report on the supplemental information should include a statement that the accountant did not become aware of any material modifications that should be made to the information.
Choice "D" is incorrect. When the compiled financial statements are accompanied by supplemental information, the accountant is not required to confirm independence in the accountant's separate report on supplemental information."
The standard report issued by a CPA after reviewing the financial statements of a nonissuer in accordance with Statements on Standards for Accounting and Review Services (SSARS) should state that the CPA:
A.
Assessed the accounting principles used and significant estimates made by management.
B.
Is not aware of any material modifications that should be made to the financial statements.
C.
Believes that there will usually be differences between the projected and actual results.
D.
Has no responsibility to update the CPA's report for events and circumstances occurring after the report's date.,"Choice "B" is correct. The standard review report issued in accordance with SSARS should state that the CPA is not aware of any material modifications that should be made to the financial statements.
Choice "A" is incorrect. An issuer standard audit report includes a statement that the CPA assessed the accounting principles used and significant estimates made by management.
Choice "C" is incorrect. This statement does not appear in a review report under SSARS. This statement appears in reports on projected financial statements under Statements on Standards for Attestation Engagements (SSAE) guidance.
Choice "D" is incorrect. This statement does not appear in a review report under SSARS. This statement appears in reports on prospective financial statements under Statements on Standards for Attestation Engagements (SSAE) guidance."