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Ac555

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AC555 External Auditing
Midterm Exam

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1. The objective of the ordinary audit of financial statements is the expression of an opinion on: | | the fairness of the financial statements | | CORRECT | | | the accuracy of the financial statements | | | | | the accuracy of the annual report | | | | | the balance sheet and income statement | | | 2. The auditor's best defense when material misstatements are not uncovered is to have conducted the audit: | | in accordance with auditing standards | | CORRECT | | | as effectively and as reasonably possible | | | | | in a timely manner | | | | | only after an adequate investigation of the management team | | | | | | | | | | | | | 3. Which of the following statements is most correct regarding errors and fraud? | | An error is unintentional, whereas fraud is intentional. | | CORRECT | | | Fraud occurs more often than errors in financial statements. | | | | | Errors are always fraud and fraud is always errors. | | | | | Auditors have more responsibility for finding fraud than errors. | | | 4. Which of the following statements is true of a public company's financial statements? | | Sarbanes-Oxley requires only the CEO to certify the financial statements. | | | | | Sarbanes-Oxley requires only the CFO to certify the financial statements. | | | | | Sarbanes-Oxley requires the CEO and CFO to certify the financial statements. | | CORRECT | | | Sarbanes-Oxley requires neither the CEO nor the CFO to certify the financial statements. | | |

5. When auditors use documents to support recorded transactions, the process is

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