The following questions deal with audits by CPA firms.
Choose the best response.
a. Which of the following best describes why an independent auditor is asked to express an opinion on the fair presentation of financial statements?
(1) The opinion of an independent party is needed because a company may not be
objective with respect to its own financial statements.
(2) It is management’s responsibility to seek available independent aid in the ap-
praisal of the financial information shown in its financial statements.
(3) It is difficult to prepare financial statements that fairly present a company’s fi-
nancial position, operations, and cash flows without the expertise of an indepen-
dent auditor.
(4) It is a customary courtesy that all stockholders of a company receive an indepen-
dent report on management’s stewardship of the affairs of the business.
b. Which of the following professional services is an attestation engagement?
(1) A consulting service engagement to provide computer-processing advice to a
client
(2) The preparation of financial statements from a client’s financial records
(3) An income tax engagement to prepare federal and state tax returns
(4) An engagement to report on compliance with statutory requirements
c. Which of the following attributes is likely to be unique to the audit work of CPAs as
compared to the work performed by practitioners of other professions?
(1) Independence
(2) Competence
(3) Due professional care
(4) Complex body of knowledge
