ACCT 555 Midterm Exam 2

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ACCT 555 Midterm Exam

  1. (TCO A) Match the following definitions to the appropriate terms
  2. (TCO B) The following is a portion of a qualified audit report issued for a private company.
    To the shareholders of Tamarak Corporation,
    We have audited the accompanying balance sheet of Tamarak Corporation as of October 31, 2009, and the related statements of income, retained earnings, and cash flows for the past year. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
  3. (TCO C) The following situation involves a possible violation of the AICPA’s code of professional conduct. For this situation, (1) determine the applicable rule number from the code, (2) decide whether or not the code has been violated, and (3) briefly explain how the situation violates (or does not violate) the code.
  4. (TCO C) The following situation involves a possible violation of the AICPA’s code of professional conduct. For this situation, (1) determine the applicable rule number from the code, (2) decide whether or not the code has been violated, and (3) briefly explain how the situation violates (or does not violate) the code. Your answer should be set up something like this:
  5. (TCO C) Under the provisions of the Sarbanes-Oxley Act of 2002 (SOX), the audit committee of a public company has specific guidelines to which employees must adhere. Discuss some of the mandated features of the audit committee of a public company under SOX.
  6. (TCO D) Discuss some of the steps the AICPA and the accounting profession as a whole can and are taking to reduce practitioners’ exposure to lawsuits. You answer should provide at least five steps.
  7. (TCO F) Match nine of the terms (A–K) with the definitions provided below (1–9).
    A – Foot
    B – Compute
    C – Scan
    D – Inquire
    E – Count
    F – Trace
    G – Recompute
    H – Read
    I – Examine
    J – Observe
    K – Compare
  8. (TCO G) Discuss the essential activities involved in the initial planning of an audit.