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SAMPLE TEST
BEST WISHES
ANSWER KEY
12.Given the following scenarios, please indicate how the company would handle
the risk in each situation. Each answer can only be used once (12 points)
N/A
a. Reduction
b. Sharing or insuring
c. Acceptance
d. Avoidance
The company is In N Out Burger and the following situations are presented:
1. C___ The FDA (Federal Department of Agriculture) has issued
new standards related to the processing of cattle on farms on
the United States; at this time we do not know if these standards
will improve the quality of the meat or not improve the quality of
the meat processed.
2. D_____ Recent studies indicate a controversy related to meat
that is frozen and then thawed too quickly.
3. B_____ Because of the health regulations, In N Out must wash
the floors during business hours if something is spilled; someone
may slip and fall when the floors are not completely dry.
4. A_____ The preparation of French fries may vary among store
locations.
13.According to the Sarbanes-Oxley Legislation, public accounting firms can no
longer perform internal audit or bookkeeping services.
A. True
B. False
14.Independence is compromised when an auditor goes to dinner with their
client at the end of an audit engagement.
A. True
B. False
15.If the risk of material misstatement is high, the auditor should not perform
any inquiry on the audit because is this is not a very effective procedure.
A. True
B. False
16.Partners on public company audits must rotate every A years, and; you must
maintain records for your public company audits for B years. A. 5 B. 7
17.List the parties involved in an assurance service (9 points)
A. PRACTICIONER
B. MANAGEMENT
C. USER
18.What is the purpose for companies to have corporate governance? PROVIDE
OVERSIGHT
19.List and explain the components of the audit risk model. (10 points)
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