CFA Level I:FSA : an induction(Reading 22) 习题精选 opinion, company, about

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1. Which of the following statements is most accurate about the responsibilities of an auditor for a publicly traded firm in the United States? The auditor:

A. Assures the reader that the financial statements are free from error, fraud, or illegal acts.

B. Must express an opinion about the effectiveness of the company’s internal control systems.

C. Must state that he prepared the financial statements according to generally accepted accounting principles.

Ans: B;
B is correct. For a publicly traded firm in the United States, the auditor must express an opinion as to whether the company’s internal control system is in accordance with the Public Company Accounting Oversight Board, under the Sarbanes–Oxley Act. This is done either as a final paragraph in the auditor’s report or as a separate opinion.
A is incorrect. An auditor can only provide reasonable assurance that the financial statements A.    are free from error, fraud, or illegal acts.
B is incorrect. Auditors’ responsibility is to express an opinion that the financial statements are free from error, fraud, or illegal acts. Preparing the financial statement is not the responsibility.

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22. The two primary assumptions in preparing financial statements under IFRS are:

A. accrual and going concern.

B. reasonable accuracy and accrual.

C. going concern and reasonable accuracy.

  
   
Ans: A.

In the IFRS framework, the two primary assumptions in preparing financial statements are the accrual basis and the going concern assumption.

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21. Which of the following sources of information should an analyst consider the least reliable?

A. Form 10-Q.

B. Proxy statement.

C. Corporate press release.
   
Ans: C.

Corporate press releases are written by management and are often view as public relations or sales materials because of the great possibility of inherent management bias in such documents. Often, little or none of the material is independently reviewed by outside auditors. Such documents are not mandated by the securities regulators.

A and B are incorrect. Form 10-Q (quarterly financial statements) and Proxy statement are mandatory SEC filings in the U.S., which inherently increases their reliability given the penalties that can be imposed by the SEC if any serious irregularities are subsequently found.

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20. Which of the following statements regarding an audit and a standard auditor’s opinion is most accurate?

A. The objective of an audit is to enable the auditor to provide an opinion on the numerical accuracy of the financial statements.

B. To provide an independent review of a company’s financial statements, an independent certified public accounting firm is appointed by the company’s management.

C. The absence of an explanatory paragraph in the audit report relating to the going concern assumption suggests that there are no serious problems that require a close examination of that assumption by the analyst.
   
Ans: C.

A specific explanatory paragraph that makes reference to (questions) the going concern assumption may be a signal of serious problems and call for close examination by the analyst. Therefore, in the absence of such a paragraph, there is no need for a close examination of the going concern assumption by the analyst.

A is incorrect. The objective of an audit is to enable the auditor to provide an opinion on the fairness and reliability of the financial statements. This is not the same as numerical accuracy. The auditor generally only provides reasonable assurance that there are no material errors in the financial statements, not an opinion about their numerical accuracy.

C is incorrect. An independent certified public accounting firm must be appointed by the audit committee of the company’s board of directors, not by its management. Appointment of the auditors by management would reduce the level of perceived independence.

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19. Which of the following statements about a corporation’s annual reports, SEC filings, and press releases is most accurate?

A. Annual and quarterly SEC filings must be audited.

B. Interim SEC filings typically update the major financial statements and footnotes.

C. Annual reports top shareholders are generally viewed as the most factual and objective source of information about a company.

  
   
Ans: B.

Besides the annual SEC filings, an analyst should examine a company’s quarterly or semiannual filings. These interim filings tropically update the major financial statements and footnotes, but are not necessarily audited. Annual reports to shareholders and press releases are written by management and are often viewed as public relations or sales materials.

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18. Which of the following items is least likely to contain details about carious accruals, adjustments, balances, and management assumptions?

A. Income statement.

B. Supplementary schedules.

C. Discussion and analysis by management.
   
Ans: A.

The income statement reports the amounts for each of the major line items within the general categories of revenues and expenses. The various accruals, adjustments, and management assumptions are implicit in the reported amounts but are not specifically explained in the income statement.

B is incorrect. Supplementary schedules contain additional information, including a more detailed breakdown of certain large account balances.

C is incorrect. Much of the detail contained in carious accruals, adjustments, and managements assumptions that go into the financial statements can be found in the footnotes to the statements and Management’s discussion and Analysis.

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17. Information about a company’s financial position at a point in time is most likely found in the:

A. balance sheet.

B. income statement.

C. cash flow statement.
   
Ans: A.

The balance sheet reports the company’s financial position ar a point in time.

The income statement reports on financial performance over a period of time.

The cash flow statement reports a company’s cash receipts and payments over a period of time.

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16. An analyst’s examination of the performance of a company is least likely to include an assessment of a company’s:

A. profitability.

B. cash flow generating ability.

C. assets relative to its liabilities.

  
    Ans: C.

Assessment of performance includes analysis of profitability and cash flow generating ability. The relationship between assets and liabilities is used to assess a company’s position, not its performance.

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15. Which of the following financial statement elements most accurately represents inflows of economic resources to a company?

A. Gains.

B. Assets.

C. Revenues.
   
Ans: C.

Revenues are inflows from delivering or producing goods, rending services, or other activities that constitute the entity’s ongoing major or central operations.

A is incorrect. Assets are the resources controlled by the firm, but not inflows.

C is incorrect. Gains are an account, not an element of the financial statements.

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14. Which of the following is least likely to be a fundamental principle in the preparation of financial statements within the IFRS Framework?

A. Matching

B. Materiality

C. Accrual basis

  
    Ans: B.

The five fundamental principles underlying the preparation of financial statements under the IFRS Framework are fair presentation, going concern, accrual basis, consistency, and materiality. Matching is a general principle of expense recognition.