Question

1. Which of the following is false regarding common and federal securities laws? a. The securities act of 1933 deals only with the reporting requirements for companies issuing new securities. b. -Rule 10-5b of the securities exchange act of 1934 is also known as the antifraud provision. C. -Ultramares doctrine states that ordinary negligence is insufficient for liability to third parties because of the lack of privity of contracts. d. A scienter is a specialist used in Rule 10-5b investigations. 2. The engagement letter explains management and auditor responsibilities. -True -False 3. An audit generally provides no assurance that illegal acts that do not have a direct effect on the financial statements will be detected. -True -False 4. Which of the following is false regarding audit objectives? a. The term audit objectives refers to transaction-related, balance related, and presentation and disclosure related audit objectives. b. It is usually practical for Auditors to obtain complete Assurance about the correctness of accounts receivable. C. Presentation and disclosure is an audit objective. d. Several audit objectives must be meant for each account balance. 5. The auditor's audit objectives follow and are closely related to management assertions. -True -False 6. Which of the following is false regarding legal liability? a. Foreseeable users are users the auditor should have reasonably been able to foresee as likely users of the client's financial statements. b. The SEC has the authority to sanction. C. The sarbanes-oxley ACT requires the Auditors to certify the annual financial statements filed with the SEC. d. Rule 10/5 B of the Securities Act of 1934 is often called the anti-fraud provision.

Answer 1

In case more than 4 questions are asked, first four would be answered.

Please find the answer below:

1. Answer is a.

The Securities Act of 1933 was created to protect investors after the stock market crash of 1929. The legislation had two main goals: to ensure more transparency in financial statements so investors could make informed decisions about investments; and to establish laws against misrepresentation and fraudulent activities in the securities markets.

2. Answer is a.True

The engagement letter would detail out the responsibilities of the auditor as well as the management related to the engagement.

3. Answer is a.True

An audit provides reasonable assurance of detecting material misstatements due to fraudulent financial reporting and misappropriation of assets, by establishing standards of performance on the financial reporting. It does not assure that there would be detection of illegal acts which are not directly related to financial reporting. It assures only about misstatements directly related to financial reporting.

5. Answer is False

The audit objectives are not linked to management assertions.The objectives are independent of managements assertions.