integrity, Pell should divide responsibility by making reference to Smith's audit. Choices "a", "c",
and "d" are incorrect. Since the principal auditor in situation I reviews Smith's audit
documentation and assumes responsibility for Smith's work, no mention of Smith should be
made.
QUESTION: 126
Which of the following best describes what is meant by the term generally accepted auditing
standards?

A. Rules acknowledged by the accounting profession because of their universal application.
B. Pronouncements issued by the Auditing Standards Board.
C. Measures of the quality of the auditor's performance.
D. Procedures to be used to gather evidence to support financial statements.

Answer(s): C
Explanation:
Choice "c" is correct. Generally accepted auditing standards ("GAAS") are measures of the
quality of the auditor's performance. Choice "a" is incorrect. GAAS are not "rules," nor are they
universally applicable. GAAS are measures of the quality of an auditor's performance. Choice
"b" is incorrect. The Auditing Standards Board (ASB) issues many types of pronouncements,
including (but not limited to) "Statements on Auditing Standards" (SASs). While
SASs are considered to be interpretations of GAAS, not all ASB pronouncements relate to
audits. Therefore, just because something is issued by the ASB does not make it GAAS. Choice
"d" is incorrect. Auditing standards differ from auditing procedures in that procedures relate to
acts to be performed, whereas standards deal with the quality of the performance of those acts.
QUESTION: 127
According to the profession's ethical standards, which of the following events may justify a
departure from a Statement of Financial Accounting Standards?
A. Option A
B. Option B
C. Option C
D. Option D

Answer(s): C
Explanation:
Choice "c" is correct. Yes - Yes. Rule 203 of the code of professional conduct of the AICPA
states that if the financial statements or data contain a GAAP departure, the departure may be
justified if the CPA can demonstrate that due to unusual circumstances, such as new legislation

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