Auditing And Assurance Services An Integrated Approach 16Th Edition - Test Bank

,Auditing and Assurance Services, 16e (Arens/Elder/Beasley)
Chapter 1 The Demand for Audit and Other Assurance Services

1.1 Learning Objective 1-1

1) In the auditing process
A) the types and amounts of evidence remain constant from audit to audit.
B) the criteria for evaluating information will not vary depending on the information being
audited.
C) the audit report communicates the auditor's findings to users.
D) records are gathered by the auditor to determine whether the audited information is stated in
accordance with SEC standards.
Answer: C
Terms: Audit process
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking

2) Which of the following is considered audit evidence?
A)
Oral statements Written Auditor
made by management Communications Observation
Y N N

B)
Oral statements Written Auditor
made by management Communications Observation
N Y Y

C)
Oral statements Written Auditor
made by management Communications Observation
Y Y Y

D)
Oral statements Written Auditor
made by management Communications Observation
N N Y

Answer: C
Terms: Audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking

,3) Which of the following can be used as a criteria for evaluating information being audited?
A) International Financial Reporting Standards (IFRS)
B) Generally Accepted Accounting Principles (GAAP)
C) Internal Revenue Code (IRC)
D) all of the above
Answer: D
Terms: Criteria by which an auditor evaluates information
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking

4) Evidence is paramount to audit and attestation engagements. List the four basic types of audit
evidence.
Answer: The four types of audit and attestation evidence include
1. Electronic and documentary data about transactions
2. Written and electronic communications with outsiders
3. Observations by the auditor
4. Oral testimony of the auditee (client)
Terms: Basic types of audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking

5) The criteria by which an auditor evaluates the information under audit may vary with the
information being audited.
Answer: TRUE
Terms: Criteria by which an auditor evaluates information
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking

6) One criteria used by an external auditor to evaluate published financial statements is known as
generally accepted auditing standards.
Answer: FALSE
Terms: Criteria used by external auditor to evaluate published financial statements
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking

7) Auditors strive to maintain a high level of independence to keep the confidence of users
relying on their reports.
Answer: TRUE
Terms: Independence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking

8) To perform an audit, there must be information in a verifiable form and some criteria by
which the auditor can evaluate the information.

, Answer: TRUE
Terms: Independence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking

9) An auditor must be competent and have an independent mental attitude.
Answer: TRUE
Terms: Criteria used by external auditor to evaluate published financial statements
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking

1.2 Learning Objective 1-2

1) Recording, classifying, and summarizing economic events in a logical manner for the purpose
of providing financial information for decision making is commonly called
A) finance.
B) auditing.
C) accounting.
D) economics.
Answer: C
Terms: Recording, classifying, and summarizing economic events
Diff: Easy
Objective: LO 1-2
AACSB: Reflective thinking

2) An accountant
A) must possess expertise in the accumulation of audit evidence.
B) must decide the number and types of items to test.
C) must have an understanding of the principles and rules that provide the basis for preparing the
accounting information.
D) must be a CPA.
Answer: C
Terms: Distinguishes auditors from accountants
Diff: Moderate
Objective: LO 1-2
AACSB: Reflective thinking