Solutions for AT overview of auditing
15th Canadian Edition Arens
1. Certain fundamental beliefs called "postulates" underlie auditing theory. Which of the
following is not a postulate of auditing?
a. No long-term conflict exists between the auditor and the management of the enterprise under
audit.
b. Economic assertions can be verified.
c. The auditor acts exclusively as an auditor.
d. An audit has a benefit only to the owners. - ANSd. An audit has a benefit only to the owners.
2. In all cases, audit reports must
a. Be signed by the individual who performed the audit procedures.
b. Certify the accuracy of the quantitative information which was audited.
c. Communicate the auditor's finding to the general public.
d. Inform readers of the degree of correspondence between the quantifiable information and the
established criteria. - ANSd. Inform readers of the degree of correspondence between the
quantifiable information and the established criteria.
3. The auditor communicates the results of his or her work through the medium of the
a. Engagement letter c. Management letter.
b. Audit report d. Financial statements. - ANSb. Audit report
4. As used in auditing, which of the following statements best describes "assertions"?
a. Assertions are the representations of management as to the reliability of the information
system.
b. Assertions are the auditor's findings to be communicated in the audit report.
c. Assertions are the representations of management as to the fairness of the financial
statements.
d. Assertions are found only in the footnotes to the financial statements. - ANSc. Assertions are
the representations of management as to the fairness of the financial statements.
5. The expertise that distinguishes auditors from accountants is in the
a. Ability to interpret generally accepted accounting principles.
b. Requirement to possess education beyond the Bachelor's degree.
c. Accumulation and interpretation of evidence.
,d. Ability to interpret ASC Statements. - ANSc. Accumulation and interpretation of evidence.
6. The framework for auditing and related services as addressed by PSA excludes
a. Review c. Compilation
b. Tax services d. Agreed upon procedure - ANSb. Tax services
7. It refers to the level of auditors satisfaction as to the reliability of an assertion being made by
one party for use by another party.
a. Confidence level c. Assurance level
b. Reasonableness level d. Tolerable level - ANSc. Assurance level
8. Indicate the level of assurance provided by audit and related services.
abcd
- Audit
- Review
- Agreed-upon procedures
- Compilation
a. high moderate none none
b. high none none none
c. negative moderate none none
d. absolute high limited none - ANSa. high moderate none none
9. Which of the following is true of the report based on agreed-upon-procedures?
a. The report is restricted to those parties who have agreed to the procedures to be performed.
b. The CPA provides the recipients of the report limited assurance as to reasonableness of the
assertion(s) presented in the financial information.
c. The report states that the auditor has not recognized any basis that requires revision of
financial statements.
d. The report should state that the procedures performed are limited to analytical procedures
and inquiry. - ANSa. The report is restricted to those parties who have agreed to the procedures
to be performed.
10. Which of the following is an objective of a review engagement?
a. Expressing a positive opinion that the financial information is presented in conformity with
generally accepted accounting principles.
, b. Expressing a limited assurance to users who have agreed as to procedures that will be
performed by the CPA.
c. Reporting whether material modifications should be made to such financial statements to
make them conform with generally accepted accounting principles.
d. Reporting that the financial statements, in all materials respects, fairly present the financial
position and operating results of the client. - ANSc. Reporting whether material modifications
should be made to such financial statements to make them conform with generally accepted
accounting principles.
11. According to Philippine Standard on Auditing, the procedures employed in doing compilation
are:
a. Designed to enable the accountant to express a limited assurance.
b. Designed to enable the accountant to express a negative assurance.
c. Not designed to enable the accountant to express any form of assurance.
d. Less extensive than review procedures but more extensive than agreed-upon procedures. -
ANSc. Not designed to enable the accountant to express any form of assurance.
12. Any services in which the CPA firm issues a written communication that express a
conclusion
with respect to the reliability of a written assertion that is the responsibility of another party is
a(n)
a. Accounting and bookkeeping service
b. Management advisory service
c. Attestation service
d. Tax service - ANSc. Attestation service
13. The three types of attestation services are:
a. Audits, review, and compilations
b. Audits, compilations, and other attestation services
c. Reviews, compilations, and other attestation services
d. Audits, reviews, and other attestation services - ANSd. Audits, reviews, and other attestation
services
15th Canadian Edition Arens
1. Certain fundamental beliefs called "postulates" underlie auditing theory. Which of the
following is not a postulate of auditing?
a. No long-term conflict exists between the auditor and the management of the enterprise under
audit.
b. Economic assertions can be verified.
c. The auditor acts exclusively as an auditor.
d. An audit has a benefit only to the owners. - ANSd. An audit has a benefit only to the owners.
2. In all cases, audit reports must
a. Be signed by the individual who performed the audit procedures.
b. Certify the accuracy of the quantitative information which was audited.
c. Communicate the auditor's finding to the general public.
d. Inform readers of the degree of correspondence between the quantifiable information and the
established criteria. - ANSd. Inform readers of the degree of correspondence between the
quantifiable information and the established criteria.
3. The auditor communicates the results of his or her work through the medium of the
a. Engagement letter c. Management letter.
b. Audit report d. Financial statements. - ANSb. Audit report
4. As used in auditing, which of the following statements best describes "assertions"?
a. Assertions are the representations of management as to the reliability of the information
system.
b. Assertions are the auditor's findings to be communicated in the audit report.
c. Assertions are the representations of management as to the fairness of the financial
statements.
d. Assertions are found only in the footnotes to the financial statements. - ANSc. Assertions are
the representations of management as to the fairness of the financial statements.
5. The expertise that distinguishes auditors from accountants is in the
a. Ability to interpret generally accepted accounting principles.
b. Requirement to possess education beyond the Bachelor's degree.
c. Accumulation and interpretation of evidence.
,d. Ability to interpret ASC Statements. - ANSc. Accumulation and interpretation of evidence.
6. The framework for auditing and related services as addressed by PSA excludes
a. Review c. Compilation
b. Tax services d. Agreed upon procedure - ANSb. Tax services
7. It refers to the level of auditors satisfaction as to the reliability of an assertion being made by
one party for use by another party.
a. Confidence level c. Assurance level
b. Reasonableness level d. Tolerable level - ANSc. Assurance level
8. Indicate the level of assurance provided by audit and related services.
abcd
- Audit
- Review
- Agreed-upon procedures
- Compilation
a. high moderate none none
b. high none none none
c. negative moderate none none
d. absolute high limited none - ANSa. high moderate none none
9. Which of the following is true of the report based on agreed-upon-procedures?
a. The report is restricted to those parties who have agreed to the procedures to be performed.
b. The CPA provides the recipients of the report limited assurance as to reasonableness of the
assertion(s) presented in the financial information.
c. The report states that the auditor has not recognized any basis that requires revision of
financial statements.
d. The report should state that the procedures performed are limited to analytical procedures
and inquiry. - ANSa. The report is restricted to those parties who have agreed to the procedures
to be performed.
10. Which of the following is an objective of a review engagement?
a. Expressing a positive opinion that the financial information is presented in conformity with
generally accepted accounting principles.
, b. Expressing a limited assurance to users who have agreed as to procedures that will be
performed by the CPA.
c. Reporting whether material modifications should be made to such financial statements to
make them conform with generally accepted accounting principles.
d. Reporting that the financial statements, in all materials respects, fairly present the financial
position and operating results of the client. - ANSc. Reporting whether material modifications
should be made to such financial statements to make them conform with generally accepted
accounting principles.
11. According to Philippine Standard on Auditing, the procedures employed in doing compilation
are:
a. Designed to enable the accountant to express a limited assurance.
b. Designed to enable the accountant to express a negative assurance.
c. Not designed to enable the accountant to express any form of assurance.
d. Less extensive than review procedures but more extensive than agreed-upon procedures. -
ANSc. Not designed to enable the accountant to express any form of assurance.
12. Any services in which the CPA firm issues a written communication that express a
conclusion
with respect to the reliability of a written assertion that is the responsibility of another party is
a(n)
a. Accounting and bookkeeping service
b. Management advisory service
c. Attestation service
d. Tax service - ANSc. Attestation service
13. The three types of attestation services are:
a. Audits, review, and compilations
b. Audits, compilations, and other attestation services
c. Reviews, compilations, and other attestation services
d. Audits, reviews, and other attestation services - ANSd. Audits, reviews, and other attestation
services
