TEST BANK AUDITING AND ASSURANCE SERVICES, 16TH EDITION BY ARENS, ELDER, BEASLEY, HOGAN

[TEST BANK]
AUDITING AND
ASSURANCE
SERVICES, 16TH
EDITION BY
ARENS, ELDER,
BEASLEY, HOGAN

,AuditinghandhAssurancehServices, (Arens)
Chapterh1h ThehDemandhforhAudithandhOtherhAssurancehServices

LearninghObjectiveh1-1

1) ThehSarbanes-OxleyhActhapplieshtohwhichhofhthehfollowinghcompanies?
A) Allhcompanies
B) Privatelyhheldhcompanies
C) Publichcompanies
D) Allhpublichcompanieshandhprivatelyhheldhcompanieshwithhassetshgreaterhthanh$500hmilli
onhAnswer:h C
Terms:hSarbanes-
OxleyhActhDiff:h Easy
Objective:h LOh1-1
AACSB:h Reflectivehthinkinghskill
shTopic:h SOX

2) Whichhofhthehfollowinghishconsideredhaudithevidenc
e?hA)
Oralhstatementshm WrittenhCo Auditorh
adehbyhmanagement mmunications Observation
Y N N

B)
Oralhstatementshm WrittenhCo Auditorh
adehbyhmanagement mmunications Observation
N Y Y

C)
Oralhstatementshm WrittenhCo Auditorh
adehbyhmanagement mmunications Observation
Y Y Y

D)
Oralhstatementshm WrittenhCo Auditorh
adehbyhmanagement mmunications Observation
N N Y

Answer:h C
Terms:hAudithevidenceh
Diff:hModeratehObjectiv
e:h LOh1-1
AACSB:h Reflectivehthinkinghskills




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,3) Evidencehishparamounthtohaudithandhattestationhengagements.hLisththehfourhbasichtypeshofha
udithevidence.
Answer:h Thehfourhtypeshofhaudithandhattestationhevidencehinclude:
1. Electronichandhdocumentaryhdatahabouthtransactions
2. Writtenhandhelectronichcommunicationshwithhoutsiders
3. Observationshbyhthehauditor
4. Oralhtestimonyhofhthehauditeeh(clien
t)hTerms:hBasichtypeshofhaudithevidenc
ehDiff:h Easy
Objective:h LOh1-1
AACSB:h Reflectivehthinkinghskills

4) Thehcriteriahbyhwhichhanhauditorhevaluateshthehinformationhunderhaudithmayhvaryhwithh
thehinformationhbeinghaudited.
A) True
B) FalsehA
nswer:h A
Terms:h Criteriahwhichhanhauditorhevaluateshinformatio
nhDiff:h Easy
Objective:h LOh1-1
AACSB:h Reflectivehthinkinghskills

5) Thehcriteriahusedhbyhanhexternalhauditorhtohevaluatehpublishedhfinancialhstatementsharehkno
wnhashgenerallyhacceptedhauditinghstandards.
A) True
B) FalsehA
nswer:h B
Terms:h Criteriahusedhbyhexternalhauditorhtohevaluatehpublishedhfinancialhstatementsh
Diff:h Easy
Objective:h LOh1-1
AACSB:h Reflectivehthinkinghskills

6) ThehSarbanes-
OxleyhActhestablisheshstandardshrelatedhtohthehauditshofhprivatelyhheldhcompanies.
A) True
B) FalsehA
nswer:h B
Terms:hSarbanes-
OxleyhActhDiff:h Easy
Objective:h LOh1-1
AACSB:h Reflectivehthinkinghskill
shTopic:h SOX




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, 7) ThehSarbanes-
OxleyhActhishwidelyhviewedhashhavinghusheredhinhsweepinghchangeshtohauditinghandhfinancialh
reporting.
A) True
B) FalsehA
nswer:h A
Terms:hSarbanes-
OxleyhActhDiff:h Easy
Objective:h LOh1-1
AACSB:h Reflectivehthinkinghskill
shTopic:h SOX

8) Anhauditorhmusthbehcompetenthandhhavehanhindependenthmentalhattitude.
A) True
B) FalsehA
nswer:h A
Terms:h Competencehandhindependenthmentalhattitudeh
Diff:h Easy
Objective:h LOh1-1
AACSB:h Reflectivehthinkinghskill

shLearninghObjectiveh1-2

1) Recording,hclassifying,handhsummarizingheconomicheventshinhahlogicalhmannerhforhthehpurp
osehofhprovidinghfinancialhinformationhforhdecisionhmakinghishcommonlyhcalled:
A) finance.
B) auditing.
C) accounting.
D) economics.
hAnswer:h C
Terms:h Recording,hclassifying,handhsummarizingheconomichevent
shDiff:h Easy
Objective:h LOh1-2
AACSB:h Reflectivehthinkinghskills

2) Anhaccountant:
A) musthpossesshexpertisehinhthehaccumulationhofhaudithevidence.
B) musthdecidehthehnumberhandhtypeshofhitemshtohtest.
C) musthhavehanhunderstandinghofhthehprincipleshandhruleshthathprovidehthehbasishforhpreparingh
thehaccountinghinformation.
D) musthbehahCPA
.hAnswer:h C
Terms:h Distinguisheshauditorshfromhaccountant
shDiff:h Moderate
Objective:h LOh1-2
AACSB:h Reflectivehthinkinghskills


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