TEST BANK FOR
AUDITING: THE ART AND
SCIENCE OF ASSURANCE
ENGAGEMENTS,
FOURTEENTH CANADIAN
EDITION 14TH EDITION
ALVIN A. ARENS, RANDAL
J. ELDER, MARK S.
BEASLEY, CHRIS E.
HOGAN, JOANNE C.
JONES
,Auditing, 14e (Arens)
Chapter 2 The Public Accounting Profession and Audit Quality
2.1 Describe the public accounting industry
1) One of the main advantages of a "big" public accounting firm is
A) their lower professional fees due to economies of scale.
B) their ability to share with the client knowledge and experience from similar companies
they have audited.
C) their ability to audit nearly all the largest companies worldwide.
D) the increased reliability of their audit reports.
Answer: C
Diff: 2 Type: MC Page Ref: 25
Learning Obj.: 2-1 Describe the public accounting industry
2) National accounting firms in 2015 were those with
A) offices in most major cities and revenues over $100 million.
B) international representation in most cities around the world.
C) offices in all major cities in Canada and revenues over $75 million.
D) national and international affiliations providing services in all major centres.
Answer: A
Diff: 3 Type: MC Page Ref: 25-26
Learning Obj.: 2-1 Describe the public accounting industry
3) Approximately how many public accounting firms in Canada have more than 50
professional staff?
A) 25
B) 50
C) 75
D) 100
Answer: B
Diff: 3 Type: MC Page Ref: 26
Learning Obj.: 2-1 Describe the public accounting industry
4) What is the size of most small local public accounting firms in Canada?
A) fewer than 25 employees
B) between 25 and 49 employees
C) between 50 and 75 employees
D) more than 75 employees
Answer: A
Diff: 3 Type: MC Page Ref: 26
Learning Obj.: 2-1 Describe the public accounting industry
, 5) The most common organizational form used by public accounting firms is
A) sole proprietorship or partnership.
B) professional corporation.
C) corporation.
D) co-operative.
Answer: A
Diff: 1 Type: MC Page Ref: 26
Learning Obj.: 2-1 Describe the public accounting industry
6) Large accounting firms are often limited liability partnerships (LLPs) because if their
audits are conducted in accordance with CAS (Canadian Auditing Standards),
A) partners not on the engagement would not be liable to pay with their personal assets
when the LLP is sued.
B) improved quality control practices can be initiated using technical personnel.
C) more formal requirements are in place when reporting to federal tax authorities.
D) partners are liable to pay with only a limited portion of their personal assets when the
LLP is sued.
Answer: A
Diff: 3 Type: MC Page Ref: 26
Learning Obj.: 2-1 Describe the public accounting industry
7) Most international and national accounting firms in Canada are comprised of
professional accountants with the designation
A) CIA.
B) CPA.
C) CFE.
D) CISA.
Answer: B
Diff: 2 Type: MC Page Ref: 27
Learning Obj.: 2-1 Describe the public accounting industry
8) What are the staff levels and responsibilities at public accounting firms?
Answer: 1. Partner - Leads the engagement, reviews the overall audit work, and is involved
in significant audit decisions. A partner has the ultimate responsibility for conducting the
audit and maintaining client relations. Average experience of 10 years.
2. Senior manager - Leads the engagement and reviews the team's work. Works directly
with the partner and assists in client relationships. Average experience of 7-10 years.
3. Manager - Helps the in-charge plan and manage the audit, reviews the in-charge's work,
and manages relations with the client. A manager may be responsible for more than one
engagement at the same time. Average experience of 5-7 years.
4. Senior or in-charge auditor - Coordinates and is responsible for the audit field work,
including supervising and reviewing staff work. Average experience of 2-5 years.
5. Staff accountant - Performs most of the detailed audit work. Average experience of 0-2
years.
Diff: 2 Type: ES Page Ref: 27
Learning Obj.: 2-1 Describe the public accounting industry
AUDITING: THE ART AND
SCIENCE OF ASSURANCE
ENGAGEMENTS,
FOURTEENTH CANADIAN
EDITION 14TH EDITION
ALVIN A. ARENS, RANDAL
J. ELDER, MARK S.
BEASLEY, CHRIS E.
HOGAN, JOANNE C.
JONES
,Auditing, 14e (Arens)
Chapter 2 The Public Accounting Profession and Audit Quality
2.1 Describe the public accounting industry
1) One of the main advantages of a "big" public accounting firm is
A) their lower professional fees due to economies of scale.
B) their ability to share with the client knowledge and experience from similar companies
they have audited.
C) their ability to audit nearly all the largest companies worldwide.
D) the increased reliability of their audit reports.
Answer: C
Diff: 2 Type: MC Page Ref: 25
Learning Obj.: 2-1 Describe the public accounting industry
2) National accounting firms in 2015 were those with
A) offices in most major cities and revenues over $100 million.
B) international representation in most cities around the world.
C) offices in all major cities in Canada and revenues over $75 million.
D) national and international affiliations providing services in all major centres.
Answer: A
Diff: 3 Type: MC Page Ref: 25-26
Learning Obj.: 2-1 Describe the public accounting industry
3) Approximately how many public accounting firms in Canada have more than 50
professional staff?
A) 25
B) 50
C) 75
D) 100
Answer: B
Diff: 3 Type: MC Page Ref: 26
Learning Obj.: 2-1 Describe the public accounting industry
4) What is the size of most small local public accounting firms in Canada?
A) fewer than 25 employees
B) between 25 and 49 employees
C) between 50 and 75 employees
D) more than 75 employees
Answer: A
Diff: 3 Type: MC Page Ref: 26
Learning Obj.: 2-1 Describe the public accounting industry
, 5) The most common organizational form used by public accounting firms is
A) sole proprietorship or partnership.
B) professional corporation.
C) corporation.
D) co-operative.
Answer: A
Diff: 1 Type: MC Page Ref: 26
Learning Obj.: 2-1 Describe the public accounting industry
6) Large accounting firms are often limited liability partnerships (LLPs) because if their
audits are conducted in accordance with CAS (Canadian Auditing Standards),
A) partners not on the engagement would not be liable to pay with their personal assets
when the LLP is sued.
B) improved quality control practices can be initiated using technical personnel.
C) more formal requirements are in place when reporting to federal tax authorities.
D) partners are liable to pay with only a limited portion of their personal assets when the
LLP is sued.
Answer: A
Diff: 3 Type: MC Page Ref: 26
Learning Obj.: 2-1 Describe the public accounting industry
7) Most international and national accounting firms in Canada are comprised of
professional accountants with the designation
A) CIA.
B) CPA.
C) CFE.
D) CISA.
Answer: B
Diff: 2 Type: MC Page Ref: 27
Learning Obj.: 2-1 Describe the public accounting industry
8) What are the staff levels and responsibilities at public accounting firms?
Answer: 1. Partner - Leads the engagement, reviews the overall audit work, and is involved
in significant audit decisions. A partner has the ultimate responsibility for conducting the
audit and maintaining client relations. Average experience of 10 years.
2. Senior manager - Leads the engagement and reviews the team's work. Works directly
with the partner and assists in client relationships. Average experience of 7-10 years.
3. Manager - Helps the in-charge plan and manage the audit, reviews the in-charge's work,
and manages relations with the client. A manager may be responsible for more than one
engagement at the same time. Average experience of 5-7 years.
4. Senior or in-charge auditor - Coordinates and is responsible for the audit field work,
including supervising and reviewing staff work. Average experience of 2-5 years.
5. Staff accountant - Performs most of the detailed audit work. Average experience of 0-2
years.
Diff: 2 Type: ES Page Ref: 27
Learning Obj.: 2-1 Describe the public accounting industry
