Chapter 1 The Demand for Audit and Other Assurance Services
1.1 Describe Auditing
1) Which of the following illustrates the definition of auditing with respect to the
evidence analysis process?
A) accumulation and evaluation of evidence about balance sheet accounts
B) learning about different types of computing technology, such as mainframes
C) writing an operational audit report that is tailored to the client's situation
D) making sure that the auditor is competent and understands evidence gathering
Answer: A
Diff: 1 Type: MC Page Ref: 3
Learning Obj.: 1-1 Describe auditing
2) Auditing should be done by a qualified
A) chartered accountant.
B) certified management accountant.
C) competent and independent person.
D) professional accountant.
Answer: C
Diff: 2 Type: MC Page Ref: 3
Learning Obj.: 1-1 Describe auditing
3) Which of the following illustrates the definition of auditing with respect to the
reporting process?
A) accumulation and evaluation of evidence about balance sheet accounts
,B) reporting on the degree of correspondence between financial statements and ASPE
C) writing an operational audit report that is tailored to the client's situation
D) making sure that the auditor is competent and understands evidence gathering
Answer: B
Diff: 2 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
4) In the audit of historical financial statements by PA firms, the criteria used are
A) generally accepted auditing standards.
B) generally accepted accounting principles.
C) regulations of the Canada Revenue Agency.
D) regulations of the provincial securities commissions.
Answer: B
Diff: 1 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
,5) A large PA firm has assessed evidence collected during an engagement. Criteria used
to assess the financial statements were International Financial Reporting Standards
(IFRS). A high level of assurance was obtained. The type of engagement conducted was
A) an audit.
B) a review.
C) management consulting.
D) a compilation.
Answer: A
Diff: 2 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
6) The auditor and the entities should agree on the criteria to be used in the audit
A) before the audit starts.
B) after the audit planning has been done.
C) as they progress with the audit, as they can determine which criteria are most
suitable.
D) at the end of the audit.
Answer: A
Diff: 1 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
7) George had a conversation with the accounting personnel and documented
information about how the accounting systems function. He has also placed copies of
accounting forms in his files. George is performing which task?
A) accounting procedures
B) evidence gathering
C) tax audit
, D) audit report preparation
Answer: B
Diff: 3 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
8) One of the reasons that an auditor must be competent is so that they can
A) understand the engagement risks and the criteria used by the client.
B) explain to staff how the bookkeeping should be done.
C) record the transactions properly for the underlying records.
D) capture the information properly in the computer files.
Answer: A
Diff: 2 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
1.1 Describe Auditing
1) Which of the following illustrates the definition of auditing with respect to the
evidence analysis process?
A) accumulation and evaluation of evidence about balance sheet accounts
B) learning about different types of computing technology, such as mainframes
C) writing an operational audit report that is tailored to the client's situation
D) making sure that the auditor is competent and understands evidence gathering
Answer: A
Diff: 1 Type: MC Page Ref: 3
Learning Obj.: 1-1 Describe auditing
2) Auditing should be done by a qualified
A) chartered accountant.
B) certified management accountant.
C) competent and independent person.
D) professional accountant.
Answer: C
Diff: 2 Type: MC Page Ref: 3
Learning Obj.: 1-1 Describe auditing
3) Which of the following illustrates the definition of auditing with respect to the
reporting process?
A) accumulation and evaluation of evidence about balance sheet accounts
,B) reporting on the degree of correspondence between financial statements and ASPE
C) writing an operational audit report that is tailored to the client's situation
D) making sure that the auditor is competent and understands evidence gathering
Answer: B
Diff: 2 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
4) In the audit of historical financial statements by PA firms, the criteria used are
A) generally accepted auditing standards.
B) generally accepted accounting principles.
C) regulations of the Canada Revenue Agency.
D) regulations of the provincial securities commissions.
Answer: B
Diff: 1 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
,5) A large PA firm has assessed evidence collected during an engagement. Criteria used
to assess the financial statements were International Financial Reporting Standards
(IFRS). A high level of assurance was obtained. The type of engagement conducted was
A) an audit.
B) a review.
C) management consulting.
D) a compilation.
Answer: A
Diff: 2 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
6) The auditor and the entities should agree on the criteria to be used in the audit
A) before the audit starts.
B) after the audit planning has been done.
C) as they progress with the audit, as they can determine which criteria are most
suitable.
D) at the end of the audit.
Answer: A
Diff: 1 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
7) George had a conversation with the accounting personnel and documented
information about how the accounting systems function. He has also placed copies of
accounting forms in his files. George is performing which task?
A) accounting procedures
B) evidence gathering
C) tax audit
, D) audit report preparation
Answer: B
Diff: 3 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
8) One of the reasons that an auditor must be competent is so that they can
A) understand the engagement risks and the criteria used by the client.
B) explain to staff how the bookkeeping should be done.
C) record the transactions properly for the underlying records.
D) capture the information properly in the computer files.
Answer: A
Diff: 2 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing
