1
Copyright © 2023 Pearson Education, Inc.
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VERIFIEDBRAINBOOSTER
,Auditing and Assurance Services, 18e (Arens)
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Chapter 1 The Demand for Audit and Other Assurance Services
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1.1 Learning Objective 1-1
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1) In the auditing process,
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A) the types and amounts of evidence remain constant from audit to audit.
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B) the criteria for evaluating information will not vary depending on the information being au
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dited.
C) the audit report communicates the auditor's findings to users.
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D) records are gathered by the auditor to determine whether the audited information is stated in ac
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cordance with SEC standards. zl zl zl
Answer: C z l
Terms: Audit process Diff z l zl zl
iculty: Moderate Objectiv
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e: LO 1-1
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AACSB: Reflective thinking z l zl
2) Which of the following is considered audit evidence?
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A)
Oral statements mad
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e by management
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mmunications ervations
Y N N
B)
Oral statements mad
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e by management
zl zl Written Co zl Auditor Obs zl
mmunications ervations
N Y Y
C)
Oral statements mad
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e by management
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mmunications ervations
Y Y Y
D)
Oral statements mad
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e by management
zl zl Written Co zl Auditor Obs zl
mmunications ervations
N N Y
Answer: C z l
Terms: Audit evidence Di z l zl zl
fficulty: Easy Objective: z l zl z l
LO 1-1 zl
AACSB: Reflective thinking z l zl
2
Copyright © 2023 Pearson Education, Inc.
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VERIFIEDBRAINBOOSTER
,3) Which of the following can be used as a criterion for evaluating information being audited?
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A) International Financial Reporting Standards (IFRS) zl zl zl zl
B) Generally Accepted Accounting Principles (GAAP) zl zl zl zl
C) Internal Revenue Code (IRC) zl zl zl
D) all of the above
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Answer: D z l
Terms: Criteria by which an auditor evaluates information Difficulty:
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Moderate
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
4) Auditors do not provide which of the following? zl zl zl zl zl zl zl
A) assurance on financial statements zl zl zl
B) assurance on the effectiveness of system of internal controls over financial reporting
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C) assurance on corporate sustainability reports zl zl zl zl
D) absolute assurance on the financial statements including assuming responsibility for them A
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nswer: D z l
Terms: Nature of Objectives of Auditing Difficulty
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: Moderate
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
5) The accumulation and evaluation of evidence about information to determine and report on the d
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egree of correspondence between the information and some established criteria is defined as
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A) accounting.
B) financial reporting. zl
C) tax reporting. zl
D) auditing.
Answer: D z l
Terms: Definition of auditing
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Difficulty: Moderate Objectiv z l zl
e: LO 1-1
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AACSB: Reflective thinking z l zl
6) The criteria by which an auditor evaluates the information under audit may vary with the inf
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ormation being audited. zl zl
Answer: TRUE z l
Terms: Criteria by which an auditor evaluates information Difficulty:
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Easy
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
3
Copyright © 2023 Pearson Education, Inc. zl zl zl zl zl
VERIFIEDBRAINBOOSTER
, 7) One criterion used by an external auditor to evaluate published financial statements is known as
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generally accepted auditing standards. zl zl zl
Answer: FALSE z l
Terms: Criteria used by external auditor to evaluate published financial statements Di
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fficulty: Easy z l
Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
8) Auditors strive to maintain a high level of independence to keep the confidence of users rel
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ying on their reports.
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Answer: TRUE Term z l zl
s: Independence Diffi
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culty: Easy Objective: z l zl
LO 1-1
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AACSB: Reflective thinking z l zl
9) To perform an audit, there must be information in a verifiable form and some criteria by wh
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ich the auditor can evaluate the information.
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Answer: TRUE Term z l zl
s: Independence Diffi
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culty: Easy Objective: z l zl
LO 1-1
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AACSB: Reflective thinking z l zl
10) An auditor must be competent and have an independent mental attitude. A
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nswer: TRUE z l
Terms: Criteria used by external auditor to evaluate published financial statements Di
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fficulty: Easy z l
Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
11) Auditors are not allowed to audit subjective information like the effectiveness of computer co
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ntrols or the efficiency of manufacturing-related operations.
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Answer: FALSE z l
Terms: Information and Established Criteria for the Performance of Audits Difficulty
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: Moderate
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
12) In an audit of system of internal controls over financial reporting, the auditor may rely upon the
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Internal Control - Integrated Framework issued by COSO.
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Answer: TRUE z l
Terms: Information and Established Criteria for the Performance of Audits Difficulty
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: Moderate
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
4
Copyright © 2023 Pearson Education, Inc.
zl zl zl zl zl
VERIFIEDBRAINBOOSTER
Copyright © 2023 Pearson Education, Inc.
zl zl zl zl zl
VERIFIEDBRAINBOOSTER
,Auditing and Assurance Services, 18e (Arens)
zl zl zl zl zl
Chapter 1 The Demand for Audit and Other Assurance Services
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1.1 Learning Objective 1-1
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1) In the auditing process,
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A) the types and amounts of evidence remain constant from audit to audit.
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B) the criteria for evaluating information will not vary depending on the information being au
zl zl zl zl zl zl zl zl zl zl zl zl zl
dited.
C) the audit report communicates the auditor's findings to users.
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D) records are gathered by the auditor to determine whether the audited information is stated in ac
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cordance with SEC standards. zl zl zl
Answer: C z l
Terms: Audit process Diff z l zl zl
iculty: Moderate Objectiv
z l zl
e: LO 1-1
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AACSB: Reflective thinking z l zl
2) Which of the following is considered audit evidence?
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A)
Oral statements mad
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e by management
zl zl Written Co Auditor Obs zl zl
mmunications ervations
Y N N
B)
Oral statements mad
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e by management
zl zl Written Co zl Auditor Obs zl
mmunications ervations
N Y Y
C)
Oral statements mad
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e by management
zl zl Written Co zl Auditor Obs zl
mmunications ervations
Y Y Y
D)
Oral statements mad
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e by management
zl zl Written Co zl Auditor Obs zl
mmunications ervations
N N Y
Answer: C z l
Terms: Audit evidence Di z l zl zl
fficulty: Easy Objective: z l zl z l
LO 1-1 zl
AACSB: Reflective thinking z l zl
2
Copyright © 2023 Pearson Education, Inc.
zl zl zl zl zl
VERIFIEDBRAINBOOSTER
,3) Which of the following can be used as a criterion for evaluating information being audited?
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A) International Financial Reporting Standards (IFRS) zl zl zl zl
B) Generally Accepted Accounting Principles (GAAP) zl zl zl zl
C) Internal Revenue Code (IRC) zl zl zl
D) all of the above
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Answer: D z l
Terms: Criteria by which an auditor evaluates information Difficulty:
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Moderate
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
4) Auditors do not provide which of the following? zl zl zl zl zl zl zl
A) assurance on financial statements zl zl zl
B) assurance on the effectiveness of system of internal controls over financial reporting
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C) assurance on corporate sustainability reports zl zl zl zl
D) absolute assurance on the financial statements including assuming responsibility for them A
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nswer: D z l
Terms: Nature of Objectives of Auditing Difficulty
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: Moderate
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
5) The accumulation and evaluation of evidence about information to determine and report on the d
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egree of correspondence between the information and some established criteria is defined as
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A) accounting.
B) financial reporting. zl
C) tax reporting. zl
D) auditing.
Answer: D z l
Terms: Definition of auditing
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Difficulty: Moderate Objectiv z l zl
e: LO 1-1
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AACSB: Reflective thinking z l zl
6) The criteria by which an auditor evaluates the information under audit may vary with the inf
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ormation being audited. zl zl
Answer: TRUE z l
Terms: Criteria by which an auditor evaluates information Difficulty:
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Easy
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
3
Copyright © 2023 Pearson Education, Inc. zl zl zl zl zl
VERIFIEDBRAINBOOSTER
, 7) One criterion used by an external auditor to evaluate published financial statements is known as
zl zl zl zl zl zl zl zl zl zl zl zl zl zl zl
generally accepted auditing standards. zl zl zl
Answer: FALSE z l
Terms: Criteria used by external auditor to evaluate published financial statements Di
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fficulty: Easy z l
Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
8) Auditors strive to maintain a high level of independence to keep the confidence of users rel
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ying on their reports.
zl zl zl
Answer: TRUE Term z l zl
s: Independence Diffi
zl zl
culty: Easy Objective: z l zl
LO 1-1
z l zl
AACSB: Reflective thinking z l zl
9) To perform an audit, there must be information in a verifiable form and some criteria by wh
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ich the auditor can evaluate the information.
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Answer: TRUE Term z l zl
s: Independence Diffi
zl zl
culty: Easy Objective: z l zl
LO 1-1
z l zl
AACSB: Reflective thinking z l zl
10) An auditor must be competent and have an independent mental attitude. A
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nswer: TRUE z l
Terms: Criteria used by external auditor to evaluate published financial statements Di
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fficulty: Easy z l
Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
11) Auditors are not allowed to audit subjective information like the effectiveness of computer co
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ntrols or the efficiency of manufacturing-related operations.
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Answer: FALSE z l
Terms: Information and Established Criteria for the Performance of Audits Difficulty
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: Moderate
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
12) In an audit of system of internal controls over financial reporting, the auditor may rely upon the
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Internal Control - Integrated Framework issued by COSO.
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Answer: TRUE z l
Terms: Information and Established Criteria for the Performance of Audits Difficulty
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: Moderate
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Objective: LO 1-1 z l zl
AACSB: Reflective thinking z l zl
4
Copyright © 2023 Pearson Education, Inc.
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VERIFIEDBRAINBOOSTER
