Auditing and Assurance Services, 16e (Arens/Elder/Beasley)
Chapter 1 The Demand for Audit and Other Assurance Services
1.1 Learning Objective 1-1
1) In the auditing process
A) the types and amounts of evidence remain constant from audit to audit.
B) the criteria for evaluating information will not vary depending on the information
being audited.
C) the audit report communicates the auditor's findings to users.
D) records are gathered by the auditor to determine whether the audited information is
stated in accordance with SEC standards.
Answer: C
Terms: Audit process
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking
2) Which of the following is considered audit evidence?
A)
Oral statements Written Auditor
made by management Communications Observation
Y N N
B)
, Oral statements Written Auditor
made by management Communications Observation
N Y Y
C)
Oral statements Written Auditor
made by management Communications Observation
Y Y Y
D)
Oral statements Written Auditor
made by management Communications Observation
N N Y
Answer: C
Terms: Audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
,3) Which of the following can be used as a criteria for evaluating information being
audited?
A) International Financial Reporting Standards (IFRS)
B) Generally Accepted Accounting Principles (GAAP)
C) Internal Revenue Code (IRC)
D) all of the above
Answer: D
Terms: Criteria by which an auditor evaluates information
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking
4) Evidence is paramount to audit and attestation engagements. List the four basic types
of audit evidence.
Answer: The four types of audit and attestation evidence include
1. Electronic and documentary data about transactions
2. Written and electronic communications with outsiders
3. Observations by the auditor
4. Oral testimony of the auditee (client)
Terms: Basic types of audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
5) The criteria by which an auditor evaluates the information under audit may vary with
the information being audited.
Answer: TRUE
, Terms: Criteria by which an auditor evaluates information
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
6) One criteria used by an external auditor to evaluate published financial statements is
known as generally accepted auditing standards.
Answer: FALSE
Terms: Criteria used by external auditor to evaluate published financial statements
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
7) Auditors strive to maintain a high level of independence to keep the confidence of
users relying on their reports.
Answer: TRUE
Terms: Independence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
8) To perform an audit, there must be information in a verifiable form and some criteria
by which the auditor can evaluate the information.
Answer: TRUE
Terms: Independence
Diff: Easy
Chapter 1 The Demand for Audit and Other Assurance Services
1.1 Learning Objective 1-1
1) In the auditing process
A) the types and amounts of evidence remain constant from audit to audit.
B) the criteria for evaluating information will not vary depending on the information
being audited.
C) the audit report communicates the auditor's findings to users.
D) records are gathered by the auditor to determine whether the audited information is
stated in accordance with SEC standards.
Answer: C
Terms: Audit process
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking
2) Which of the following is considered audit evidence?
A)
Oral statements Written Auditor
made by management Communications Observation
Y N N
B)
, Oral statements Written Auditor
made by management Communications Observation
N Y Y
C)
Oral statements Written Auditor
made by management Communications Observation
Y Y Y
D)
Oral statements Written Auditor
made by management Communications Observation
N N Y
Answer: C
Terms: Audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
,3) Which of the following can be used as a criteria for evaluating information being
audited?
A) International Financial Reporting Standards (IFRS)
B) Generally Accepted Accounting Principles (GAAP)
C) Internal Revenue Code (IRC)
D) all of the above
Answer: D
Terms: Criteria by which an auditor evaluates information
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking
4) Evidence is paramount to audit and attestation engagements. List the four basic types
of audit evidence.
Answer: The four types of audit and attestation evidence include
1. Electronic and documentary data about transactions
2. Written and electronic communications with outsiders
3. Observations by the auditor
4. Oral testimony of the auditee (client)
Terms: Basic types of audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
5) The criteria by which an auditor evaluates the information under audit may vary with
the information being audited.
Answer: TRUE
, Terms: Criteria by which an auditor evaluates information
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
6) One criteria used by an external auditor to evaluate published financial statements is
known as generally accepted auditing standards.
Answer: FALSE
Terms: Criteria used by external auditor to evaluate published financial statements
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
7) Auditors strive to maintain a high level of independence to keep the confidence of
users relying on their reports.
Answer: TRUE
Terms: Independence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
8) To perform an audit, there must be information in a verifiable form and some criteria
by which the auditor can evaluate the information.
Answer: TRUE
Terms: Independence
Diff: Easy
