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Auditing and Assurance Services An Integrated Approach, 17e Arens, Elder, Beasley, Hogan (Test Bank all Chapters)

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1 Copyright © 2020 Pearson Education, Inc.Auditing and Assurance Services, 17e (Arens/Elder/Beasley) Chapter 1 The Demand for Audit and Other Assurance Services

1.1 Learning Objective 1-1

1) In the auditing process,

• the types and amounts of evidence remain constant from audit to audit.
• the criteria for evaluating information will not vary depending on the information being

audited.

• the audit report communicates the auditor's findings to users.
• records are gathered by the auditor to determine whether the audited information is stated in

accordance with SEC standards.

Answer: C

Terms: Audit process

Difficulty: Moderate

Objective: LO 1-1

AACSB: Reflective thinking

2) Which of the following is considered audit evidence?A) Oral statements made by management Written Communications Auditor Observations Y N N

B) Oral statements made by management Written Communications Auditor Observations N Y Y

C) Oral statements made by management Written Communications Auditor Observations Y Y Y

D) Oral statements made by management Written Communications Auditor Observations N N Y

Answer: C

Terms: Audit evidence

Difficulty: Easy

Objective: LO 1-1

AACSB: Reflective thinking

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2 Copyright © 2020 Pearson Education, Inc.3) Which of the following can be used as a criterion for evaluating information being audited?

• International Financial Reporting Standards (IFRS)
• Generally Accepted Accounting Principles (GAAP)
• Internal Revenue Code (IRC)
• all of the above

Answer: D

Terms: Criteria by which an auditor evaluates information

Difficulty: Moderate

Objective: LO 1-1

AACSB: Reflective thinking

4) Auditors do not provide which of the following?

• assurance on financial statements
• assurance on the effectiveness of internal controls over financial reporting
• assurance on corporate sustainability reports
• absolute assurance on the financial statements including assuming responsibility for them

Answer: D

Terms: Nature of Objectives of Auditing

Difficulty: Moderate

Objective: LO 1-1

AACSB: Reflective thinking

5) The accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and some established criteria is defined as

• accounting.
• financial reporting.
• tax reporting.
• auditing.

Answer: D

Terms: Definition of auditing

Difficulty: Moderate

Objective: LO 1-1

AACSB: Reflective thinking

6) 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

Difficulty: Easy

Objective: LO 1-1

AACSB: Reflective thinking

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3 Copyright © 2020 Pearson Education, Inc.7) One criterion 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

Difficulty: Easy

Objective: LO 1-1

AACSB: Reflective thinking

8) Auditors strive to maintain a high level of independence to keep the confidence of users relying on their reports.

Answer: TRUE

Terms: Independence

Difficulty: Easy

Objective: LO 1-1

AACSB: Reflective thinking

9) 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

Difficulty: Easy

Objective: LO 1-1

AACSB: Reflective thinking

10) An auditor must be competent and have an independent mental attitude.

Answer: TRUE

Terms: Criteria used by external auditor to evaluate published financial statements

Difficulty: Easy

Objective: LO 1-1

AACSB: Reflective thinking

11) Auditors are not allowed and should not audit subjective information like the effectiveness of computer controls or the efficiency of manufacturing-related operations.

Answer: FALSE

Terms: Information and Established Criteria for the Performance of Audits

Difficulty: Moderate

Objective: LO 1-1

AACSB: Reflective thinking

12) In an audit of internal controls over financial reporting, the auditor may rely upon Internal Control - Integrated Framework issued by COSO.

Answer: TRUE

Terms: Information and Established Criteria for the Performance of Audits

Difficulty: Moderate

Objective: LO 1-1

AACSB: Reflective thinking

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