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Test Bank for Auditing and Assurance Services Auditing, 14e (Arens) 2024.
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- Concordia University ( )
Test Bank for Auditing and Assurance Services Auditing, 14e (Arens) 2024.
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Test Bank for Auditing and AssuranceServices Auditing, 14e (Arens) 2024
,Chapter 1 The Demand for Audit and Other Assurance Services
1.1 Describe auditing and its purpose
1) Which of the following illustrates the definition of auditing with respect to the
evidence analysis process?
A) accumulation and evaluation of evidence regarding assertions
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 and its purpose
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 and its purpose
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/IFRS
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: 3
Learning Obj.: 1-1 Describe auditing and its purpose
4) In the audit of historical financial statements by PA firms, the criteria used are
A) generally accepted auditing standards.
B) relevant accounting frameworks.
C) regulations of the Canada Revenue Agency.
D) regulations of the provincial securities
commissions. Answer: B
Diff: 1 Type: MC Page Ref: 3
Learning Obj.: 1-1 Describe auditing and its purpose
,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: 3
Learning Obj.: 1-1 Describe auditing and its purpose
6) The auditor and the entities being audited should agree on the criteria to be used in
the audit
A) well in advance 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 and its purpose
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 and its purpose
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 and its purpose
9) One of the reasons that an auditor must be competent is so that they can
A) select the type and amount of evidence to accumulate.
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 and its purpose
, 10) It is important for the auditor to be independent because
A) otherwise the auditor would not charge a fair rate to the client.
B) otherwise the auditor might not be as knowledgeable of the subject matter and
the criteria.
C) this will prevent bias in accumulating and evaluating evidence.
D) the Canadian tax authorities require that the auditor be
independent. Answer: C
Diff: 2 Type: MC Page Ref: 4
Learning Obj.: 1-1 Describe auditing and its purpose
11) As an external auditor is paid a fee by a client company, he or she
A) is absolutely independent and may conduct an audit.
B) may still be sufficiently independent to conduct an audit.
C) is never considered to be independent.
D) must receive approval from the relevant provincial securities commission
before conducting an audit.
Answer: B
Diff: 1 Type: MC Page Ref: 5
Learning Obj.: 1-1 Describe auditing and its purpose
12) The independent auditor's report is the
A) communication of the outcome of auditor's evaluation to the users.
B) set of audited financial statements.
C) invoice of the auditor detailing the work they have performed.
D) report presented to management about the possible
improvements. Answer: A
Diff: 2 Type: MC Page Ref: 5
Learning Obj.: 1-1 Describe auditing and its purpose
13) In the audit of a corporate tax return, the CRA auditor should demonstrate
competence in the use of
A) external databases that contain economic statistics.
B) standard personal and corporate tax preparation software.
C) the Income Tax Act and accompanying regulations.
D) database management software for the use of client based
research. Answer: C
Diff: 1 Type: MC Page Ref: 5
Learning Obj.: 1-1 Describe auditing and its purpose
14) In the audit of an individual's tax return, the criteria used would be
A) an accounting framework.
B) the Income Tax Act.
C) the client's policies for taxable income.
D) the auditor's
judgment. Answer: B
Diff: 2 Type: MC Page Ref: 5
Learning Obj.: 1-1 Describe auditing and its purpose
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