Test Bank for Auditing: The Art and Science of Assurance Engagements, 16th Canadian Edition by Arens, NEWEST GUIDE

Test Bank

Auditing: The Art And Science Of Assurance Engagements,
By Alvin A. Arens


16th Edition

,Auditing, 16e (Arens)
Chapter 1 The Demand For An Auditing And Assurance Profession

1.1 Identify The Components Of An Audit And Explain Why There Is A Demand For Audits

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: 5
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

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: 5
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

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: 5
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

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: 5
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

,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(N)
A) Audit.
B) Review.
C) Management Consulting.
D) Compilatio
N.
Answer: A
Diff: 2 Type: Mc Page Ref: 5
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

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 Is More
Suitable.
D) At The End Of
The Audit.
Answer: A
Diff: 1 Type: Mc Page Ref: 5
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

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: 5
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

8) One Of The Reasons That An Auditor Must Be Competent Is To Be Able To
A) Understand The Engagement Risks And The Criteria Used By The Client.
B) Explain How The Bookkeeping Should Be Done To His Staff.
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: 6
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

, 9) One Of The Reasons That An Auditor Must Be Competent Is To Be Able To
A) Select The Type And Amount Of Evidence To Accumulate.
B) Explain How The Bookkeeping Should Be Done To His Staff.
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: 6
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

10) It Is Important For The Auditor To Be Independent Because
A) The Auditor Would Not Charge A Fair Rate To The Client.
B) 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: 6
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

11) Because 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 Be Sufficiently Independent To Conduct An Audit.
C) Is Never Considered To Be Independent.
D) Must Receive Approval Of The Relevant Provincial Securities Commission
Before Conducting An Audit.
Answer: B
Diff: 1 Type: Mc Page Ref: 6
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits

12) The Independent Auditor's Report Is The
A) Communication Of The Result Of The Audit 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: 6
Learning Obj.: 1-1 Identify The Components Of An Audit And Explain Why There Is A
Demand For Audits