Solution Manual for Auditing and Assurance Services 18th edition by Alvin A Arens All Chapters.

AuditinggandgAssurancegServices,g17eg(Arens/Elder/Beasley)gCha
pterg1g ThegDemandgforgAuditgandgOthergAssurancegServices

LearninggObjectiveg1-1

1) ThegSarbanes-OxleygActgappliesgtogwhichgofgthegfollowinggcompanies?
A) Allgcompanies
B) Privatelygheldgcompanies
C) Publicgcompanies
D) Allgpublicgcompaniesgandgprivatelygheldgcompaniesgwithgassetsggreatergthang$500gmillio
ngAnswer:g C
Terms:g Sarbanes-
OxleygActgDiff:g Easy
Objective:g LOg1-1
AACSB:gReflectivegthinkinggskillsgTo
pic:g SOX

2) Whichgofgthegfollowinggisgconsideredgauditgevidence
?gA)
Oralgstatements Written Auditor
madegbygmanagement Communications Observation
Y N N

B)
Oralgstatementsgm WrittengCom Auditorg
adegbygmanagement munications Observation
N Y Y

C)
Oralgstatements Written Auditor
madegbygmanagement Communications Observation
Y Y Y

D)
Oralgstatements Written Auditor
madegbygmanagement Communications Observation
N N Y

Answer:g C
Terms:g Auditgevidenceg
Diff:gModerategObjectiv
e:g LOg1-1
AACSB:g Reflectivegthinkinggskills




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,3) Evidencegisgparamountgtogauditgandgattestationgengagements.gListgthegfourgbasicgtypesgofgaud
itgevidence.
Answer:g Thegfourgtypesgofgauditgandgattestationgevidenceginclude:
1. Electronicgandgdocumentarygdatagaboutgtransactions
2. Writtengandgelectronicgcommunicationsgwithgoutsiders
3. Observationsgbygthegauditor
4. Oralgtestimonygofgthegauditeeg(client
)gTerms:gBasicgtypesgofgauditgevidence
gDiff:g Easy
Objective:g LOg1-1
AACSB:g Reflectivegthinkinggskills

4) Thegcriteriagbygwhichgangauditorgevaluatesgtheginformationgundergauditgmaygvarygwithgth
eginformationgbeinggaudited.
A) True
B) FalsegA
nswer:gA
Terms:gCriteriagwhichgangauditorgevaluatesginformationg
Diff:g Easy
Objective:g LOg1-1
AACSB:g Reflectivegthinkinggskills

5) Thegcriteriagusedgbygangexternalgauditorgtogevaluategpublishedgfinancialgstatementsgaregknow
ngasggenerallygacceptedgauditinggstandards.
A) True
B) FalsegA
nswer:gB
Terms:g Criteriagusedgbygexternalgauditorgtogevaluategpublishedgfinancialgstatementsg
Diff:g Easy
Objective:g LOg1-1
AACSB:g Reflectivegthinkinggskills

6) ThegSarbanes-
OxleygActgestablishesgstandardsgrelatedgtogthegauditsgofgprivatelygheldgcompanies.
A) True
B) FalsegA
nswer:gB
Terms:g Sarbanes-
OxleygActgDiff:g Easy
Objective:g LOg1-1
AACSB:gReflectivegthinkinggskillsgTo
pic:g SOX




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,7) ThegSarbanes-
OxleygActgisgwidelygviewedgasghavinggusheredgingsweepinggchangesgtogauditinggandgfinancialgr
eporting.
A) True
B) FalsegA
nswer:gA
Terms:g Sarbanes-
OxleygActgDiff:g Easy
Objective:g LOg1-1
AACSB:gReflectivegthinkinggskillsgTo
pic:g SOX

8) Angauditorgmustgbegcompetentgandghavegangindependentgmentalgattitude.
A) True
B) FalsegA
nswer:gA
Terms:g CompetencegandgindependentgmentalgattitudegDi
ff:g Easy
Objective:g LOg1-1
AACSB:gReflectivegthinkinggskillsgLe

arninggObjectiveg1-2

1) Recording,gclassifying,gandgsummarizinggeconomicgeventsgingaglogicalgmannergforgthegpurpos
egofgprovidinggfinancialginformationgforgdecisiongmakinggisgcommonlygcalled:
A) finance.
B) auditing.
C) accounting.
D) economics.
Answer:g C
Terms:g Recording,gclassifying,gandgsummarizinggeconomicgeventsg
Diff:g Easy
Objective:g LOg1-2
AACSB:g Reflectivegthinkinggskills

2) Angaccountant:
A) mustgpossessgexpertisegingthegaccumulationgofgauditgevidence.
B) mustgdecidegthegnumbergandgtypesgofgitemsgtogtest.
C) mustghavegangunderstandinggofgthegprinciplesgandgrulesgthatgprovidegthegbasisgforgpreparinggth
egaccountingginformation.
D) mustgbegagCPA
.
Answer:g C
Terms:g Distinguishesgauditorsgfromgaccountants
gDiff:g Moderate
Objective:g LOg1-2
AACSB:g Reflectivegthinkinggskills

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, 3) Ing"auditing"gfinancialgaccountinggdata,gthegprimarygconcerngisgwith:
A) determininggwhethergrecordedginformationgproperlygreflectsgthegeconomicgeventsgtha
tgoccurredgduringgthegaccountinggperiod.
B) determininggifgfraudghasgoccurred.
C) determininggifgtaxablegincomeghasgbeengcalculatedgcorrectly.
D) analyzinggthegfinancialginformationgtogbegsuregthatgitgcompliesgwithggovernmentgrequirement
s.gAnswer:g A
Terms:g AuditinggfinancialgaccountinggdatagprimarygconcerngDi
ff:g Moderate
Objective:g LOg1-2
AACSB:g Reflectivegthinkinggskills

4) Thegtraitgthatgdistinguishesgauditorsgfromgaccountantsgisgthe:
A) auditor'sgabilitygtoginterpretgaccountinggprinciplesggenerallygacceptedgingthegUnitedgStates.
B) auditor'sgeducationgbeyondgthegBachelor'sgdegree.
C) auditor'sgabilitygtoginterpretgFASBgStatements.
D) auditor'sgaccumulationgandginterpretationgofgevidencegrelatedgtogagcompany'sgfinancia
lgstatements.
Answer:g D
Terms:g Distinguishesgauditorsgfromgaccountants
gDiff:g Challenging
Objective:g LOg1-2
AACSB:g Reflectivegthinkinggskills

5) Discussgthegdifferencesgandgsimilaritiesgbetweengthegrolesgofgaccountantsgandgauditors.gWh
atgadditionalgexpertisegmustgangauditorgpossessgbeyondgthatgofgangaccountant?
Answer:gThegrolegofgaccountantsgisgtogrecord,gclassify,gandgsummarizegeconomicgeventsgingaglo
gicalgmannergforgthegpurposegofgprovidinggfinancialginformationgforgdecisiongmaking.gTogprovi
degrelevantginformation,gaccountantsgmustghavegagthoroughgunderstandinggofgthegprinciplesgandg
rulesgthatgprovidegthegbasisgforgpreparinggthegaccountingginformation.gIngaddition,gaccountantsg
mustgdevelopgagsystemgtogensuregthatgthegentity'sgeconomicgeventsgaregproperlygrecordedgongagt
imelygbasisgandgatgagreasonablegcost.

Thegrolegofgauditorsgisgtogdeterminegwhethergthegrecordedginformationgpreparedgbygaccountantsg
properlygreflectsgthegeconomicgeventsgthatgoccurredgduringgthegaccountinggperiod.gBecausegU.S.
gorginternationalgstandardsgprovidegthegcriteriagforgevaluatinggwhethergfinancialginformationgisgp
roperlygrecorded,gauditorsgmustgthoroughlygunderstandgthosegaccountinggstandards.gIngadditiongt
ogunderstandinggaccounting,gthegauditorgmustgpossessgexpertisegingthegaccumulationgandginterpr
etationgofgauditgevidence.gItgisgthisgexpertisegthatgdistinguishesgauditorsgfromgaccountants.gDeter
mininggthegpropergauditgprocedures,gdecidinggthegnumbergandgtypesgofgitemsgtogtest,gandgevalua
tinggthegresultsgareguniquegtogthegauditor.
Terms:g Rolesgofgaccountantsgandgauditorsg
Diff:g Moderate
Objective:g LOg1-2
AACSB:g Reflectivegthinkinggskills



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