,Auditing,n12en(Arens)
Chaptern1n n ThenDemandnfornannAuditingnandnAssurancenProfession
1.1 Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
1) Whichn of n then followingn illustratesn thendefinitionn ofnauditingn withnrespect n tonthenevidencena
nalysisn process?
A) accumulationn and n evaluationn of n evidencen about n balancen sheet n accounts
B) learningn about n different n typesn of n computingn technology,n suchn asn mainframes
C) writingn ann operationaln audit n report n that n isn tailored n ton then client'sn situation
D) makingn suren that n thenauditornisn competent nandnunderstandsn evidencen gatheringn
Answer:n A
Diff:n 1 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
2) Auditingn should n ben donen byn an qualified
A) chartered n accountant.
B) certified n management n accountant.
C) competent n and n independent n person.
D) professionalnaccountant.
n Answer:n C
Diff:n 2 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
3) Whichn of n then followingn illustratesn thendefinitionn ofnauditingn withnrespect n tonthenreportingnp
rocess?
A) accumulationn and n evaluationn of n evidencen about n balancen sheet n accounts
B) reportingn onn then degreen of n correspondencen betweenn financialn statementsn and n ASPE
C) writingn ann operationaln audit n report n that n isn tailored n ton then client'sn situation
D) makingn suren that n thenauditornisn competent nandnunderstandsn evidencen gatheringn
Answer:n B
Diff:n 2 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
4) Inn then audit n of n historicaln financialn statementsn byn PAn firms,n then criterian used n are
A) generallyn accepted n auditingn standards.
B) generallyn accepted n accountingn principles.
C) regulationsn of n then Canadan Revenuen Agency.
D) regulationsnof nthenprovincialnsecuritiesncommissions.n
Answer:n B
Diff:n 1 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
1
©n 2013 n Pearson n CanadanInc.
,5) A n largen PAn firmn hasn assessed n evidencen collectednduringn ann engagement.nCriterian usednton assessnt
hen financialn statementsn werenInternationaln Financialn Reportingn Standardsn (IFRS).n An highn leveln ofn a
ssurancen wasn obtained.n Then typen of n engagement n conducted n wasn a(n)
A) audit.
B) review.
C) management n consulting.
D) compilation.
Answer:n A
Diff:n 2 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
6) Then auditorn and n then entitiesn should n agreen onn then criterian ton ben used n inn then audit
A) beforen then audit n starts.
B) aftern then audit n planningn hasn beenn done.
C) asn theyn progressn withn then audit n asn theyn cann determinen whichn criterian isn moren suitable.
D) at nthenend nof nthenaudit.n
Answer:n A
Diff:n 1 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
7) Georgen had n an conversationn withn then accountingn personneln and ndocumentedn informationn aboutn
how nthen accountingn systemsnfunction.n Hen hasn alson placedn copiesn ofn accountingnformsn inn hisn files.n
Georgen isn performingn whichn task?
A) accountingn procedures
B) evidencen gathering
C) taxn audit
D) audit nreport npreparation
n Answer:n B
Diff:n 3 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
8) Onen of n then reasonsn that n ann auditorn must n ben competent n isn ton ben ablen to
A) understand n then engagement n risksn and n then criterian used n byn then client.
B) explainn how n then bookkeepingn should n ben donen ton hisn staff.
C) record n then transactionsn properlyn forn then underlyingn records.
D) capturen then informationn properlyn inn thencomputern files.n
Answer:n A
Diff:n 2 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
2
©n 2013 n Pearson n CanadanInc.
, 9) Onen of n then reasonsn that n ann auditorn must n ben competent n isn ton ben ablen to
A) select n then typen and n amount n of n evidencen ton accumulate.
B) explainn how n then bookkeepingn should n ben donen ton hisn staff.
C) record n then transactionsn properlyn forn then underlyingn records.
D) capturen then informationn properlyn inn thencomputern files.n
Answer:n A
Diff:n 2 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
10) It n isn important n forn then auditorn ton ben independent n because
A) then auditorn would n not n chargen an fairn raten ton then client.
B) then auditorn might n not n ben asn knowledgeablen of n then subject n mattern and n then criteria.
C) thisn willn prevent n biasn inn accumulatingn and n evaluatingn evidence.
D) then Canadiann Taxn Authoritiesn requiren thatnthenauditornbenindependent.n
Answer:n C
Diff:n 2 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
11) Becausen ann externaln auditorn isn paid n an feen byn an client n company,n hen orn she
A) isn absolutelyn independent n and n mayn conduct n ann audit.
B) mayn ben sufficientlyn independent n ton conduct n ann audit.
C) isn nevern considered n ton ben independent.
D) must n receiven approvaln of n thenrelevant n provincialn securitiesn commissionn beforen conductingn anna
udit.
Answer:n B
Diff:n 1 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
12) Then independent n auditor'sn report n isn the
A) communicationn of n then result n of n then audit n ton then users.
B) set n of n audited n financialn statements.
C) invoicen of n then auditorn detailingn then workn theyn haven performed.
D) report n presented n tonmanagement nabout nthen possiblen improvements.n
Answer:n A
Diff:n 2 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
3
©n 2013 n Pearson n CanadanInc.
Chaptern1n n ThenDemandnfornannAuditingnandnAssurancenProfession
1.1 Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
1) Whichn of n then followingn illustratesn thendefinitionn ofnauditingn withnrespect n tonthenevidencena
nalysisn process?
A) accumulationn and n evaluationn of n evidencen about n balancen sheet n accounts
B) learningn about n different n typesn of n computingn technology,n suchn asn mainframes
C) writingn ann operationaln audit n report n that n isn tailored n ton then client'sn situation
D) makingn suren that n thenauditornisn competent nandnunderstandsn evidencen gatheringn
Answer:n A
Diff:n 1 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
2) Auditingn should n ben donen byn an qualified
A) chartered n accountant.
B) certified n management n accountant.
C) competent n and n independent n person.
D) professionalnaccountant.
n Answer:n C
Diff:n 2 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
3) Whichn of n then followingn illustratesn thendefinitionn ofnauditingn withnrespect n tonthenreportingnp
rocess?
A) accumulationn and n evaluationn of n evidencen about n balancen sheet n accounts
B) reportingn onn then degreen of n correspondencen betweenn financialn statementsn and n ASPE
C) writingn ann operationaln audit n report n that n isn tailored n ton then client'sn situation
D) makingn suren that n thenauditornisn competent nandnunderstandsn evidencen gatheringn
Answer:n B
Diff:n 2 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
4) Inn then audit n of n historicaln financialn statementsn byn PAn firms,n then criterian used n are
A) generallyn accepted n auditingn standards.
B) generallyn accepted n accountingn principles.
C) regulationsn of n then Canadan Revenuen Agency.
D) regulationsnof nthenprovincialnsecuritiesncommissions.n
Answer:n B
Diff:n 1 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
1
©n 2013 n Pearson n CanadanInc.
,5) A n largen PAn firmn hasn assessed n evidencen collectednduringn ann engagement.nCriterian usednton assessnt
hen financialn statementsn werenInternationaln Financialn Reportingn Standardsn (IFRS).n An highn leveln ofn a
ssurancen wasn obtained.n Then typen of n engagement n conducted n wasn a(n)
A) audit.
B) review.
C) management n consulting.
D) compilation.
Answer:n A
Diff:n 2 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
6) Then auditorn and n then entitiesn should n agreen onn then criterian ton ben used n inn then audit
A) beforen then audit n starts.
B) aftern then audit n planningn hasn beenn done.
C) asn theyn progressn withn then audit n asn theyn cann determinen whichn criterian isn moren suitable.
D) at nthenend nof nthenaudit.n
Answer:n A
Diff:n 1 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
7) Georgen had n an conversationn withn then accountingn personneln and ndocumentedn informationn aboutn
how nthen accountingn systemsnfunction.n Hen hasn alson placedn copiesn ofn accountingnformsn inn hisn files.n
Georgen isn performingn whichn task?
A) accountingn procedures
B) evidencen gathering
C) taxn audit
D) audit nreport npreparation
n Answer:n B
Diff:n 3 Type:n MC Pagen Ref:n 5
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
8) Onen of n then reasonsn that n ann auditorn must n ben competent n isn ton ben ablen to
A) understand n then engagement n risksn and n then criterian used n byn then client.
B) explainn how n then bookkeepingn should n ben donen ton hisn staff.
C) record n then transactionsn properlyn forn then underlyingn records.
D) capturen then informationn properlyn inn thencomputern files.n
Answer:n A
Diff:n 2 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
2
©n 2013 n Pearson n CanadanInc.
, 9) Onen of n then reasonsn that n ann auditorn must n ben competent n isn ton ben ablen to
A) select n then typen and n amount n of n evidencen ton accumulate.
B) explainn how n then bookkeepingn should n ben donen ton hisn staff.
C) record n then transactionsn properlyn forn then underlyingn records.
D) capturen then informationn properlyn inn thencomputern files.n
Answer:n A
Diff:n 2 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
10) It n isn important n forn then auditorn ton ben independent n because
A) then auditorn would n not n chargen an fairn raten ton then client.
B) then auditorn might n not n ben asn knowledgeablen of n then subject n mattern and n then criteria.
C) thisn willn prevent n biasn inn accumulatingn and n evaluatingn evidence.
D) then Canadiann Taxn Authoritiesn requiren thatnthenauditornbenindependent.n
Answer:n C
Diff:n 2 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
11) Becausen ann externaln auditorn isn paid n an feen byn an client n company,n hen orn she
A) isn absolutelyn independent n and n mayn conduct n ann audit.
B) mayn ben sufficientlyn independent n ton conduct n ann audit.
C) isn nevern considered n ton ben independent.
D) must n receiven approvaln of n thenrelevant n provincialn securitiesn commissionn beforen conductingn anna
udit.
Answer:n B
Diff:n 1 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
12) Then independent n auditor'sn report n isn the
A) communicationn of n then result n of n then audit n ton then users.
B) set n of n audited n financialn statements.
C) invoicen of n then auditorn detailingn then workn theyn haven performed.
D) report n presented n tonmanagement nabout nthen possiblen improvements.n
Answer:n A
Diff:n 2 Type:n MC Pagen Ref:n 6
Learningn Obj.:n 1-
1n Identifyn then componentsn of n ann audit n and n explainn whyn theren isn an demand n forn audits
3
©n 2013 n Pearson n CanadanInc.
