1
Copyright © 2023 Pearson Education, Inc.
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VERIFIEDBRAINBOOSTER
,Auditing and Assurance Services, 18e (Arens)
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Chapter 1 The Demand for Audit and Other Assurance Services
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1.1 Learning Objective 1-1
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1) In the auditing process,
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A) the types and amounts of evidence remain constant from audit to audit.
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B) the criteria for evaluating information will not vary depending on the information being a
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udited.
C) the audit report communicates the auditor's findings to users.
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D) records are gathered by the auditor to determine whether the audited information is stated in a
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ccordance with SEC standards. br br br
Answer: C b r
Terms: Audit process Diffb r br br
iculty: Moderate Objectiv
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e: LO 1-1
b r br
AACSB: Reflective thinking b r br
2) Which of the following is considered audit evidence?
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A)
Oral statements mad
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e by management
br br Written Co Auditor Obs br br
mmunications ervations
Y N N
B)
Oral statements mad
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e by management
br br Written Co br Auditor Obs br
mmunications ervations
N Y Y
C)
Oral statements mad
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e by management
br br Written Co br Auditor Obs br
mmunications ervations
Y Y Y
D)
Oral statements mad
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e by management
br br Written Co br Auditor Obs br
mmunications ervations
N N Y
Answer: C b r
Terms: Audit evidence Di b r br br
fficulty: Easy Objective: b r br b r
LO 1-1 br
AACSB: Reflective thinking b r br
2
Copyright © 2023 Pearson Education, Inc.
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VERIFIEDBRAINBOOSTER
,3) Which of the following can be used as a criterion for evaluating information being audited?
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A) International Financial Reporting Standards (IFRS) br br br br
B) Generally Accepted Accounting Principles (GAAP) br br br br
C) Internal Revenue Code (IRC) br br br
D) all of the above
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Answer: D b r
Terms: Criteria by which an auditor evaluates information Difficulty
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: Moderate
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Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
4) Auditors do not provide which of the following?
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A) assurance on financial statements br br br
B) assurance on the effectiveness of system of internal controls over financial reporting
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C) assurance on corporate sustainability reports br br br br
D) absolute assurance on the financial statements including assuming responsibility for them
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Answer: D b r
Terms: Nature of Objectives of Auditing Difficult
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y: Moderate
b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
5) The accumulation and evaluation of evidence about information to determine and report on the
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degree of correspondence between the information and some established criteria is defined as
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A) accounting.
B) financial reporting. br
C) tax reporting.br
D) auditing.
Answer: D b r
Terms: Definition of auditing
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Difficulty: Moderate Objectiv b r br
e: LO 1-1
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AACSB: Reflective thinking b r br
6) The criteria by which an auditor evaluates the information under audit may vary with the i
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nformation being audited. br br
Answer: TRUE b r
Terms: Criteria by which an auditor evaluates information Difficulty
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: Easy
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Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
3
Copyright © 2023 Pearson Education, Inc. br br br br br
VERIFIEDBRAINBOOSTER
, 7) One criterion used by an external auditor to evaluate published financial statements is known a
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s generally accepted auditing standards.
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Answer: FALSE b r
Terms: Criteria used by external auditor to evaluate published financial statements D
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ifficulty: Easy b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
8) Auditors strive to maintain a high level of independence to keep the confidence of users r
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elying on their reports.
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Answer: TRUE Term b r br
s: Independence Diffi
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culty: Easy Objective
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: LO 1-1
b r br
AACSB: Reflective thinking b r br
9) To perform an audit, there must be information in a verifiable form and some criteria by w
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hich the auditor can evaluate the information.
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Answer: TRUE Term b r br
s: Independence Diffi
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culty: Easy Objective
b r br
: LO 1-1
b r br
AACSB: Reflective thinking b r br
10) An auditor must be competent and have an independent mental attitude.
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Answer: TRUE b r
Terms: Criteria used by external auditor to evaluate published financial statements D
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ifficulty: Easy b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
11) Auditors are not allowed to audit subjective information like the effectiveness of computer c
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ontrols or the efficiency of manufacturing-related operations.
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Answer: FALSE b r
Terms: Information and Established Criteria for the Performance of Audits Difficult
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y: Moderate
b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
12) In an audit of system of internal controls over financial reporting, the auditor may rely upon th
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e Internal Control - Integrated Framework issued by COSO.
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Answer: TRUE b r
Terms: Information and Established Criteria for the Performance of Audits Difficult
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y: Moderate
b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
4
Copyright © 2023 Pearson Education, Inc.
br br br br br
VERIFIEDBRAINBOOSTER
Copyright © 2023 Pearson Education, Inc.
br br br br br
VERIFIEDBRAINBOOSTER
,Auditing and Assurance Services, 18e (Arens)
br br br br br
Chapter 1 The Demand for Audit and Other Assurance Services
br b r b r br br br br br br br
1.1 Learning Objective 1-1
b r br br
1) In the auditing process,
br br br
A) the types and amounts of evidence remain constant from audit to audit.
br br br br br br br br br br br
B) the criteria for evaluating information will not vary depending on the information being a
br br br br br br br br br br br br br
udited.
C) the audit report communicates the auditor's findings to users.
br br br br br br br br
D) records are gathered by the auditor to determine whether the audited information is stated in a
br br br br br br br br br br br br br br br
ccordance with SEC standards. br br br
Answer: C b r
Terms: Audit process Diffb r br br
iculty: Moderate Objectiv
b r br
e: LO 1-1
b r br
AACSB: Reflective thinking b r br
2) Which of the following is considered audit evidence?
br br br br br br br br
A)
Oral statements mad
br br
e by management
br br Written Co Auditor Obs br br
mmunications ervations
Y N N
B)
Oral statements mad
br br
e by management
br br Written Co br Auditor Obs br
mmunications ervations
N Y Y
C)
Oral statements mad
br br
e by management
br br Written Co br Auditor Obs br
mmunications ervations
Y Y Y
D)
Oral statements mad
br br
e by management
br br Written Co br Auditor Obs br
mmunications ervations
N N Y
Answer: C b r
Terms: Audit evidence Di b r br br
fficulty: Easy Objective: b r br b r
LO 1-1 br
AACSB: Reflective thinking b r br
2
Copyright © 2023 Pearson Education, Inc.
br br br br br
VERIFIEDBRAINBOOSTER
,3) Which of the following can be used as a criterion for evaluating information being audited?
br br br br br br br br br br br br br br
A) International Financial Reporting Standards (IFRS) br br br br
B) Generally Accepted Accounting Principles (GAAP) br br br br
C) Internal Revenue Code (IRC) br br br
D) all of the above
br br br br
Answer: D b r
Terms: Criteria by which an auditor evaluates information Difficulty
b r br br br br br br br
: Moderate
b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
4) Auditors do not provide which of the following?
br br br br br br br
A) assurance on financial statements br br br
B) assurance on the effectiveness of system of internal controls over financial reporting
br br br br br br br br br br br
C) assurance on corporate sustainability reports br br br br
D) absolute assurance on the financial statements including assuming responsibility for them
br br br br br br br br br br br
Answer: D b r
Terms: Nature of Objectives of Auditing Difficult
b r br br br br br
y: Moderate
b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
5) The accumulation and evaluation of evidence about information to determine and report on the
br br br br br br br br br br br br br br
degree of correspondence between the information and some established criteria is defined as
br br br br br br br br br br br br
A) accounting.
B) financial reporting. br
C) tax reporting.br
D) auditing.
Answer: D b r
Terms: Definition of auditing
b r br br br
Difficulty: Moderate Objectiv b r br
e: LO 1-1
b r br
AACSB: Reflective thinking b r br
6) The criteria by which an auditor evaluates the information under audit may vary with the i
br br br br br br br br br br br br br br br
nformation being audited. br br
Answer: TRUE b r
Terms: Criteria by which an auditor evaluates information Difficulty
b r br br br br br br br
: Easy
b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
3
Copyright © 2023 Pearson Education, Inc. br br br br br
VERIFIEDBRAINBOOSTER
, 7) One criterion used by an external auditor to evaluate published financial statements is known a
br br br br br br br br br br br br br br
s generally accepted auditing standards.
br br br br
Answer: FALSE b r
Terms: Criteria used by external auditor to evaluate published financial statements D
b r br br br br br br br br br br
ifficulty: Easy b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
8) Auditors strive to maintain a high level of independence to keep the confidence of users r
br br br br br br br br br br br br br br br
elying on their reports.
br br br
Answer: TRUE Term b r br
s: Independence Diffi
br br
culty: Easy Objective
b r br
: LO 1-1
b r br
AACSB: Reflective thinking b r br
9) To perform an audit, there must be information in a verifiable form and some criteria by w
br br br br br br br br br br br br br br br br
hich the auditor can evaluate the information.
br br br br br br
Answer: TRUE Term b r br
s: Independence Diffi
br br
culty: Easy Objective
b r br
: LO 1-1
b r br
AACSB: Reflective thinking b r br
10) An auditor must be competent and have an independent mental attitude.
br br br br br br br br br br br
Answer: TRUE b r
Terms: Criteria used by external auditor to evaluate published financial statements D
b r br br br br br br br br br br
ifficulty: Easy b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
11) Auditors are not allowed to audit subjective information like the effectiveness of computer c
br br br br br br br br br br br br br
ontrols or the efficiency of manufacturing-related operations.
br br br br br br
Answer: FALSE b r
Terms: Information and Established Criteria for the Performance of Audits Difficult
b r br br br br br br br br br
y: Moderate
b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
12) In an audit of system of internal controls over financial reporting, the auditor may rely upon th
br br br br br br br br br br br br br br br br
e Internal Control - Integrated Framework issued by COSO.
br br br br br br br br
Answer: TRUE b r
Terms: Information and Established Criteria for the Performance of Audits Difficult
b r br br br br br br br br br
y: Moderate
b r
Objective: LO 1-1 b r br
AACSB: Reflective thinking b r br
4
Copyright © 2023 Pearson Education, Inc.
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VERIFIEDBRAINBOOSTER
