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Homework answers / question archive / An Introduction to Assurance and Financial Statement Auditing True / False Questions 1) Independence standards are required for audits of public companies, but not for audits of private companies
An Introduction to Assurance and Financial Statement Auditing
True / False Questions
1) Independence standards are required for audits of public companies, but not for audits of private companies.
2. Decision makers demand reliable information that is provided by accountants.
3. Information asymmetry seldom occurs.
4. Conflicts of interest often occur between absentee owners and managers.
5. Auditing services and attestation services are the same.
6. Auditing is a type of attest service.
7. Testing all transactions that occurred during the period is cost prohibitive.
Multiple Choice Questions
8. Why do auditors generally use a sampling approach to evidence gathering?
9. Which of the following statements best describes a relationship between sample size and other elements of auditing?
10. Which of the following statements about the study of auditing is NOT true?
A. The study of auditing can be valuable to future accountants and business decision makers whether or not they plan to become auditors.
B. The study of auditing focuses on learning the analytical and logical skills necessary to evaluate the relevance and reliability of information.
C. The study of auditing focuses on learning the rules, techniques, and computations required to analyze financial statements.
D. The study of auditing begins with the understanding of a coherent logical framework and techniques useful for gathering and analyzing evidence about others' assertions.
11. The basic purpose of a financial statement audit is to
12. Assurance services may improve all of the following except
13. Evidence is reliable if it
14. Which of the following best describes the concept of audit risk?
15. An auditor who accepts an audit engagement and does not possess expertise with respect to the business entity's industry, should
16. For publicly-held companies, which of the following is integrated into the audit of financial statements?
17. During the first phase of an audit, a CPA most likely would
18. In the context of agency theory, information asymmetry refers to the idea that
19. Which of the following best describes why an independent auditor is asked to express an opinion on the fair presentation of financial statements?
20. Which of the following best describes the fundamental, underlying reason for why there is demand for an independent auditor to report on financial statements?
21. Which of the following best describes why publicly-traded corporations follow the practice of having the external auditor appointed by the board of directors or elected by the stockholders?
22. The definition of auditing refers to auditing as a "systematic process of objectively obtaining and evaluating evidence regarding assertions¼" What is meant by "systematic process"?
23. Which of the following would best be described as an assurance service?
24. Which of the following statements is not true with respect to assurance, attest, and audit services?
25. Auditors are most likely to use the most rigorous audit procedures to examine
26. When obtaining an understanding of the entity and its environment, the auditor should obtain an understanding of internal controls primarily to
27. Which one of the following statements best describes the concept of materiality?
28. Before accepting an engagement to audit a new client, an auditor is required to
29. An investor is reading the financial statements of the Stankey Corporation and observes that the statements are accompanied by an auditor's unqualified report. From this, the investor may conclude that
30. Preliminary engagement activities include
31. The auditor's report is generally addressed to the
32. An auditor would issue an adverse opinion if
33. Which of the following is true with respect to the auditor's report?
34. Which of the following is not a concept that is included in the scope paragraph of the auditor's report?
