Chapter 1   The Demand for Audit and Other Assurance Services

1.1   Learning Objective 1-1

1) In the auditing process

1. A) the types and amounts of evidence remain constant from audit to audit.
2. B) the criteria for evaluating information will not vary depending on the information being audited.
3. C) the audit report communicates the auditor’s findings to users.
4. D) records are gathered by the auditor to determine whether the audited information is stated in accordance with SEC standards.

Answer:  C

Terms:  Audit process

Diff:  Moderate

Objective:  LO 1-1

AACSB:  Reflective thinking

2) Which of the following is considered audit evidence?

1. A)

1. B)

1. C)

1. D)

Answer:  C

Terms:  Audit evidence

Diff:  Easy

Objective:  LO 1-1

AACSB:  Reflective thinking

3) Which of the following can be used as a criteria for evaluating information being audited?

1. A) International Financial Reporting Standards (IFRS)
2. B) Generally Accepted Accounting Principles (GAAP)
3. C) Internal Revenue Code (IRC)
4. D) all of the above

Answer:  D

Terms:  Criteria by which an auditor evaluates information

Diff:  Moderate

Objective:  LO 1-1

AACSB:  Reflective thinking

4) Evidence is paramount to audit and attestation engagements. List the four basic types of audit evidence.

Answer:  The four types of audit and attestation evidence include

1. Electronic and documentary data about transactions
2. Written and electronic communications with outsiders
3. Observations by the auditor
4. Oral testimony of the auditee (client)

Terms:  Basic types of audit evidence

Diff:  Easy

Objective:  LO 1-1

AACSB:  Reflective thinking

5) The criteria by which an auditor evaluates the information under audit may vary with the information being audited.

Answer:  TRUE

Terms:  Criteria by which an auditor evaluates information

Diff:  Easy

Objective:  LO 1-1

AACSB:  Reflective thinking

6) One criteria used by an external auditor to evaluate published financial statements is known as generally accepted auditing standards.

Answer:  FALSE

Terms:  Criteria used by external auditor to evaluate published financial statements

Diff:  Easy

Objective:  LO 1-1

AACSB:  Reflective thinking

7) Auditors strive to maintain a high level of independence to keep the confidence of users relying on their reports.

Answer:  TRUE

Terms:  Independence

Diff:  Easy

Objective:  LO 1-1

AACSB:  Reflective thinking