Auditing Chapter 1 Solutions manual

Topics: Auditing, Financial audit, Audit Pages: 22 (6714 words) Published: July 3, 2015
Auditing, 12e (Arens)
Chapter 1 The Demand for an Auditing and Assurance Profession

1.1 Identify the components of an audit and explain why there is a demand for audits

1) Which of the following illustrates the definition of auditing with respect to the evidence analysis process? A) accumulation and evaluation of evidence about balance sheet accounts B) learning about different types of computing technology, such as mainframes C) writing an operational audit report that is tailored to the client's situation D) making sure that the auditor is competent and understands evidence gathering Answer: A

Diff: 1 Type: MC Page Ref: 5
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

2) Auditing should be done by a qualified
A) chartered accountant.
B) certified management accountant.
C) competent and independent person.
D) professional accountant.
Answer: C
Diff: 2 Type: MC Page Ref: 5
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

3) Which of the following illustrates the definition of auditing with respect to the reporting process? A) accumulation and evaluation of evidence about balance sheet accounts B) reporting on the degree of correspondence between financial statements and ASPE C) writing an operational audit report that is tailored to the client's situation D) making sure that the auditor is competent and understands evidence gathering Answer: B

Diff: 2 Type: MC Page Ref: 5
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

4) In the audit of historical financial statements by PA firms, the criteria used are A) generally accepted auditing standards.
B) generally accepted accounting principles.
C) regulations of the Canada Revenue Agency.
D) regulations of the provincial securities commissions.
Answer: B
Diff: 1 Type: MC Page Ref: 5
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits 5) A large PA firm has assessed evidence collected during an engagement. Criteria used to assess the financial statements were International Financial Reporting Standards (IFRS). A high level of assurance was obtained. The type of engagement conducted was a(n) A) audit.

B) review.
C) management consulting.
D) compilation.
Answer: A
Diff: 2 Type: MC Page Ref: 5
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

6) The auditor and the entities should agree on the criteria to be used in the audit A) before the audit starts.
B) after the audit planning has been done.
C) as they progress with the audit as they can determine which criteria is more suitable. D) at the end of the audit.
Answer: A
Diff: 1 Type: MC Page Ref: 5
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

7) George had a conversation with the accounting personnel and documented information about how the accounting systems function. He has also placed copies of accounting forms in his files. George is performing which task? A) accounting procedures

B) evidence gathering
C) tax audit
D) audit report preparation
Answer: B
Diff: 3 Type: MC Page Ref: 5
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

8) One of the reasons that an auditor must be competent is to be able to A) understand the engagement risks and the criteria used by the client. B) explain how the bookkeeping should be done to his staff.

C) record the transactions properly for the underlying records. D) capture the information properly in the computer files.
Answer: A
Diff: 2 Type: MC Page Ref: 6
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

9) One of the reasons...
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