Question 1

Self regulation as applied to the auditing profession means:

Accepted Answer

A) The profession advises the government on the laws which should be applied to the profession. 
B) The profession is solely responsible for disciplining any member found to be engaged in wrong doing. 
C) The profession establishes the rules that govern audit practice and monitors compliance with these rules. 
D) The profession exists to protect the best interests of its members and not the best interests of the public. 
A) The profession advises the government on the laws which should be applied to the profession. 
B) The profession is solely responsible for disciplining any member found to be engaged in wrong doing. 
C) The profession establishes the rules that govern audit practice and monitors compliance with these rules. 
D) The profession exists to protect the best interests of its members and not the best interests of the public. C

Question 2

The risk that financial statements may be materially false and misleading is called

Accepted Answer

A) Business risk. 
B) Information risk. 
C) Client risk. 
D) Risk assessment. 
A) Business risk. 
B) Information risk. 
C) Client risk. 
D) Risk assessment. B

Question 3

The assurance function involves the lending of credibility to financial information.

Accepted Answer

A) True 
 B)False  True

Question 4

The CICA's policy is to adopt ISAs as is, unless there is already a Canadian standard dealing with the same topic.

Accepted Answer

A) True 
 B)False

Question 5

An example of a forensic accounting assignment might be:

Accepted Answer

A) To ensure compliance with specific legislation. 
B) To provide an opinion about the effectiveness of a government program. 
C) To provide assurance about the fairness of prospective financial information included in an initial public offering document. 
D) To estimate the value of inventory lost in a warehouse fire. 
A) To ensure compliance with specific legislation. 
B) To provide an opinion about the effectiveness of a government program. 
C) To provide assurance about the fairness of prospective financial information included in an initial public offering document. 
D) To estimate the value of inventory lost in a warehouse fire.

Question 6

The primary role and responsibility of independent external auditors is to

Accepted Answer

A) Prepare a company's annual financial statements and notes. 
B) Perform an audit and provide an opinion on the financial statements of a company. 
C) Provide business consulting advice to audit clients. 
D) Obtain an understanding of a client's internal control system and prepare a report for management about control weaknesses. 
A) Prepare a company's annual financial statements and notes. 
B) Perform an audit and provide an opinion on the financial statements of a company. 
C) Provide business consulting advice to audit clients. 
D) Obtain an understanding of a client's internal control system and prepare a report for management about control weaknesses.

Question 7

The failure of Enron and WorldCom in the U.S.raised questions about the audit profession and as a result auditing is likely to become less important in society.

Accepted Answer

A) True 
 B)False

Question 8

The three underlying conditions affecting users' demand for accounting information are complexity, reliability, and completeness.

Accepted Answer

A) True 
 B)False

Question 9

Describe the Sarbanes-Oxley Act.

Accepted Answer

The Sarbanes-Oxley Act was drafted after

Question 10

The underlying conditions that create demand by users for reliable financial information include the fact that

Accepted Answer

A) More reliable information will allow investors to calculate the rate of return on their investment. 
B) Users are separated from accounting records by distance and time. 
C) Governments rely on such information to create tax policies. 
D) There is a need for the expression of an opinion as to the fairness of financial statements. 
A) More reliable information will allow investors to calculate the rate of return on their investment. 
B) Users are separated from accounting records by distance and time. 
C) Governments rely on such information to create tax policies. 
D) There is a need for the expression of an opinion as to the fairness of financial statements.

Question 11

What is the difference between the American Accounting Association's (AAA) definition of auditing and the Canadian Institute of Chartered Accountants (CICA) objectives of financial statement auditing?

Accepted Answer

The AAA definition is broad and general

Question 12

Professional judgment is a widely used concept in accounting and auditing.How is it defined in the audit standards?

Accepted Answer

A) There is no definition of professional judgment in the auditing standards. 
B) Professional judgment includes consideration of key principles and concepts of disciplines underlying the professional standards, such as economics, psychology, law, finance, statistics and philosophy. 
C) Professional judgement means reaching a complex decision by incorporating auditing standards, accounting standards, and rules of professional ethics in a coherent manner. 
D) Professional judgement involves specialized concepts and language integrating several disciplines in order to provide appropriate justification for audit decisions. 
A) There is no definition of professional judgment in the auditing standards. 
B) Professional judgment includes consideration of key principles and concepts of disciplines underlying the professional standards, such as economics, psychology, law, finance, statistics and philosophy. 
C) Professional judgement means reaching a complex decision by incorporating auditing standards, accounting standards, and rules of professional ethics in a coherent manner. 
D) Professional judgement involves specialized concepts and language integrating several disciplines in order to provide appropriate justification for audit decisions.

Question 13

In addition to the audit of financial statements, governmental auditing may also include audits of efficiency, effectiveness and

Accepted Answer

A) Fraud. 
B) Accuracy. 
C) Economy. 
D) Adequacy. 
A) Fraud. 
B) Accuracy. 
C) Economy. 
D) Adequacy.

Question 14

Internal auditing is an independent activity designed to add value and improve an organization's operations.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following best describes the main reason that independent auditors report on a company's financial statements?

Accepted Answer

A) Management fraud may exist within the company and it is likely that the independent auditors will detect it. 
B) Users of financial need confidence in the numbers they base their decisions on. 
C) Misstated account balances may be corrected as the result of the independent audit work. 
D) The accounting system from which the financial statements are derived may have a poorly designed system of internal control. 
A) Management fraud may exist within the company and it is likely that the independent auditors will detect it. 
B) Users of financial need confidence in the numbers they base their decisions on. 
C) Misstated account balances may be corrected as the result of the independent audit work. 
D) The accounting system from which the financial statements are derived may have a poorly designed system of internal control.

Question 16

Discuss the underlying conditions affecting users' demand for accounting information.

Accepted Answer

There are three key conditions: complexi

Question 17

The auditee is the person or company:

Accepted Answer

A) who will use the audited information. 
B) who performs an audit. 
C) who pays the audit fee. 
D) whose information is being audited. 
A) who will use the audited information. 
B) who performs an audit. 
C) who pays the audit fee. 
D) whose information is being audited.

Question 18

In operational auditing, the auditor studies business operations and makes recommendations about all of the following except

Accepted Answer

A) Economic and efficient use of resources. 
B) Effective achievement of business objectives. 
C) The fairness of the financial statements. 
D) Compliance with company policies. 
A) Economic and efficient use of resources. 
B) Effective achievement of business objectives. 
C) The fairness of the financial statements. 
D) Compliance with company policies.

Question 19

Why is it important to Canadian auditors to understand the rules of the Security and
Exchange Commission?

Accepted Answer

A) Many Canadian companies are finding it cheaper to raise money on U.S.stock exchanges. 
B) Canadian investors think these rules apply to Canadian companies. 
C) The Free Trade Act requires Canadian companies to follow U.S.rules. 
D) There is no similar body in Canada regulating the stock markets. 
A) Many Canadian companies are finding it cheaper to raise money on U.S.stock exchanges. 
B) Canadian investors think these rules apply to Canadian companies. 
C) The Free Trade Act requires Canadian companies to follow U.S.rules. 
D) There is no similar body in Canada regulating the stock markets.

Question 20

Why is three-party accountability an important distinguishing feature of auditing?

Accepted Answer

In three-party accountability, accountab

Self regulation as applied to the auditing profession means:

The risk that financial statements may be materially false and misleading is called

The assurance function involves the lending of credibility to financial information.

The CICA's policy is to adopt ISAs as is, unless there is already a Canadian standard dealing with the same topic.

An example of a forensic accounting assignment might be:

The primary role and responsibility of independent external auditors is to

The failure of Enron and WorldCom in the U.S.raised questions about the audit profession and as a result auditing is likely to become less important in society.

The three underlying conditions affecting users' demand for accounting information are complexity, reliability, and completeness.

Describe the Sarbanes-Oxley Act.

The underlying conditions that create demand by users for reliable financial information include the fact that

What is the difference between the American Accounting Association's (AAA) definition of auditing and the Canadian Institute of Chartered Accountants (CICA) objectives of financial statement auditing?

Professional judgment is a widely used concept in accounting and auditing.How is it defined in the audit standards?

In addition to the audit of financial statements, governmental auditing may also include audits of efficiency, effectiveness and

Internal auditing is an independent activity designed to add value and improve an organization's operations.

Which of the following best describes the main reason that independent auditors report on a company's financial statements?

Discuss the underlying conditions affecting users' demand for accounting information.

The auditee is the person or company:

In operational auditing, the auditor studies business operations and makes recommendations about all of the following except

Why is it important to Canadian auditors to understand the rules of the Security and Exchange Commission?

Why is three-party accountability an important distinguishing feature of auditing?

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Production and Payroll Process

Finance and Investment Process

Completing the Audit

Other Public Accounting Services and Reports

Fraud Awareness Auditing

Filters

Exam 1: Introduction to Auditing

Self regulation as applied to the auditing profession means:

The risk that financial statements may be materially false and misleading is called

The assurance function involves the lending of credibility to financial information.

The CICA's policy is to adopt ISAs as is, unless there is already a Canadian standard dealing with the same topic.

An example of a forensic accounting assignment might be:

The primary role and responsibility of independent external auditors is to

The failure of Enron and WorldCom in the U.S.raised questions about the audit profession and as a result auditing is likely to become less important in society.

The three underlying conditions affecting users' demand for accounting information are complexity, reliability, and completeness.

Describe the Sarbanes-Oxley Act.

The underlying conditions that create demand by users for reliable financial information include the fact that

What is the difference between the American Accounting Association's (AAA) definition of auditing and the Canadian Institute of Chartered Accountants (CICA) objectives of financial statement auditing?

Professional judgment is a widely used concept in accounting and auditing.How is it defined in the audit standards?

In addition to the audit of financial statements, governmental auditing may also include audits of efficiency, effectiveness and

Internal auditing is an independent activity designed to add value and improve an organization's operations.

Which of the following best describes the main reason that independent auditors report on a company's financial statements?

Discuss the underlying conditions affecting users' demand for accounting information.

The auditee is the person or company:

In operational auditing, the auditor studies business operations and makes recommendations about all of the following except

Why is it important to Canadian auditors to understand the rules of the Security and Exchange Commission?

Why is three-party accountability an important distinguishing feature of auditing?

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Production and Payroll Process

Finance and Investment Process

Completing the Audit

Other Public Accounting Services and Reports

Fraud Awareness Auditing

Filters