Question 1

To operate effectively, an internal auditor must be independent of the

Accepted Answer

A)  line functions of the organization. 
B)  entity that is being audited. 
C)  employer-employee relationship that exists for other employees in the organization. 
D)  outsourcing organizations used. 
A)  line functions of the organization. 
B)  entity that is being audited. 
C)  employer-employee relationship that exists for other employees in the organization. 
D)  outsourcing organizations used. A

Question 2

In the audit of an individual's tax return, the auditor should demonstrate competence in the use of

Accepted Answer

A)  external databases that contain economic statistics. 
B)  standard personal and corporate tax preparation software. 
C)  the Income Tax Act and accompanying regulations. 
D)  database management software for the use of client based research. 
A)  external databases that contain economic statistics. 
B)  standard personal and corporate tax preparation software. 
C)  the Income Tax Act and accompanying regulations. 
D)  database management software for the use of client based research. C

Question 3

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?

Accepted Answer

A)  accounting procedures 
B)  evidence gathering 
C)  tax audit 
D)  audit report preparation 
A)  accounting procedures 
B)  evidence gathering 
C)  tax audit 
D)  audit report preparation B

Question 4

Blader Ng. Inc. has recently placed new air-cleaning systems in their smokestacks to meet air quality regulations. An auditing firm has been engaged to assess air quality and compare results to legislated requirements. What type of audit or engagement is the auditor conducting?

Accepted Answer

A)  financial statement 
B)  compliance 
C)  operational 
D)  review 
A)  financial statement 
B)  compliance 
C)  operational 
D)  review

Question 5

One of the reasons that an auditor must be competent is so that they can

Accepted Answer

A)  select the type and amount of evidence to accumulate. 
B)  explain to staff how the bookkeeping should be done. 
C)  record the transactions properly for the underlying records. 
D)  capture the information properly in the computer files. 
A)  select the type and amount of evidence to accumulate. 
B)  explain to staff how the bookkeeping should be done. 
C)  record the transactions properly for the underlying records. 
D)  capture the information properly in the computer files.

Question 6

The internal audit group typically reports directly to the

Accepted Answer

A)  board of directors. 
B)  management of the company. 
C)  external auditor. 
D)  audit committee. 
A)  board of directors. 
B)  management of the company. 
C)  external auditor. 
D)  audit committee.

Question 7

Which of the following services provides no assurance about the client's financial statements?

Accepted Answer

A)  compilation 
B)  review 
C)  audit 
D)  SysTrust 
A)  compilation 
B)  review 
C)  audit 
D)  SysTrust

Question 8

Because an external auditor is paid a fee by a client company, he or she

Accepted Answer

A)  is absolutely independent and may conduct an audit. 
B)  may be sufficiently independent to conduct an audit. 
C)  is never considered to be independent. 
D)  must receive approval from the relevant provincial securities commission before conducting an audit. 
A)  is absolutely independent and may conduct an audit. 
B)  may be sufficiently independent to conduct an audit. 
C)  is never considered to be independent. 
D)  must receive approval from the relevant provincial securities commission before conducting an audit.

Question 9

One of the reasons that an auditor must be competent is so that they can

Accepted Answer

A)  understand the engagement risks and the criteria used by the client. 
B)  explain to staff how the bookkeeping should be done. 
C)  record the transactions properly for the underlying records. 
D)  capture the information properly in the computer files. 
A)  understand the engagement risks and the criteria used by the client. 
B)  explain to staff how the bookkeeping should be done. 
C)  record the transactions properly for the underlying records. 
D)  capture the information properly in the computer files.

Question 10

Which of the following is an example of accounting rather than auditing?

Accepted Answer

A)  gathering evidence about the quality of accounts receivable 
B)  entering sales transactions into the sales order system 
C)  reviewing sales invoices to see if they have been calculated correctly 
D)  comparing bank deposit documents to the recorded cash received 
A)  gathering evidence about the quality of accounts receivable 
B)  entering sales transactions into the sales order system 
C)  reviewing sales invoices to see if they have been calculated correctly 
D)  comparing bank deposit documents to the recorded cash received

Question 11

The extent and the scope of the audits conducted by Auditors General are determined by

Accepted Answer

A)  legislation in the Auditor General's jurisdiction. 
B)  audit partner planning and audit program development. 
C)  the Auditor General and his/her staff. 
D)  the financial statement auditors of the client. 
A)  legislation in the Auditor General's jurisdiction. 
B)  audit partner planning and audit program development. 
C)  the Auditor General and his/her staff. 
D)  the financial statement auditors of the client.

Question 12

Jordan set up a nonprofit corporation several years ago to provide scholarships to disadvantaged youth in his community. Scholarships Get Up and Go Foundation now has assets of over $5 million and provides about ten university scholarships every year. Jordan is proud of the new doctors, dentists, and other healthcare practitioners that his foundation has funded.
Jordan is thinking of starting another foundation in an old building that he has purchased. It would be a youth drop-in centre offering music lessons, art facilities, and gym facilities, and would have links to local highschools to offer homework clubs to encourage good grades.
Required:
A) Why should Jordan have the financial statements of both of these foundations audited?
B) Who would be the users of the financial statements of the foundations?
C) What other types of services could PAs provide to Jordan and the foundations?

Accepted Answer

A)Auditing provides added assurance with

Question 13

Which of the following terms best describes the increased likelihood that unreliable information will be provided to decision makers?

Accepted Answer

A)  audit risk 
B)  information risk 
C)  inherent risk 
D)  business risk 
A)  audit risk 
B)  information risk 
C)  inherent risk 
D)  business risk

Question 14

Which of the following is an advantage of a review engagement as compared to an audit engagement?

Accepted Answer

A)  For the review engagement, information risk is reduced more than for an audit. 
B)  For the review engagement, the documentation to be provided by the client is greater. 
C)  For the review engagement, the financial statements assessed will have more detail. 
D)  The review engagement requires considerably less work, so is less costly. 
A)  For the review engagement, information risk is reduced more than for an audit. 
B)  For the review engagement, the documentation to be provided by the client is greater. 
C)  For the review engagement, the financial statements assessed will have more detail. 
D)  The review engagement requires considerably less work, so is less costly.

Question 15

Which of the following is an example of an attestation engagement?

Accepted Answer

A)  accounting and bookkeeping services for the accounts 
B)  an audit of internal controls over financial reporting 
C)  preparation of the annual financial statements with notes 
D)  completion of provincial and federal tax returns 
A)  accounting and bookkeeping services for the accounts 
B)  an audit of internal controls over financial reporting 
C)  preparation of the annual financial statements with notes 
D)  completion of provincial and federal tax returns

Question 16

Which of the following services provides a moderate level of assurance about the client's financial statements?

Accepted Answer

A)  forecasts and projections 
B)  compliance 
C)  review 
D)  audit 
A)  forecasts and projections 
B)  compliance 
C)  review 
D)  audit

Question 17

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

Accepted Answer

A)  an audit. 
B)  a review. 
C)  management consulting. 
D)  a compilation. 
A)  an audit. 
B)  a review. 
C)  management consulting. 
D)  a compilation.

Question 18

A shareholder of a public Canadian firm can have access to the audited financial statements

Accepted Answer

A)  on the Internet. 
B)  by calling the accounting department of the company. 
C)  by requesting a copy from the auditors. 
D)  if he/she holds more than 1% of the shares of the company. 
A)  on the Internet. 
B)  by calling the accounting department of the company. 
C)  by requesting a copy from the auditors. 
D)  if he/she holds more than 1% of the shares of the company.

Question 19

When do individuals and organizations typically need assurance services?

Accepted Answer

A)  usually only when organizations obtain debt or other loans 
B)  for five years from the start of an organization until debt is retired 
C)  only when historical data, such as financial information, needs to be audited 
D)  on an ongoing basis, as demand for forward-looking information increases 
A)  usually only when organizations obtain debt or other loans 
B)  for five years from the start of an organization until debt is retired 
C)  only when historical data, such as financial information, needs to be audited 
D)  on an ongoing basis, as demand for forward-looking information increases

Question 20

Which of the following organizations establishes ethical standards and standards for the practice of Internal Auditing?

Accepted Answer

A)  Information Systems Audit and Control Association (ISAC
A)  
B)  Institute of Internal Auditors (II
A)  
C)  Society of Management Accountants of Canada (SMA
C)  
D)  Canadian Institute of Chartered Accountants (CIC
A)  
A)  Information Systems Audit and Control Association (ISAC
A)  
B)  Institute of Internal Auditors (II
A)  
C)  Society of Management Accountants of Canada (SMA
C)  
D)  Canadian Institute of Chartered Accountants (CIC
A)

To operate effectively, an internal auditor must be independent of the

In the audit of an individual's tax return, the auditor should demonstrate competence in the use of

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?

Blader Ng. Inc. has recently placed new air-cleaning systems in their smokestacks to meet air quality regulations. An auditing firm has been engaged to assess air quality and compare results to legislated requirements. What type of audit or engagement is the auditor conducting?

One of the reasons that an auditor must be competent is so that they can

The internal audit group typically reports directly to the

Which of the following services provides no assurance about the client's financial statements?

Because an external auditor is paid a fee by a client company, he or she

One of the reasons that an auditor must be competent is so that they can

Which of the following is an example of accounting rather than auditing?

The extent and the scope of the audits conducted by Auditors General are determined by

Which of the following terms best describes the increased likelihood that unreliable information will be provided to decision makers?

Which of the following is an advantage of a review engagement as compared to an audit engagement?

Which of the following is an example of an attestation engagement?

Which of the following services provides a moderate level of assurance about the client's financial statements?

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 shareholder of a public Canadian firm can have access to the audited financial statements

When do individuals and organizations typically need assurance services?

Which of the following organizations establishes ethical standards and standards for the practice of Internal Auditing?

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 1: The Demand for Audit and Other Assurance Services

To operate effectively, an internal auditor must be independent of the

In the audit of an individual's tax return, the auditor should demonstrate competence in the use of

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?

Blader Ng. Inc. has recently placed new air-cleaning systems in their smokestacks to meet air quality regulations. An auditing firm has been engaged to assess air quality and compare results to legislated requirements. What type of audit or engagement is the auditor conducting?

One of the reasons that an auditor must be competent is so that they can

The internal audit group typically reports directly to the

Which of the following services provides no assurance about the client's financial statements?

Because an external auditor is paid a fee by a client company, he or she

One of the reasons that an auditor must be competent is so that they can

Which of the following is an example of accounting rather than auditing?

The extent and the scope of the audits conducted by Auditors General are determined by

Which of the following terms best describes the increased likelihood that unreliable information will be provided to decision makers?

Which of the following is an advantage of a review engagement as compared to an audit engagement?

Which of the following is an example of an attestation engagement?

Which of the following services provides a moderate level of assurance about the client's financial statements?

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 shareholder of a public Canadian firm can have access to the audited financial statements

When do individuals and organizations typically need assurance services?

Which of the following organizations establishes ethical standards and standards for the practice of Internal Auditing?

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters