Question 1

Which of the following is not a cause of information risk?

Accepted Answer

A)  simple exchange transactions 
B)  voluminous data 
C)  remoteness of information 
D)  biases and motives of the provider 
A)  simple exchange transactions 
B)  voluminous data 
C)  remoteness of information 
D)  biases and motives of the provider A

Question 2

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. A

Question 3

A reason for a nonprofit organization to be audited is to

Accepted Answer

A)  comply with the laws requiring them to be audited. 
B)  meet requirements of lenders or funding sources. 
C)  have a professional accountant perform their bookkeeping. 
D)  ensure that their financial statements do not contain errors. 
A)  comply with the laws requiring them to be audited. 
B)  meet requirements of lenders or funding sources. 
C)  have a professional accountant perform their bookkeeping. 
D)  ensure that their financial statements do not contain errors. B

Question 4

What is the nature of the service provided when a auditor evaluates information using suitable criteria and issues a report that attests to the reliability of the information?

Accepted Answer

A)  internal audit engagement 
B)  review engagement 
C)  compilation engagement 
D)  attestation engagement 
A)  internal audit engagement 
B)  review engagement 
C)  compilation engagement 
D)  attestation engagement

Question 5

Auditing should be done by a qualified

Accepted Answer

A)  chartered accountant. 
B)  certified management accountant. 
C)  competent and independent person. 
D)  professional accountant. 
A)  chartered accountant. 
B)  certified management accountant. 
C)  competent and independent person. 
D)  professional accountant.

Question 6

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 7

As part of its loan agreement, Big Bank requires that only accounts receivable less than 60 days old be used as collateral. An auditor has been engaged to provide assurance that the accounts receivable on the list provided to the bank are indeed less than 60 days old. What type of 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 8

Use your knowledge of the definition of auditing and Figure 1-1: Audit of a Tax Return to explain how an auditor would conduct a privacy audit.

Accepted Answer

First, the concept of a competent, indep

Question 9

In the audit of a corporate tax return, the report provided by the Canada Revenue Agency auditor would describe

Accepted Answer

A)  an opinion on the likelihood of tax return error. 
B)  the likely accounting errors that could contribute to tax errors. 
C)  management issues with respect to accurately reporting taxes. 
D)  corporate income tax overages or income tax underpayments. 
A)  an opinion on the likelihood of tax return error. 
B)  the likely accounting errors that could contribute to tax errors. 
C)  management issues with respect to accurately reporting taxes. 
D)  corporate income tax overages or income tax underpayments.

Question 10

An accountant records information. When conducting an audit, the auditor must possess

Accepted Answer

A)  an ability to interpret generally accepted accounting frameworks. 
B)  an education beyond the bachelor's degree. 
C)  an ability to classify transactions by type. 
D)  an ability to organize and summarize economic events. 
A)  an ability to interpret generally accepted accounting frameworks. 
B)  an education beyond the bachelor's degree. 
C)  an ability to classify transactions by type. 
D)  an ability to organize and summarize economic events.

Question 11

Which of the following is most difficult to evaluate objectively?

Accepted Answer

A)  efficiency and effectiveness of operations 
B)  compliance with government regulations 
C)  presentation of financial statements in accordance with a generally accepted accounting framework 
D)  internal controls in use at a small company 
A)  efficiency and effectiveness of operations 
B)  compliance with government regulations 
C)  presentation of financial statements in accordance with a generally accepted accounting framework 
D)  internal controls in use at a small company

Question 12

Frederic is an account manager at a large Canadian bank. Frederic has to decide if the bank will make a loan to Frost Corp, a snow removal company. Further, Frederic has to decide how much they will lend to Frost and at what rate.
Assuming that Frederic makes the loan, what factors will he use to decide the rate of interest? What factors are impacted by auditing and how?

Accepted Answer

Factors:
1.Risk free interest rate: The

Question 13

What is the primary difference between internal and external auditors?

Accepted Answer

A)  the methodology used to conduct financial statement audits 
B)  the level of competence required 
C)  the parties to whom the auditor is responsible 
D)  the level of objectivity required 
A)  the methodology used to conduct financial statement audits 
B)  the level of competence required 
C)  the parties to whom the auditor is responsible 
D)  the level of objectivity required

Question 14

There is an increasing demand for assurance about computer controls surrounding financial information transacted electronically and the security of the information related to the transaction. This is in large part due to

Accepted Answer

A)  the increasing presence of Internet sales in many businesses. 
B)  the use of computer-assisted auditing tools. 
C)  the large volume of transactions and information shared online and in real-time by companies. 
D)  client's uncertainty about the proper functioning of their computer systems. 
A)  the increasing presence of Internet sales in many businesses. 
B)  the use of computer-assisted auditing tools. 
C)  the large volume of transactions and information shared online and in real-time by companies. 
D)  client's uncertainty about the proper functioning of their computer systems.

Question 15

What type of information is available from www.sedar.com (System for Electronic Document Analysis and Retrieval)?

Accepted Answer

A)  minutes of shareholders and directors meetings 
B)  transaction reports from major credit card companies 
C)  annual reports and management discussion and analysis 
D)  listings of all of the shareholders on record 
A)  minutes of shareholders and directors meetings 
B)  transaction reports from major credit card companies 
C)  annual reports and management discussion and analysis 
D)  listings of all of the shareholders on record

Question 16

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 17

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 18

A major type of assurance service performed by large public accounting firms is

Accepted Answer

A)  auditing. 
B)  reviewing. 
C)  compilation. 
D)  management consulting. 
A)  auditing. 
B)  reviewing. 
C)  compilation. 
D)  management consulting.

Question 19

It is important for the auditor to be independent because

Accepted Answer

A)  otherwise the auditor would not charge a fair rate to the client. 
B)  otherwise the auditor might not be as knowledgeable of the subject matter and the criteria. 
C)  this will prevent bias in accumulating and evaluating evidence. 
D)  the Canadian tax authorities require that the auditor be independent. 
A)  otherwise the auditor would not charge a fair rate to the client. 
B)  otherwise the auditor might not be as knowledgeable of the subject matter and the criteria. 
C)  this will prevent bias in accumulating and evaluating evidence. 
D)  the Canadian tax authorities require that the auditor be independent.

Question 20

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.

Which of the following is not a cause of information risk?

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

A reason for a nonprofit organization to be audited is to

What is the nature of the service provided when a auditor evaluates information using suitable criteria and issues a report that attests to the reliability of the information?

Auditing should be done by a qualified

Use your knowledge of the definition of auditing and Figure 1-1: Audit of a Tax Return to explain how an auditor would conduct a privacy audit.

In the audit of a corporate tax return, the report provided by the Canada Revenue Agency auditor would describe

An accountant records information. When conducting an audit, the auditor must possess

Which of the following is most difficult to evaluate objectively?

What is the primary difference between internal and external auditors?

There is an increasing demand for assurance about computer controls surrounding financial information transacted electronically and the security of the information related to the transaction. This is in large part due to

What type of information is available from www.sedar.com (System for Electronic Document Analysis and Retrieval)?

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

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

A major type of assurance service performed by large public accounting firms is

It is important for the auditor to be independent because

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

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

Which of the following is not a cause of information risk?

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

A reason for a nonprofit organization to be audited is to

What is the nature of the service provided when a auditor evaluates information using suitable criteria and issues a report that attests to the reliability of the information?

Auditing should be done by a qualified

Use your knowledge of the definition of auditing and Figure 1-1: Audit of a Tax Return to explain how an auditor would conduct a privacy audit.

In the audit of a corporate tax return, the report provided by the Canada Revenue Agency auditor would describe

An accountant records information. When conducting an audit, the auditor must possess

Which of the following is most difficult to evaluate objectively?

What is the primary difference between internal and external auditors?

There is an increasing demand for assurance about computer controls surrounding financial information transacted electronically and the security of the information related to the transaction. This is in large part due to

What type of information is available from www.sedar.com (System for Electronic Document Analysis and Retrieval)?

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

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

A major type of assurance service performed by large public accounting firms is

It is important for the auditor to be independent because

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

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