Exam 18: Auditing and Evaluating the Ais

Revise each statement below so that it more clearly upholds the indicated generally accepted auditing standard.1) Training: Alexis completed an online course on professional etiquette.2) Evidence: Allison checked the employment references of an audit client's CEO as part of evaluating the CEO's credentials.3) Report: Ann used her own words to express a report on the truth of an audit client's financial statements.4) Independence: Blaine accepted an audit engagement with a firm owned by his mother-in-law.5) Professional care: Brent randomly selected auditors in his firm as part of developing an audit team.6) Internal control: Crystal used expectancy theory to assess internal control as part of an audit.7) Supervision: Lindsay, the manager of an audit team, scrutinized the work of all auditors on her team equally, regardless of their experience or the tasks they were completing.8) Consistency: Louis explained a change between the applications of GAAP in 2008 and 2011.9) Disclosure: Nicole personally prepared the footnotes for an audit client's financial statements to ensure all disclosures were properly done.10) GAAP: Ralph determined that a client's financial statements were truthfully and accurately presented in accordance with generally accepted auditing standards.

As specified by the Audit Clarity Project, which element of the auditor's report must include the phrase "independent auditor's report?"

The Audit Clarity Project's objectives include:

As a tool for understanding human behavior, expectancy theory can be useful in:

The terms "adverse" and "disclaimer" are most closely associated with which generally accepted auditing standard?

Consider the audit descriptions and types paired below.Indicate with an X in the appropriate column whether the audit described is paired with the appropriate type.

The chapter identified four links between AIS and auditing.Which link is indicated by each independent description below? 1) Alex prepared a bond discount amortization schedule using Excel.2) Amy verified an audit client's process for validating XBRL taxonomy extensions.3) Joan reviewed the previous year's risk/control matrix when starting an audit.4) Josef estimated the useful life of equipment for calculating depreciation.5) Mark debated which systems development methodology to use in developing an AIS.6) Members of an audit team discussed a client's business processes in terms of the capability maturity model.7) Nancy used relational database software to sample transactions for an audit.8) Omar prepared a PowerPoint presentation summarizing the results of an audit.9) Paul asked employees of an audit client about management's attitude on various topics.10) Will explained the five-part COSO framework to an audit client.

Which of the following organizations is most likely to be subject to a compliance audit?

The chapter described five generic steps in a financial statement audit; it also discussed six other types of audits you may encounter in your professional career.Consider the operational audit.Based on its broad purpose and objectives, explain how you would modify the five generic financial statement audit steps for the audit type you choose.

As a processing tool in the AIS, general ledger software can be useful in:

Verifying the frequency of bank reconciliations and reconciling the latest bank statement are examples of actions an auditor might take in which generic steps of the financial statement audit process?

In which generic step of a financial statement audit is the auditor most likely to verify the frequency of bank reconciliations?

Generally accepted auditing standards are divided into three groups.All of the following are standards in the "general" group except:

In the first generic step of financial statement audits, the auditor should assess:

Which type of audit is a "basket" of the other types?

The third generic step in a financial statement audit could benefit from:

According to the Audit Clarity Project, the auditor's report must explain management's responsibilities for:

As specified by the Audit Clarity Project, when an audit wants to call attention to something in the financial statements, the report must include:

All of the following are changes associated with the Audit Clarity Project except:

Consider the statements presented below.Choose those that would happen as part of a financial statement audit, then put them in the proper order based on the steps presented in the text. a.Check access to sensitive information and other assets. b.Consult GAO standards. c.Convert financial statements to XBRL. d.Evaluate the organization's control environment. e.Interview the CFO as a corroborative witness. f.Make recommendations for improving business processes. g.Prepare an unmodified report. h.Review management's resumes. i.Translate financial statements from German to English. j.Verify the existence of inventory and plant assets.