Exam 1: Introduction to Auditing

Auditors on staff in the Office of the Auditor General (OAG)are considered to be external auditors with respect to the government agencies they audit because the OAG is ________.

Business risk is the risk that the financial statements do not reflect the economic substance of business activities.

Forensic accounting does not include fraud auditing.

When does an agency problem occur?

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

An example of a forensic accounting assignment might be ________.

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

What is the primary role and responsibility of independent external auditors?

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

Three-party accountability is a special case of which economic theory problem?

The concept of three-party accountability means that the auditor is expected to act in the interests of the party paying the audit fee.

There are no restrictions on the type of business advisory services a PA firm can provide to a nonaudit client.

What is operational auditing and who performs it?

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

Accounting risk is the part of information risk that is due to incorrectly predicting future events.

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

What is an attest engagement?

The auditee is the person or company ________.