Question 1

In the audit of historical financial statements by PA firms, the criteria used are

Accepted Answer

A)  generally accepted auditing standards. 
B)  generally accepted accounting principles. 
C)  regulations of the Canada Revenue Agency. 
D)  regulations of the provincial securities commissions.

Question 2

The No-Name Agency conducts an independent service for a company to determine if its suppliers have complied with health and safety regulations, child labour guidelines, and other employee welfare issues. What type of service is No-Name providing?

Accepted Answer

A)  assurance 
B)  attest 
C)  review 
D)  compilation

Question 3

The independent auditor's report is the

Accepted Answer

A)  communication of the result of the audit to the users. 
B)  set of audited financial statements. 
C)  invoice of the auditor detailing the work they have performed. 
D)  report presented to management about the possible improvements.

Question 4

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

Question 5

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

Accepted Answer

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

Question 6

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

Question 7

When readers are cautioned that the financial statements may not be appropriate for their purposes, the non-assurance service is called a(n)

Accepted Answer

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

Question 8

Herbert Zora is having financial statements prepared by his PA to accompany his tax return. His primary concern is cost. Of the following, the lowest-cost engagement that the PA can perform for Zora's financial statements is

Accepted Answer

A)  compilation. 
B)  review. 
C)  audit. 
D)  WebTrust.

Question 9

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.

Question 10

The auditor and the entities should agree on the criteria to be used in the audit

Accepted Answer

A)  before the audit starts. 
B)  after the audit planning has been done. 
C)  as they progress with the audit, as they can determine which criteria are most suitable. 
D)  at the end of the audit.

Question 11

A review of any part of an organization's procedures and methods for the purpose of evaluating efficiency and effectiveness is classified as a(n)

Accepted Answer

A)  audit of financial statements. 
B)  compliance audit. 
C)  operational audit. 
D)  production audit.

Question 12

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.

Question 13

We discuss four types of auditors: public accountants, government auditors, Canada Revenue Agency auditors, and internal auditors. Briefly describe the work and responsibilities of each type of auditor.

Accepted Answer

The answer of We discuss four types of auditors: public...

Question 14

Which of the following is an example of a financial statement audit?

Accepted Answer

A)  determining whether ABC's financial statements overall do not violate any debt covenants 
B)  determining whether ABC's overall financial statements are stated in conformity with IFRS 
C)  evaluating the effectiveness and efficiency of internal controls used to create account balance 
D)  evaluating the effectiveness and efficiency of internal controls used to record transactions

Question 15

Joe is recording sales transactions in the accounting system so that they can be summarized in a logical manner for the purpose of providing financial information for decision-making. Joe is performing

Accepted Answer

A)  accounting. 
B)  auditing. 
C)  review. 
D)  management consulting.

Question 16

What is the most appropriate method for an organization to lower information risk related to its financial statements?

Accepted Answer

A)  Have good bookkeeping work completed on the accounts. 
B)  Use a high quality software package keep track of information. 
C)  Have an independent financial statement audit conducted. 
D)  Have an independent operational audit conducted on effectiveness.

Question 17

Which of the following illustrates the definition of auditing with respect to the evidence analysis process?

Accepted Answer

A)  accumulation and evaluation of evidence about balance sheet accounts 
B)  learning about different types of computing technology, such as mainframes 
C)  writing an operational audit report that is tailored to the client's situation 
D)  making sure that the auditor is competent and understands evidence gathering

Question 18

A PA is attempting to sell a service to clients that will provide assurance on the accuracy, availability, and security of information systems.The PA is attempting to sell a(n)

Accepted Answer

A)  WebTrust service. 
B)  compilation service. 
C)  SysTrust service. 
D)  audit engagement.

Question 19

Which of the following audits can be regarded as being solely "compliance" audits?

Accepted Answer

A)  Canada Revenue Agency's examinations of the returns of taxpayers 
B)  the Auditor General's evaluation of the computer operations of governmental units 
C)  an internal auditor's review of his employer's payroll authorization procedures 
D)  a public accounting firm's audit of the local school district

Question 20

In the audit of an individual's tax return, the criteria used would be

Accepted Answer

A)  an accounting framework. 
B)  the Income Tax Act. 
C)  the client's policies for taxable income. 
D)  the auditor's judgment.

Exam 1: The Demand for Audit and Other Assurance Services