Question 1

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.

Accepted Answer

The answer of Revise each statement below so that it...

Question 2

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

Accepted Answer

A) introductory paragraph 
B) auditor's opinion 
C) title 
D) some other section

Question 3

The Audit Clarity Project's objectives include:

Accepted Answer

A) making auditing standards easier to read. 
B) converging US auditing standards with international auditing standards. 
C) Both making auditing standards easier to read and converging US auditing standards with international auditing standards. 
D) Neither making auditing standards easier to read nor converging US auditing standards with international auditing standards.

Question 4

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

Accepted Answer

A) Accounting information systems. 
B) Auditing. 
C) Both accounting information systems and auditing. 
D) Neither accounting information systems nor auditing.

Question 5

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

Accepted Answer

A) Reporting 
B) Opinion 
C) Disclosure 
D) Some other standard

Question 6

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.

Accepted Answer

The answer of Consider the audit descriptions and types paired...

Question 7

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.

Accepted Answer

The answer of The chapter identified four links between AIS...

Question 8

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

Accepted Answer

A) Yellow Pages Company 
B) City of Los Angeles 
C) Microsoft 
D) All of these are likely to be subject to a compliance audit.

Question 9

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.

Accepted Answer

The answer of The chapter described five generic steps in...

Question 10

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

Accepted Answer

A) A management audit. 
B) An investigative audit. 
C) Both a management audit and an investigative audit. 
D) Neither a management audit nor an investigative audit.

Question 11

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?

Accepted Answer

A) First and second 
B) Second and third 
C) Third and fourth 
D) Second and fourth

Question 12

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

Accepted Answer

A) First 
B) Second 
C) Third 
D) Fifth

Question 13

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

Accepted Answer

A) Training 
B) Independence 
C) Professional care 
D) Internal control

Question 14

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

Accepted Answer

A) The internal control system. 
B) Management's integrity. 
C) Both the internal control system and management's integrity. 
D) Neither the internal control system nor management's integrity.

Question 15

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

Accepted Answer

A) Financial 
B) Operational 
C) International 
D) Management

Question 16

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

Accepted Answer

A) Interviews. 
B) Flowcharts. 
C) Both interviews and flowcharts. 
D) Neither interviews nor flowcharts.

Question 17

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

Accepted Answer

A) the board of directors and other parties. 
B) ensuring that the financial statements are fairly presented. 
C) financial statements and internal controls. 
D) paying the auditor when the engagement is finished.

Question 18

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

Accepted Answer

A) an emphasis-of-matter paragraph. 
B) an audit assertions paragraph. 
C) the relevant GAAS. 
D) references to appropriate professional codes of ethics.

Question 19

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

Accepted Answer

A) the audit report. 
B) terminology. 
C) format. 
D) ensuring that US standards are adopted worldwide.

Question 20

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.

Accepted Answer

The answer of Consider the statements presented below.Choose those that...

Exam 18: Auditing and Evaluating the Ais