Question 1

"Supervision," as associated with generally accepted auditing standards applies to: (i) inexperienced auditors, (ii) auditors without CPA licenses, (iii) auditors with CPA licenses.

Accepted Answer

A)  i and ii only. 
B)  ii and iii only. 
C)  i and iii only. 
D)  i, ii and iii.

Question 2

Why does a financial statement auditor evaluate management's credentials after assessing management's integrity?

Accepted Answer

A)  Because credentials are more objective. 
B)  Because integrity is less important. 
C)  Because managers can have integrity without credentials. 
D)  Because credentials can be falsified more easily than integrity.

Question 3

An auditor carefully documents every conclusion reached and every balance calculated in a financial statement audit because of which auditing standard?

Accepted Answer

A)  Internal control. 
B)  Independence. 
C)  Supervision. 
D)  Professional care.

Question 4

After examining a firm's accounting information system, an auditor concluded that the firm's financial statements are fairly presented, thus fulfilling which auditing standard?

Accepted Answer

A)  Opinion. 
B)  Disclosure. 
C)  GAAP. 
D)  Evidence.

Question 5

In most financial statement audits, ___ immediately precedes compliance testing.

Accepted Answer

A)  Assess management's integrity. 
B)  Evaluate management's credentials. 
C)  Review the internal control system. 
D)  Issue an opinion.

Question 6

Which type of audit is not indicated by any of the situations above?

Accepted Answer

A)  Financial statement. 
B)  Operational. 
C)  Compliance. 
D)  Investigative.

Question 7

The "completeness" assertion associated with financial statement audits is most closely associated with which general auditing standard?

Accepted Answer

A)  Independence. 
B)  Disclosure. 
C)  Consistency. 
D)  Evidence.

Question 8

Which of the following is a field work auditing standard?

Accepted Answer

A)  Internal control. 
B)  Professional care. 
C)  Consistency. 
D)  Disclosure.

Question 9

Which type of audit looks "inside the box?"

Accepted Answer

A)  Management audit. 
B)  Financial statement audit. 
C)  Compliance audit. 
D)  Systems audit.

Question 10

Your school's accounting club will soon host a one-day seminar on auditing and evaluating accounting information systems. You know you'll be talking with experienced auditors during the seminar; you want to demonstrate your knowledge of auditing to make a good impression.
-List, in order, the steps commonly associated with a financial statement audit.

Accepted Answer

The answer of Your school's accounting club will soon host...

Question 11

Flowcharts and other forms of systems documentation are useful in: (i) operational audits, (ii) investigative audits.

Accepted Answer

A)  i only. 
B)  ii only. 
C)  Both i and ii. 
D)  Neither i nor ii.

Question 12

A financial statement auditor completed the following steps in a recent engagement. Number the steps in the order of their occurrence based on the generic audit steps discussed in the text.

a. Compose an unqualified opinion.

b. Confirm the existence of inventory.

c. Determine risk exposures.

d. Interview employees about management's overall attitude.

e. Obtain copies of college transcripts and professional certifications.

Accepted Answer

The answer of A financial statement auditor completed the following...

Question 13

In most financial statement audits, what happens immediately after assessing management's integrity?

Accepted Answer

A)  Evaluate management's credentials. 
B)  Evaluate the internal control system. 
C)  Plan compliance testing. 
D)  Conduct compliance testing.

Question 14

All of the following link accounting information systems with auditing except:

Accepted Answer

A)  The conversion process. 
B)  Financial statements. 
C)  Enterprise resource planning systems. 
D)  Reporting standards.

Question 15

An investigative auditor planned to complete the following actions; number them in their preferred order of occurrence.

a. Discuss evidence obtained in other steps with the main suspect.

b. Interview accounting employees who created journal entries to cover up an inventory theft.

c. Obtain copies of purchase orders.

d. Question receiving department employees that may have observed inventory theft.

e. Review video surveillance tapes.

Accepted Answer

The answer of An investigative auditor planned to complete the...

Question 16

Examining remittance advices in a financial statement audit helps fulfill which auditing standard?

Accepted Answer

A)  Disclosure. 
B)  Supervision. 
C)  GAAP. 
D)  Evidence.

Exam 17: Auditing and Evaluating the AIS