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1、Auditing and Assurance Services, 15e (Arens)Chapter 1 The Demand for Audit and Other Assurance ServicesLearning Objective 1-11) The Sarbanes-Oxley Act applies to which of the following companies?A) All companiesB) Privately held companiesC) Public companiesD) All public companies and privately held
2、companies with assets greater than $500 millionAnswer: CTerms: Sarbanes-Oxley ActDiff: EasyObjective: LO 1-1AACSB: Reflective thinking skillsTopic: SOX2) Which of the following is considered audit evidence?A) Oral statements made by managementWritten CommunicationsAuditorObservationYNNB) Oral statem
3、ents made by managementWritten CommunicationsAuditorObservationNYYC) Oral statements made by managementWritten CommunicationsAuditorObservationYYYD) Oral statements made by managementWritten CommunicationsAuditorObservationNNYAnswer: CTerms: Audit evidenceDiff: ModerateObjective: LO 1-1AACSB: Reflec
4、tive thinking skills3) Evidence is paramount to audit and attestation engagements. List the four basic types of audit evidence.Answer: The four types of audit and attestation evidence include:1. Electronic and documentary data about transactions2. Written and electronic communications with outsiders
5、 3. Observations by the auditor4. Oral testimony of the auditee (client)Terms: Basic types of audit evidenceDiff: EasyObjective: LO 1-1AACSB: Reflective thinking skills4) The criteria by which an auditor evaluates the information under audit may vary with the information being audited.A) TrueB) Fals
6、eAnswer: ATerms: Criteria which an auditor evaluates informationDiff: EasyObjective: LO 1-1AACSB: Reflective thinking skills5) The criteria used by an external auditor to evaluate published financial statements are known as generally accepted auditing standards.A) TrueB) FalseAnswer: BTerms: Criteri
7、a used by external auditor to evaluate published financial statementsDiff: EasyObjective: LO 1-1AACSB: Reflective thinking skills6) The Sarbanes-Oxley Act establishes standards related to the audits of privately held companies.A) TrueB) FalseAnswer: BTerms: Sarbanes-Oxley ActDiff: EasyObjective: LO
8、1-1AACSB: Reflective thinking skillsTopic: SOX7) The Sarbanes-Oxley Act is widely viewed as having ushered in sweeping changes to auditing and financial reporting.A) TrueB) FalseAnswer: ATerms: Sarbanes-Oxley ActDiff: EasyObjective: LO 1-1AACSB: Reflective thinking skillsTopic: SOX8) An auditor must
9、 be competent and have an independent mental attitude.A) TrueB) FalseAnswer: ATerms: Competence and independent mental attitudeDiff: EasyObjective: LO 1-1AACSB: Reflective thinking skillsLearning Objective 1-21) Recording, classifying, and summarizing economic events in a logical manner for the purp
10、ose of providing financial information for decision making is commonly called:A) finance.B) auditing.C) accounting.D) economics.Answer: CTerms: Recording, classifying, and summarizing economic eventsDiff: EasyObjective: LO 1-2AACSB: Reflective thinking skills2) An accountant:A) must possess expertis
11、e in the accumulation of audit evidence.B) must decide the number and types of items to test.C) must have an understanding of the principles and rules that provide the basis for preparing the accounting information.D) must be a CPA.Answer: CTerms: Distinguishes auditors from accountantsDiff: Moderat
12、eObjective: LO 1-2AACSB: Reflective thinking skills3) In auditing financial accounting data, the primary concern is with:A) determining whether recorded information properly reflects the economic events that occurred during the accounting period.B) determining if fraud has occurred.C) determining if
13、 taxable income has been calculated correctly.D) analyzing the financial information to be sure that it complies with government requirements.Answer: ATerms: Auditing financial accounting data primary concernDiff: ModerateObjective: LO 1-2AACSB: Reflective thinking skills4) The trait that distinguis
14、hes auditors from accountants is the:A) auditors ability to interpret accounting principles generally accepted in the United States.B) auditors education beyond the Bachelors degree.C) auditors ability to interpret FASB Statements.D) auditors accumulation and interpretation of evidence related to a
15、companys financial statements.Answer: DTerms: Distinguishes auditors from accountantsDiff: ChallengingObjective: LO 1-2AACSB: Reflective thinking skills5) Discuss the differences and similarities between the roles of accountants and auditors. What additional expertise must an auditor possess beyond that of an accountant?Answer: The role of accountants is to record, classify, and summ
