《阿伦斯审计学一种整合方法课后习题答案ch01》由会员分享，可在线阅读，更多相关《阿伦斯审计学一种整合方法课后习题答案ch01（13页珍藏版）》请在金锄头文库上搜索。
1、Chapter 1The Demand for Audit and Other Assurance Services Review Questions1-1The relationship among audit services, attestation services, and assurance services is reflected in Figure 1-3 on page 13 of the text. An assurance service is an independent professional service to improve the quality of i
2、nformation for decision makers. An attestation service is a form of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. Audit services are a form of attestation service in which the auditor expresses a written con
3、clusion about the degree of correspondence between information and established criteria.The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements are presented in conformity with generally
4、accepted accounting principles. An example of an attestation service is a report on the effectiveness of an entitys internal control over financial reporting. There are many possible forms of assurance services, including services related to business performance measurement, health care performance,
5、 and information system reliability.1-2An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are:1. Remoteness of informationa. Owners (stockholders) divorced from managementb. Direct
6、ors not involved in day-to-day operations or decisionsc. Dispersion of the business among numerous geographic locations and complex corporate structures2. Biases and motives of providera. Information will be biased in favor of the provider when his or her goals are inconsistent with the decision mak
7、ers goals.3. Voluminous dataa. Possibly millions of transactions processed daily via sophisticated computerized systemsb. Multiple product linesc. Multiple transaction locations4. Complex exchange transactionsa. New and changing business relationships lead to innovative accounting and reporting prob
8、lemsb. Potential impact of transactions not quantifiable, leading to increased disclosures1-31.Risk-free interest rate This is approximately the rate the bank could earn by investing in U.S. treasury notes for the same length of time as the business loan.2. Business risk for the customer This risk r
9、eflects the possibility that the business will not be able to repay its loan because of economic or business conditions such as a recession, poor management decisions, or unexpected competition in the industry.3. Information risk This risk reflects the possibility that the information upon which the
10、 business risk decision was made was inaccurate. A likely cause of the information risk is the possibility of inaccurate financial statements.Auditing has no effect on either the risk-free interest rate or business risk. However, auditing can significantly reduce information risk.1-4The four primary
11、 causes of information risk are remoteness of information, biases and motives of the provider, voluminous data, and the existence of complex exchange transactions.The three main ways to reduce information risk are:1. User verifies the information.2. User shares the information risk with management.3
12、. Audited financial statements are provided.The advantages and disadvantages of each are as follows:ADVANTAGESDISADVANTAGESUSER VERIFIES INFORMATION1. User obtains information desired.2. User can be more confident of the qualifications and activities of the person getting the information.1. High cos
13、t of obtaining information.2. Inconvenience to the person providing the information because large number of users would be on premises.USER SHARES INFORMATION RISK WITH MANAGEMENT1. No audit costs incurred.1. User may not be able to collect on losses.AUDITED FINANCIAL STATEMENTS ARE PROVIDED1. Multi
14、ple users obtain the information.2. Information risk can usually be reduced sufficiently to satisfy users at reasonable cost.3. Minimal inconvenience to management by having only one auditor.1. May not meet needs of certain users.2. Cost may be higher than the benefits in some situations, such as fo
15、r a small company.1-5To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. Examples of established criteria include generally accepted accounting principles and the Internal Revenue Code. Determining the degree
16、 of correspondence between information and established criteria is determining whether a given set of information is in accordance with the established criteria. The information for Jones Companys tax return is the federal tax returns filed by the company. The established criteria are found in the Internal Revenue Code and all inte
