Chapter 1 - Questions (Audit)

In the auditing process,

• the types and amounts of evidence remain constant from audit to audit. (depend on materity)

• the criteria for evaluating information will not vary depending on the information being audited

• the audit report communicates the auditor's findings to users

• records are gathered by the auditor to determine whether the audited information is stated in accordance with SEC standards. (not just SEC)

The criteria by which an auditor evaluates the information under audit may vary with the information being audited

• True

• False

One criterion used by an external auditor to evaluate published financial statements is known as generally accepted auditing standards.

• True

• False

Auditors strive to maintain a high level of independence to keep the confidence of users relying on their reports

• True

• False

To perform an audit, there must be information in a verifiable form and some criteria by which the auditor can evaluate the information.

• True

• False

Auditors are not allowed and should not audit subjective information like the effectiveness of computer controls or the efficiency of manufacturing-related operations

• True

• False

In an audit of internal controls over financial reporting, the auditor may rely upon Internal Control - Integrated Framework issued by COSO

• True

• False

In circumstances where the auditor is being asked to audit subjective types of information, typically, the auditor and the entities being audited should agree in writing about the criteria being audited after the audit starts

• True

• False

An accountant

• must possess expertise in the accumulation of audit evidence

• must decide the number and types of items to test.

• must have an understanding of the principles and rules that provide the basis for preparing the accounting information.

• must be a CPA

When auditing accounting data, auditors focus on

• determining whether recorded information properly reflects the economic events that occurred during the accounting period.

• determining if fraud has occurred

• determining if taxable income has been calculated correctly

• analyzing the financial information to be sure that it complies with government requirements.