Chapter 1

Internal auditors should report to all parties of the following expect

• Company chairman

• accounting manager

• audit committee

• Board of Director

In the context of agency theory, information symmetry refers to the idea that

• information can vary in its reliability
• information can vary its relevance
• management has more information about the entity's true finanacial position than do absentee owners
• management likely will not act in the best interest of the absentee owners.

Providing quantitive information that management and others can use to make decisions is the function of

• management information systems
• auditing
• finance
• accounting

An audit of financial statements is conducted to determine whether the

• organisation is operating efficiently and effectively
• entity is following specific procedures or rules set down by some higher authority
• members of the management team are fulfilling their fiduciary responsibilities to shareholders
• none of the above

In "auditing" financial accounting data, the primary concern is with

• determining whether recorded information properly reflects the economic events that occurred during the accounting period
• determining if the fraud has occurred
• determining if taxable income has been calculated correctly
• analysing the financial information to be sure that it complies with government requirements

The trait that distinguishes auditors from accountants is the

• auditor's ability to interpret accounting principles
• auditor's education in tertiary education
• auditor's ability to interpret financial statements
• auditor's sklls in interpretation of evidence related to a client's financial statements

Select the knowledge an auditor needs to accquire before can audit client company:

• banking law
• company law
• financial accounting
• management accounting

Auditing helps financial information is

• reliable
• credible
• relevant
• timely

Which statement best explain the concept of absentee owners in running the business?

• Professional managers to run the corporation on a day-to-day basis
• Professional auditors to run the corporation on a day-to-day basis
• Professional accountants to run the corporation on a day-to-day basis
• Owners to run the corporation on a day-to-day basis

Acounting and finance managers are reporting to the owners of the business on the yearly financial performance

• Stedwardship
• Stedwarship accounting
• Information asymmentry
• Conflict of interest