Question 1

The purpose of obtaining and evaluating evidence is to ascertain the degree of correspondence between the assertions and established criteria.

Accepted Answer

Obtaining and evaluating evidence helps to determine the extent to which the assertions align with established criteria.

Question 2

The AICPA licenses CPAs to practice in the United States.

Accepted Answer

The AICPA is a professional organization for CPAs, but it does not have the authority to license individuals to practice as CPAs. Licensing is done by individual states through their state boards of accountancy.

Question 3

The concept "professional skepticism" requires that auditors assume management is dishonest and should not be trusted.

Accepted Answer

Professional skepticism does not assume that management is dishonest or untrustworthy. Rather, it requires auditors to maintain a questioning mind and critically evaluate the evidence presented by management, recognizing the possibility of errors, fraud, or other irregularities. While auditors should not blindly accept management's representations, they should also not assume that they are always lying or acting in bad faith. Instead, they should seek to gather sufficient and appropriate audit evidence to support their conclusions and opinions.

Question 4

The PCAOB audit objective related to the completeness assertion is to establish evidence that assets,liabilities,and equities actually exist.

Accepted Answer

The completeness assertion ensures that all transactions and accounts that should be presented in the financial statements are included, not that they exist. The existence assertion is concerned with whether assets, liabilities, and equities actually exist.

Question 5

Assurance services are independent professional services that improve the quality of information or its context for decision makers.

Accepted Answer

Assurance services are indeed independent professional services that aim to enhance the quality and reliability of information for decision makers. These services can include activities like audits, reviews, and attestation services.

Question 6

Expanded scope governmental auditing includes economy and efficiency and program results audits.

Accepted Answer

Governmental auditing has expanded to include not only financial audits, but also economy and efficiency audits and program results audits. These types of audits assess whether government programs are being carried out in the most cost-effective and efficient manner, as well as whether they are achieving their intended goals and outcomes.

Question 7

The ASB balance audit objective related to valuation or accuracy is to determine whether proper values have been assigned to assets,liabilities,equities,revenues,and expenses.

Accepted Answer

The statement accurately describes the ASB balance audit objective related to valuation or accuracy. The primary aim of this type of audit is to ensure that the financial statements accurately reflect the financial position and performance of the organization by checking the accuracy of the values assigned to various elements such as assets, liabilities, equities, revenues, and expenses.

Question 8

Internal auditors perform only operational audits.

Accepted Answer

Internal auditors may perform operational audits, but they may also perform financial audits, compliance audits, and other types of audits. It depends on the scope of the audit and the needs of the organization.

Question 9

Evidence consists of assertions about economic actions and events.

Accepted Answer

The answer of Evidence consists of assertions about economic actions...

Question 10

The AICPA Statement on Auditing Standards defines auditing more broadly than the AAA definition of auditing.

Accepted Answer

The answer of The AICPA Statement on Auditing Standards defines...

Question 11

Four conditions that create demand for reliable information are complexity,remoteness,timeliness,and consequences.

Accepted Answer

These four conditions are widely recognized as creating a need for the availability of reliable information. Complexity refers to situations where a matter is difficult to understand or explain, while remoteness describes circumstances in which decision-makers are physically or geographically separated from the situation at hand. Timeliness is important because many decisions require timely information to be effective, and consequences matter because the effects of decisions can be significant or long-lasting.

Question 12

Financial decision makers demand reliable information that is provided by accountants.

Accepted Answer

Financial decision makers rely on accurate and trustworthy financial information provided by accountants to make informed decisions regarding investments or business operations. Therefore, accountants hold a crucial role in providing reliable financial information to decision makers.

Question 13

Independent auditors are employees of the client.

Accepted Answer

Independent auditors are not employees of the client. They are external professionals hired by the client to perform an objective assessment of the client's financial statements and internal controls. The independence of auditors is crucial for ensuring the credibility and reliability of the audit report.

Question 14

For independent auditors of financial statements in the United States,established criteria largely consist of the generally accepted accounting principles (GAAP).

Accepted Answer

Established criteria for independent auditors of financial statements in the United States largely consist of the generally accepted accounting principles (GAAP).

Question 15

The objective of internal auditing is to assist members of an organization to effectively perform their obligations.

Accepted Answer

The objective of internal auditing is to provide independent and objective assurance or consulting services designed to add value and improve an organization's operations. This includes assisting members of the organization to effectively perform their obligations by identifying areas for improvement, providing recommendations, and evaluating the effectiveness of existing processes and controls.

Question 16

Financial decision makers obtain their accounting information from lenders of funds.

Accepted Answer

Financial decision makers obtain their accounting information from various sources such as financial statements, management reports, auditors, and internal accounting systems. Lenders of funds may be one of the sources, but not the only source.

Question 17

The lending of credibility to financial information is known as certification.

Accepted Answer

The lending of credibility to financial information is known as assurance, not certification.

Question 18

Professional skepticism is an auditor's tendency not to believe anyone.

Accepted Answer

Professional skepticism is an auditor's attitude that includes a questioning mind and a critical assessment of audit evidence. It does not mean that auditors do not believe anyone, but rather that they approach the audit with an open mind while maintaining a healthy level of skepticism.

Question 19

Government auditors perform both financial and performance audits.

Accepted Answer

Government auditors have the responsibility to conduct financial audits, which focus on the accurate financial reporting of funds, and performance audits, which examine the efficiency and effectiveness of government programs and operations.

Question 20

Assurance service is the systematic process of objectively obtaining and evaluating evidence.

Accepted Answer

The answer of Assurance service is the systematic process of...

Quiz 1: Auditing and Assurance Services