Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 26, Problem 12RQ
To determine
Understand the involvement of external auditor in operational auditing. Also mention one example of operational auditing by a CPA firm.
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Under what circumstances are external auditors likely to beinvolved in operational auditing? Give one example of operational auditing by a CPA firm
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Is it possible for external auditors to make use of the work done by internal audit teams?
Chapter 26 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 26 - Prob. 1RQCh. 26 - Prob. 2RQCh. 26 - Prob. 3RQCh. 26 - Prob. 4RQCh. 26 - Prob. 5RQCh. 26 - Prob. 6RQCh. 26 - Prob. 7RQCh. 26 - Prob. 8RQCh. 26 - Prob. 9RQCh. 26 - Prob. 10RQ
Ch. 26 - Prob. 11RQCh. 26 - Prob. 12RQCh. 26 - Prob. 13RQCh. 26 - Prob. 14RQCh. 26 - Prob. 15RQCh. 26 - Prob. 16.1MCQCh. 26 - Prob. 16.2MCQCh. 26 - Prob. 16.3MCQCh. 26 - Prob. 17.1MCQCh. 26 - Prob. 17.2MCQCh. 26 - Prob. 17.3MCQCh. 26 - Prob. 18.1MCQCh. 26 - Prob. 18.2MCQCh. 26 - Prob. 18.3MCQCh. 26 - Prob. 19.1MCQCh. 26 - Prob. 19.2MCQCh. 26 - Prob. 19.3MCQCh. 26 - Prob. 20DQPCh. 26 - Prob. 21DQPCh. 26 - Prob. 22DQPCh. 26 - Prob. 23DQPCh. 26 - Prob. 24DQPCh. 26 - Prob. 25DQP
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- The evidence that is gathered by an auditor plays a crucial role in the results of the audit and therecommendations that are provided to management. There are TWO (2) attributes with regard to evidencethat an auditor will need to meet before concluding the audit. What are these attributes and why are theyimportant?arrow_forwardAnswer the below: What do you understand by attestation services? Discuss the responsibility and functions of CPA. Why independent Auditors' Reports are usually required? What type of information usually discussed in this report?arrow_forwardThe user auditor is required to obtain a sufficient understanding of the nature and significance of the services provided by the service organisation and their effect on the user entities internal control relevant to the audit. From which source(s) might this understanding be obtained? A) the user entity B) a type 1 service auditors report C) a type 2 service auditors report D) all of the above answersarrow_forward
- The Responsibilities principle requires that auditors be responsiblefor having appropriate competence and capabilities to perform the audit. What are thevarious ways in which auditors can fulfill this principle?arrow_forwardThe Performance Principle in AICPA auditing standards requires the auditor to obtain a sufficient understanding of the entity and its environment, including its internal control. Why is it important to understand the client’s business and how does the auditor gain an understanding of the client’s business?arrow_forwardConsider the concepts of sufficient and appropriate audit evidence. Assess how audit risk relates to audit evidence. How do auditors audit accounting estimates and other subjective information? What are analytical procedures, and why are they a useful audit tool? Explain the importance of audit documentation.arrow_forward
- Which of the following is least likely to be used as evidence by an external auditor?a. Substantive tests results b. Work performed by internal auditors who organizationally report to the controllerc. Tests of controls resultsd. Work performed by internal auditors who report to the audit committee of the BODarrow_forwardWhich of the following expressions best describes a situation under which the issuance of a report that concludes on the condition of the internal controls of an organization that provides technological services to one of our audit clients (SOC report) is required? It is that situation in which a CPA has been hired to evaluate a. the projected financial statements prepared by the client, to see if the expected results comply with hypothetical assumptions or not. b. the information systems and technologies subcontracted by the client, specifically in what corresponds to criteria of security, availability, integrity, confidentiality and privacy. c. any assertion or area that the client has asked to intervene (subject matter), and do so in accordance with compliance or not, with criteria or principles (against criteria). d. services that help the client maintain their financial independence.arrow_forwardWhen testing IT controls, which of the following BEST (select one) describes the IT auditor's focus: a) Assessing the alignment of the IT controls, in relation to an industry framework. b) Assessing the design and operating effectiveness of the controls. c) Evaluating the scope and objectives of the IT controls. d) Evaluating the need for post-audit substantive testing.arrow_forward
- When testing IT controls, which of the following BEST (select one) describes the IT auditor's objective: a) Evaluating the need for post-audit substantive testing. b) Assessing the design and operating effectiveness of the controls to express an opinion on whether or not the IT controls adequately mitigate the identified risks. c) Assessing the alignment of the IT controls, in relation to an industry framework. d) Evaluating the scope and objectives of the IT controls.arrow_forwardWhich of the following is least likely to be a continuous activity that an auditor would be expected to perform throughout an audit engagement? OA. Understanding the entity and its environment OB. Assessing the risk of material misstatement OC. Considering client continuance OD. Inquiring as to the design of controlsarrow_forwardWhich of the following documents or/ and procedures should be used by the auditor to gain a better understanding of the client ? 1 .Discussion with management 2. Communications with certain entities working in the same industry sector 3. Predecessor auditor assessment of the internal control 4. All answers are correctarrow_forward
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