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 8, Problem 26.2MCQ
To determine
Identify the correct option for the given statement.
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Students have asked these similar questions
1)Which of the following factors most likely would cause an auditor to decline a new audit engagement?
A.Concluding that the entity’s management probably lacks integrity.
B.An inability to perform preliminary analytical procedures before assessing control risk.
C.An inadequate understanding of the entity’s internal control.
D.The close proximity to the end of the entity’s reporting period.
2)Before accepting an engagement to audit a new client, an auditor is required to
A.Obtain a copy of the client’s financial statements.
B.Prepare amemorandum setting forth the staffing requirements and documenting the preliminary audit plan.
C.Make inquiries of the predecessor auditor after obtaining consent of the prospective client.
D.Discuss the management representation letter with the client’s audit committee.
3)Which of the following conditions most likely would pose the greater risk in accepting a new audit engagement?A.There will be a client-imposed scope limitation.
B.The client’s…
Which of the following statements is not a correct statement regarding audit evidence?
Select one:
a. External evidence, such as communications from banks, is generally regarded as more reliable than answers obtained from inquiries of the client
b.
Documents that originate outside the company are considered more reliable than those that originate within the client's organization.
c.
Evidence obtained from an independent source outside the client organization is more reliable than that obtained from within.
d. Documentary evidence is more reliable when it is received by the auditor indirectly rather than directly.
Which of the following is an incorrect statement?
a. The amount of audit work should vary inversely with the likelihood of material misstatements existing in the accounting records.
b. The better the organization’s control structure, the less likely it is that material misstatements will be present
c. Complex or unusual transactions are more likely to be recorded in error than recurring or routine transactions are
d. If misstatements are likely to occur in the recording process, the auditor should develop procedures to detect misstatements.
Chapter 8 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQ
Ch. 8 - Prob. 11RQCh. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Prob. 14RQCh. 8 - Prob. 15RQCh. 8 - Your client, Harper Company, has a contractual...Ch. 8 - Prob. 17RQCh. 8 - Prob. 18RQCh. 8 - Prob. 19RQCh. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23RQCh. 8 - Prob. 24RQCh. 8 - Prob. 25.1MCQCh. 8 - Prob. 25.2MCQCh. 8 - Prob. 25.3MCQCh. 8 - Prob. 26.1MCQCh. 8 - Prob. 26.2MCQCh. 8 - Prob. 26.3MCQCh. 8 - Which one of the following statements is correct...Ch. 8 - Prob. 27.2MCQCh. 8 - Prob. 27.3MCQCh. 8 - Prob. 28.1MCQCh. 8 - Prob. 28.2MCQCh. 8 - Prob. 28.3MCQCh. 8 - Prob. 29DQPCh. 8 - Prob. 30DQPCh. 8 - Prob. 31DQPCh. 8 - Your comparison of the gross margin percent for...Ch. 8 - Prob. 33DQPCh. 8 - Prob. 34DQPCh. 8 - Prob. 35DQPCh. 8 - Prob. 36DQPCh. 8 - Prob. 37DQPCh. 8 - Following are statements of earnings and financial...
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Similar questions
- Which of the following is least likely to be considered an appropriate response relating to risks the auditors identify at the financial statement level? Assign more experienced staff, Incorporate additional elements of unperdictability in the selection of audit procedures, Increase the scope of auditor procedures, Emphasize the need to remain neutral, rather than to excercise professional skepticismarrow_forwardWhich of the following statements is not true with respect to the performance principle?a. Auditors are required to prepare a written audit plan during the planning stages of initialaudits but are not required to do so in continuing audits.b. Audit teams consider materiality in planning the audit, performing the audit, and evaluating the effect of misstatements on the entity’s financial statements.c. In assessing the risk of material misstatements, the audit team considers the effectivenessof the entity’s internal controls in preventing and detecting misstatements.d. Auditors are required to consider both the relevance and the reliability of evidence inevaluating whether the evidence they have gathered is appropriate.arrow_forwardWith regard to corrective action on audit results, which of the following is not theinternal auditor’s responsibility?(1) Soliciting auditees’ suggestions for corrective actions.(2) Recommending possible alternative corrective actions.(3) Directing the corrective actions.(4) Determining that the corrective actions are responsive to the audit results.(5) Evaluating new policy statements to determine whether they address the unsatisfactory conditions disclosed in the audit results.arrow_forward
- TRUE OR FALSE Written representations are considered audit evidences. For recurring audits, management letters may include a follow-up of prior years recommendation and status of their resolutions. Related parties are generally unreliable in nature which leads to the auditor performing procedures to examine transactions with them. One of the ways to gain knowledge of any lirigations and claims is through an examination of professional and or legal expenses and related source documents. If lower detection risk is determined the auditor may reduce the extent of substantive procedures. Audit documentation should be done after the last day of audit field work and before the auditor's report date. Audit sampling is highly useful when identifying plausible relationships between account balances and classes of transactions. Review of tax returns and other information is an audit procedure responsive to the completeness of related party relationships and…arrow_forwardWhich of the following statements is not true with respect to written representations?a. The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer of opinion.b. They should address management’s responsibility for designing internal control to prevent and detect fraud.c. Auditors use them to corroborate information received during the audit from the client and its employees.d. They are dated the same date as the auditor’s reports.arrow_forwardWhen evaluating audit findings, the auditor should consider any potential bias in management's judgement. Which if the these is not included in an auditor's concerns. 1. Management's bias in estimation calculations 2. Management's bias in accounting policies 3. Management's bias in detection risk 4. Management's bias in adjusting entry calculationsarrow_forward
- When evaluating whether accounting estimates made by management are reasonable, the audit team would be most interested in which of the following?a. Key factors that are consistent with prior periods.b. Assumptions that are similar to industry guidelines.c. Measurements that are objective and not susceptible to bias.d. Evidence of a conservative systematic bias.arrow_forwardPlease answerarrow_forwardWhich of the following is least likely to be a factor that might indicate to an auditor that an identified risk of misstatement requires special audit consideration? Complex calculations are involved, The rate of technical change is moderate in the industry, The potential for fraud seems high, Various subjective methods of application of a key accounting policy existarrow_forward
- When evaluating whether accounting estimates made by management are reasonable, auditors would be most interested in which of the following?a. Key factors that are consistent with prior periods.b. Assumptions that are similar to industry guidelines.c. Measurements that are objective and not susceptible to bias.d. Evidence of a conservative systematic bias.arrow_forwardWhich of the following factors most likely would cause a CPA not to accept a new audit engagement? Management's reluctance in making all financial records available to the CPA. The CPA's inability to review the predecessor auditor's working papers. The CPA's lack of understanding of the entity's operations and industry O Management's reputation for failing to provide schedules to prior auditors on a timely basis.arrow_forwardWhich statement is incorrect regarding the external auditor's consideration of the work of internal auditing? а. During the course of planning the audit, the external auditor should perform a preliminary assessment of the internal audit function when it appears that internal auditing is relevant to the external audit of the financial statements in specific audit areas. b. The external auditor should consider the activities of internal auditing and their effect, if any, on external audit procedures. C. When the external auditor intends to use specific work of internal auditing, the external auditor need not evaluate and test that work to confirm its adequacy for the external auditor's purposes. d. The external auditor should obtain a sufficient understanding of internal audit activities to assist in planning the audit and developing an effective audit approach.arrow_forward
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