Questions from Auditing and Assurance

Q: What is meant by the statement “The agency relationship between absentee

What is meant by the statement “The agency relationship between absentee owners and managers produces a natural conflict of interest”?

Q: Doug Stevens, CPA, is interested in testing the fairness of

Doug Stevens, CPA, is interested in testing the fairness of the ending inventory balance during the audit of Morris Co. Doug has relatively little experience using statistical sampling methods and, qu...

Q: For what primary purpose does the auditor obtain an understanding of the

For what primary purpose does the auditor obtain an understanding of the entity and its environment? a. To determine the audit fee. b. To decide which facts about the entity to include in the audit re...

Q: Which of the following statements best describes the role of materiality in

Which of the following statements best describes the role of materiality in a financial statement audit? a. Materiality refers to the “material” from which audit evidence is developed. b. The higher t...

Q: Which of the following is the most important reason for an auditor

Which of the following is the most important reason for an auditor to gain an understanding of an audit client’s system of internal control over financial reporting? a. Understanding a client’s system...

Q: Preliminary engagement activities include a. Understanding the client and the

Preliminary engagement activities include a. Understanding the client and the client’s industry. b. Determining audit engagement team requirements. c. Ensuring the independence of the audit team and a...

Q: Which of the following statements best describes what is meant by an

Which of the following statements best describes what is meant by an unqualified audit opinion? a. Issuance of an unqualified auditor’s report indicates that in the auditor’s opinion the client’s fina...

Q: The auditing standards that are used to guide the conduct of the

The auditing standards that are used to guide the conduct of the audit are a. Implicitly referred to in the critical audit matters section of the auditor’s standard report. b. Explicitly referred to i...

Q: A client has used an inappropriate method of accounting for its pension

A client has used an inappropriate method of accounting for its pension liability on the balance sheet. The resulting misstatement is material, but the auditor does not consider its effect to be perva...

Q: Which of the following is not a part of the role of

Which of the following is not a part of the role of internal auditors? a. Assisting the external auditors. b. Providing reports on the reliability of financial statements to investors and creditors. c...