Test Bank For Auditing A Business Risk Approach International Edition 8th Edition by Audrey A. Gramling

Test Bank For Auditing A Business Risk Approach International Edition 8th Edition by Audrey A. Gramling

Chapter 1: Auditing: Integral to the Economy

TRUE/FALSE

1. The need for assurance services arises because the interests of the users of information may be different from that of the interests of those responsible for providing information.

ANS: T                    PTS:   1                    OBJ:  Auditing Defined

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

2. An audit of financial statements is a form of attestation service.

ANS: T                    PTS:   1                    OBJ:  Auditing Defined

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

3. Independence is an attribute necessary to perform assurance services.

ANS: T                    PTS:   1                    OBJ:  Scope of Services

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

4. A bank using Milton Company’s financial statements to determine the creditworthiness of a potential loan to Milton is a good example of the need for unbiased reporting.

ANS: T                    PTS:   1                    OBJ:  Auditing Defined

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

5. Independence is only required for assurance service providers.

ANS: T                    PTS:   1                    OBJ:  Scope of Services

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

6. A CPA automatically qualifies as an assurance provider in all areas of business.

ANS: F                    PTS:   1                    OBJ:  Scope of Services

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

7. Attestation services are a subset of assurance services and always involve a report that goes to a third party.

ANS: T                    PTS:   1                    OBJ:  Scope of Services

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

8. The American Institute of Certified Public Accountants has the primary authority to set auditing standards for public companies.

ANS: F                    PTS:   1                    OBJ:  Public Company Auditing Standards

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

9. The audit function is unique because it exists to perform services on a “client” on behalf of shareholders, directors and other parties.

ANS: T                    PTS:   1                    OBJ:  Auditing Defined

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

10. Auditing is the process of attesting to assertions about economic actions and events.

ANS: T                    PTS:   1                    OBJ:  Auditing Defined

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

11. Auditing is the process of verifying the accuracy of the financial statements.

ANS: F                    PTS:   1                    OBJ:  Auditing Defined

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking

12. Internal auditing only provides assurance services to clients.

ANS: F                    PTS:   1                    OBJ:  Internal and Governmental Auditors

NAT: AACSB-Analytical skills | AICPA BB-Critical thinking