Auditing MCQ Exam Review (2022)

Auditing MCQ Exam Review (2022) Auditing Multiple-Choice Questions Review Chapter 1 The parties relevant to an assurance engagement are: ● assurance practitioner, users, responsible party. Agency theory explains that audits are demanded because conflicts can arise between: ● managers and owners. The insurance hypothesis means: ● an audit acts as insurance. Performance audits are useful because: ● they are concerned with the economy, efficiency, and effectiveness of an organization's activities The function of internal audit is determined by: ● those charged with governance and management. Reasonable assurance means: ● the auditor has gathered sufficient and appropriate evidence to form a positive expression of opinion regarding the financial statements. An auditor disclaims responsibility when: ● the auditor is unable to obtain sufficient evidence about a potentially material and pervasive matter. Those charged with governance have a responsibility to ensure that the information in financial statements is: ● relevant and reliable ● comparable and understandable ● fairly presented ● ALL OF THE ABOVE The purpose of the Auditing and Assurance Standards Board is: ● to set high-quality auditing and assurance standards. The audit expectation gap occurs when: ● user beliefs do not align with what an auditor has actually done. Chapter 2 Professional behaviour means that members of the professional body must: ● uphold the reputation of the profession Due care means that members of a profession must: ● act diligently. Professional independence for auditors: ● is the ability to act with integrity, objectivity, and professional scepticism. A self-interest threat arises when: ● the auditor owns shares in the client's business. A self-review threat arises when: ● the auditor performs services for the client that are then assured. Safeguards to independence: ● minimize the risk that a threat to independence will surface. ● deal with a threat when one becomes apparent. ● are developed by the accounting profession, legislators, regulators, clients, and accounting firms. ● ALL OF THE ABOVE Audit committees for listed entities per the CSA: ● should have a formal charter. Generally, the auditor could be legally liable: