Question

 

An integrated audit is

·         (a)

required for all companies.

·         (b)

required by the IAASB.

·         (c)

composed of a financial statement audit and an audit of internal control over financial reporting.

·         (d)

conducted according to audit standards of the AICPA.

11-2.  

[LO 11.2]

Evidence

·         (a)

is composed of various items including underlying records of accounts and documents.

·         (b)

must be in written form.

·         (c)

includes records created by the auditor to document the audit activities.

·         (d)

includes only corroborating information obtained from outside the audit client.

11-3.  

[LO 11.4]

The PCAOB

·         (a)

is a not-for-profit entity.

·         (b)

shares its responsibility for standard setting with the AICPA.

·         (c)

creates audit standards that CPA firms must use in all audits.

·         (d)

is independent of SEC oversight.

11-4.  

[LO 11.2]

Shareholders of large multinational companies need audits

·         (a)

to be comfortable that management makes good decisions.

·         (b)

because state laws require them.

·         (c)

to have assurance regarding the fairness of financial statements.

·         (d)

because all multinational companies are required by international law to be audited.

11-5.  

[LO 11.2]

An audit of internal control over financial reporting (ICFR)

·         (a)

addresses the same management assertion as a financial statement audit.

·         (b)

is integrated with a financial statement audit.

·         (c)

does not result in a audit opinion; the financial statement audit produces the opinion.

·         (d)

is required for all companies.

11-6.  

[LO 11.2]

An integrated audit

·         (a)

is a systematic process.

·         (b)

is not a systematic process because that definition only applies to a financial statement audit.

·         (c)

uses only GAAP as the established criteria for assessing management's assertions.

·         (d)

uses only the COSO Internal Control Framework as the established criteria for assessing management's assertions.

11-7.  

[LO 11.2]

Economic events and actions

·         (a)

are only important when studying the FASB conceptual framework.

·         (b)

affect accounting but not auditing.

·         (c)

are represented in fairly presented financial statements.

·         (d)

do not impact either accounting or auditing.

11-8.  

[LO 11.2]

When performing an audit, the auditor is objective, meaning

·         (a)

the auditor is highly skeptical of all the documents examined.

·         (b)

the auditor tries to remain suspicious because of the possibility that documents are forged.

·         (c)

the auditor evaluates underlying documents to be sure that management has used a conservative accounting approach.

·         (d)

the auditor is not biased when evaluating evidence supporting management's assertions.

11-9.  

[LO 11.2]

Auditing and accounting

·         (a)

are highly related, so if you know one you do not need to know the other as well.

·         (b)

are highly related, because to be a good accountant you have to be a good auditor.

·         (c)

are highly related, because to be a good auditor you have to be a good accountant.

·         (d)

overlap because accountants and auditors perform similar job functions.

11-10.  

[LO 11.3]

The auditor

·         (a)

can require management to change the financial statements.

·         (b)

can require management to change the report on ICFR.

·         (c)

can change the accounting information included in the SEC filings.

·         (d)

can respond to the financial statements and management's reports by changing the audit report.

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Answer 1

11 - 1

Integrated Audit Report - (c) Composed of a financial statement Audit and an Audit of internal control over financial reporting.

11 - 2

Evidence - (a) is composed of various items including underlying records of accounts and documents.

11 - 3

The PCAOB - (c) creates audit standards that CPA firms must use in all audits.

11 - 4

Shareholders of large multinational companies need audits - (c) to have assurance regarding the fairness of financial statements.

11 - 5

An audit of internal control over financial reporting (ICFR) - (b) is integrated with a financial statement audit.

11 - 6

An integrated audit - (a) is a systematic process.

11 - 7

Economic events and actions - (c) are represented in fairly presented financial statements.

11 - 9

Auditing and accounting - (c) are highly related, because to be a good auditor you have to be a good accountant

11 - 10

The auditor - (d) can respond to the financial statements and management's reports by changing the audit report.

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