Auditing: A Practical Approach 4th Canadian Edition by Robyn Moroney Test bank
52. Mary Logan was careful to undertake her audits in a most responsible manner. Her audit manager complimented her on her diligence and how well she documented her work at the different stages of the audit process. Which element of responsibility did she display?
a) due care
b) professional judgment
c) professional scepticism
d) professional attitude
Answer: a
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Differentiate between the roles of the preparer and the auditor, and discuss the different firms that provide assurance services.
Section Reference: 1.6 Preparers and auditors
CPA Competency: Audit and Assurance
AACSB: Analytic
53. Larry Dibitonto is a partner in his firm and runs management consulting, mergers and
acquisitions, insolvency, tax, and accounting services. How are these services referred to
collectively?
a) audit
b) non-assurance services
c) reviews
d) compilations
Answer: b
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Differentiate between the roles of the preparer and the auditor, and discuss the different firms that provide assurance services.
Section Reference: 1.6 Preparers and auditors
CPA Competency: Audit and Assurance
AACSB: Analytic
54. In addition to the preparation of financial statements, it is also the responsibility of those
charged with governance to
a) identify the financial reporting framework to be used in the preparation and presentation of their financial statements.
b) establish and maintain internal controls that are effective in preventing and detecting material misstatements.
c) selecting and applying appropriate accounting policies and making reasonable accounting estimates.
d) all of these answers are correct
Answer: d
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Differentiate between the roles of the preparer and the auditor, and discuss the different firms that provide assurance services.
Section Reference: 1.6 Preparers and auditors
CPA Competency: Audit and Assurance
AACSB: Analytic
55. Which of the following is not true in relation to comparability?
a) able to identify trends that may influence their perception of how well the entity is doing
b) able to assess performance of the entity over time and with other entities
c) able to be understood
d) able to consistently apply accounting principles
Answer: c
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Differentiate between the roles of the preparer and the auditor, and discuss the different firms that provide assurance services.
Section Reference: 1.6 Preparers and auditors
CPA Competency: Audit and Assurance
AACSB: Analytic
56. Professional scepticism does not involve
a) the professional requirement that all management representations be substantiated with supporting documentation.
b) seeking independent evidence to corroborate information provided by their client.
c) being suspicious when evidence contradicts documents held by their client or inquiries made of client personnel.
d) the attitude adopted by the auditor when conducting the audit.
Answer: a
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Differentiate between the roles of the preparer and the auditor, and discuss the different firms that provide assurance services.
Section Reference: 1.6 Preparers and auditors
CPA Competency: Audit and Assurance
AACSB: Analytic
57. The largest accounting firms in Canada are known collectively as the
a) ‘Big-3’.
b) ‘Big-4’.
c) ‘Big-5’.
d) ‘Big-6’.
Answer: b
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Differentiate between the roles of the preparer and the auditor, and discuss the different firms that provide assurance services.
Section Reference: 1.6 Preparers and auditors
CPA Competency: Audit and Assurance
AACSB: Analytic
58. Auditors of reporting issuers are required to be a member in good standing with
a) CPAB.
b) CSA.
c) CPA Canada.
d) OSFI.
Answer: a
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify the different regulators, legislation, and regulations surrounding the assurance process.
Section Reference: 1.7 The role of regulators and regulations