Auditing: The Art and Science of Assurance Engagements 15th Canadian Edition by Alvin A Arens Test b

accounting period within specified dollar ranges.
C) determining if taxable income has been calculated correctly.
D) determining if fraud has occurred.
Answer: B
56) Which of the following is an example of auditing rather than accounting?
A) posting the daily sales totals to the general ledger
B) recording cash received in the customer account files
C) evaluating whether accounts receivable are collectible
D) recording purchase amounts in the expense accounts
Answer: C
57) An accountant records information. When conducting an audit, the auditor must possess
A) an ability to classify transactions by type.
B) an ability to organize and summarize economic events.
C) an ability to interpret relevant accounting frameworks.
D) an education beyond the bachelor's degree.
Answer: C
58) Auditors are licensed to perform financial statement audits, while accountants are not. Which of the following is
a requirement for individuals who perform audits, but not for those performing accounting?
A) Requisite education and training B) Integrity
C) Objectivity D) Independence
Answer: D
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
59) Discuss the differences and similarities between the roles of accountants and auditors. What additional
expertise must an auditor possess beyond that of an accountant?
Answer: The role of accountants is to record, classify, and summarize economic events in a logical manner for the
purpose of providing financial information for decision making. To do this, accountants must have a
thorough understanding of the principles and rules that provide the basis for preparing the accounting
information. In addition, accountants also help to develop systems to ensure that the entity's economic
events are properly recorded in a timely manner and at a reasonable cost.
The role of auditors is to determine whether the recorded financial information prepared by accountants
reasonably reflects the economic events that occurred. To do this, the auditor must not only understand
the principles and rules that provide the basis for preparing financial information, but must also possess
expertise in the accumulation and evaluation of audit evidence. It is this latter expertise that distinguishes
auditors from accountants.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
60) What impact is the presence of factors such as real- time information (such as via the Internet) expected to have
upon the demand for assurance services?
A) Demand is expected to decline due to the lack of adequate resources.
B) Demand is expected to grow due to the need for forward- looking information.
C) Demand is expected to decline as small businesses use the Internet more.
D) Demand is expected to grow due to the increase in large corporations.
Answer: B
61) The need to implement philosophies and practices commonly referred to as "improved business practices"
comes from
A) an IFRA pronouncement.
B) a need to increase profitability on assurance type mandates.
C) increased competition resulting in public accounting firms being concerned about keeping clients and
maintaining a reasonable profit.
D) a CAS pronouncement.
Answer: C
62) In Canada, publicly traded companies are
A) not required to have an audit.
B) strongly encouraged to have audits.
C) required to have audits.
D) not required to have an audit if they have a review.
Answer: C
63) A shareholder of a public Canadian firm can have access to the audited financial statements
A) if he/she holds more than 1% of the shares of the company.
B) by requesting a copy from the auditors.
C) by calling the accounting department of the company.
D) on the Internet.
Answer: D
64) What type of information is available from www.sedar.com (System for Electronic Document Analysis and
Retrieval)?
A) annual reports and management discussion and analysis
B) transaction reports from major credit card companies
C) listings of all of the shareholders on record
D) minutes of shareholders and directors meetings
Answer: A
65) A reason for a not- for- profit organization to be audited is to
A) have a professional accountant perform their bookkeeping.
B) comply with the laws requiring them to be audited.
C) meet requirements of lenders or funding sources.
D) ensure that their financial statements do not contain errors.
Answer: C
66) Which of the following services provides a moderate level of assurance about the client's financial statements?
A) review B) forecasts and projections
C) compliance D) audit
Answer: A
67) Which of the following is an advantage of a review engagement as compared to an audit engagement?