Question 1

Why is three-party accountability an important distinguishing feature of auditing?

Accepted Answer

The answer of Why is three-party accountability an important distinguishing...

Question 2

What is one of the factors mentioned that is driving the international harmonization of auditing standards?
A)Increased ownership of Canadian companies by companies outside North America.
B)Increased overseas investment by Canadians.
C)Improved living standards throughout the world.
D)Technological change permitting world wide trading in financial securities.

Accepted Answer

Technological change permitting worldwide trading in financial securities is a factor driving the international harmonization of auditing standards, as it necessitates consistent and reliable financial reporting across borders.

Question 3

SOX's has had consequences for many areas of corporate activities, including the following impact on the work of the auditor:
A)The auditor is now required to report all fraudulent activities it uncovers directly to the
B)The auditor is specifically required to evaluate the internal controls used by management to prepare financial information.
C)The auditor is must monitor how well management is carrying out its financial reporting responsibilities.
D)The auditor must prepare a report verifying the information in the financial statements.

Accepted Answer

The Sarbanes-Oxley Act (SOX) requires auditors to evaluate and report on the effectiveness of a company's internal controls over financial reporting.

Question 4

Describe the Sarbanes-Oxley Act.

Accepted Answer

The answer of Describe the Sarbanes-Oxley Act....

Question 5

Why is it important to Canadian auditors to understand the rules of the Security and
Exchange Commission?
A)Many Canadian companies are finding it cheaper to raise money on U.S.stock exchanges.
B)Canadian investors think these rules apply to Canadian companies.
C)The Free Trade Act requires Canadian companies to follow U.S.rules.
D)There is no similar body in Canada regulating the stock markets.

Accepted Answer

Many Canadian companies list on U.S. stock exchanges to access capital, requiring compliance with SEC rules.

Question 6

What is information risk?

Accepted Answer

The answer of What is information risk?...

Question 7

Discuss the underlying conditions affecting users' demand for accounting information.

Accepted Answer

The answer of Discuss the underlying conditions affecting users' demand...

Question 8

What is the difference between the American Accounting Association's (AAA) definition of auditing and the Canadian Institute of Chartered Accountants (CICA) objectives of financial statement auditing?

Accepted Answer

The answer of What is the difference between the American...

Question 9

On which of the following reasons do many people blame for the profession's problems in the post-Enron world?
A)Inadequate training of professional accountants.
B)The lack of focus on fraud investigation by external auditors.
C)A lack of independence between audit services and non-audit services provided to the same client.
D)New stock trading technology causing major swings in the capital markets.

Accepted Answer

A lack of independence between audit services and non-audit services provided to the same client is a major reason for the profession's problems in the post-Enron world.

Question 10

In operational auditing, the auditor studies business operations and makes recommendations about all of the following except
A)Economic and efficient use of resources.
B)Effective achievement of business objectives.
C)The fairness of the financial statements.
D)Compliance with company policies.

Accepted Answer

Operational auditing focuses on evaluating the efficiency, effectiveness, and compliance of business operations, not on the fairness of financial statements, which is the focus of financial auditing.

Question 11

An example of a forensic accounting assignment might be:
A)To ensure compliance with specific legislation.
B)To provide an opinion about the effectiveness of a government program.
C)To provide assurance about the fairness of prospective financial information included in an initial public offering document.
D)To estimate the value of inventory lost in a warehouse fire.

Accepted Answer

Forensic accounting involves investigating financial data for use in legal proceedings, such as estimating losses from events like a warehouse fire.

Question 12

Auditors on staff in the Office of the Auditor General (OAG) are considered to be external auditors with respect to the government agencies they audit because the OAG is
A)Organizationally independent.
B)The accounting and auditing agency of the Canadian Senate.
C)Funded by the federal government.
D)Guided by standards similar to GAAS.

Accepted Answer

The OAG is organizationally independent from the government agencies it audits, which allows its auditors to be considered external auditors.

Question 13

In addition to the audit of financial statements, governmental auditing may also include audits of efficiency, effectiveness and
A)Fraud.
B)Accuracy.
C)Economy.
D)Adequacy.

Accepted Answer

Governmental auditing often includes audits of economy, which assess whether resources have been used economically and efficiently.

Quiz 1: Introduction to Auditing

Why is three-party accountability an important distinguishing feature of auditing?

What is one of the factors mentioned that is driving the international harmonization of auditing standards?

SOX's has had consequences for many areas of corporate activities, including the following impact on the work of the auditor:

Describe the Sarbanes-Oxley Act.

Why is it important to Canadian auditors to understand the rules of the Security and Exchange Commission?

What is information risk?

Discuss the underlying conditions affecting users' demand for accounting information.

What is the difference between the American Accounting Association's (AAA) definition of auditing and the Canadian Institute of Chartered Accountants (CICA) objectives of financial statement auditing?

On which of the following reasons do many people blame for the profession's problems in the post-Enron world?

In operational auditing, the auditor studies business operations and makes recommendations about all of the following except

An example of a forensic accounting assignment might be:

Auditors on staff in the Office of the Auditor General (OAG) are considered to be external auditors with respect to the government agencies they audit because the OAG is

In addition to the audit of financial statements, governmental auditing may also include audits of efficiency, effectiveness and