Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 1, Problem 13.1MCQ
To determine
Identify the option that correctly states about the independent auditor.
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Which of the following best describes why an independent auditor is asked to expressan opinion on the fair presentation of financial statements?(1) It is difficult to prepare financial statements that fairly present a company’s financialposition, operations, and cash flows without the expertise of an independent auditor.(2) It is management’s responsibility to seek available independent aid in theappraisal of the financial information shown in its financial statements
Which report would not be appropriate for a public accounting firm to provide on financial reporting controls?a. Unqualified—no material weaknesses found.b. Disclaimer of opinion—unable to perform all necessary procedures.c. Disclaimer of opinion—significant deficiencies exist.d. Adverse—material weaknesses exist.
Which of the following questions best describes why an independent auditor is asked to give an opinion on the fairness of financial statement presentation?a. It is difficult to prepare financial statements that fairly present the company's financial position, operations and cash flows without the expertise of an independent auditorb. It is the responsibility of management to seek independent expert assistance in assessing the financial information presented in its financial statementsc. Opinions from independent parties are needed because companies may not have objectivity towards their own financial statementsd. It is customary that all company shareholders receive independent reports of management's accountability for business events that occur
Chapter 1 Solutions
Auditing And Assurance Services
Ch. 1 - What are the information and established criteria...Ch. 1 - Prob. 2RQCh. 1 - Discuss changes in accounting and business...Ch. 1 - Prob. 4RQCh. 1 - Identify the three main ways information risk can...Ch. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 8RQCh. 1 - Prob. 9RQCh. 1 - Prob. 10RQ
Ch. 1 - Prob. 11RQCh. 1 - Prob. 12RQCh. 1 - Prob. 13.1MCQCh. 1 - Prob. 13.2MCQCh. 1 - Prob. 13.3MCQCh. 1 - Prob. 14.1MCQCh. 1 - Prob. 14.2MCQCh. 1 - Prob. 14.3MCQCh. 1 - Prob. 15.1MCQCh. 1 - Prob. 15.2MCQCh. 1 - Prob. 15.3MCQCh. 1 - Prob. 16DQPCh. 1 - Prob. 17DQPCh. 1 - Prob. 18DQPCh. 1 - Prob. 19DQPCh. 1 - Prob. 20DQPCh. 1 - Prob. 21DQPCh. 1 - Prob. 22DQPCh. 1 - Prob. 23DQPCh. 1 - As discussed in the chapter opening vignette and...Ch. 1 - Prob. 25DQP
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- When accountants are not independent, which of the following reports can they nevertheless issue?a. Compilation report.b. Standard unmodified audit report.c. Examination report on a forecast.d. Examination of internal control over financial reporting.arrow_forwardWhich of the following is NOT among the conditions that give rise to a demand by external users for independent audits of financial statements? a. The users of the financial statement do not have a background knowledge about accounting and tax matters b. There is an issue of agency problem between the management and the stockholders of the company c. Reliance on unaudited financial information may have adverse economic consequences d. The users of financial statements cannot directly access the company’s books and recordsarrow_forwardPLEASE ANSWER THIS ASAP. THANK YOU SO MUCH. 1.Which of the following statements is incorrect? a. Management assertions are implied or expressed representations by management about classes of transactions, account balances and presentation and disclosures contained in the financial statements. b. Transaction cycles may vary from one entity to another and may also be affected by the nature of industry of the client. c. The primary goal of an auditor in an audit is to issue an opinion that the financial statements of an entity are fairly stated, in all material respects, in accordance with the applicable financial reporting framework. d. Reasonable assurance is moderate but not absolute level of assurance that the financial statements are free from material misstatements. 2. Which of the following statements does not pertain to responsibilities of management and those in charge of governance? a. Establish and implement internal controls relevant to the preparation of financial reports.…arrow_forward
- What is the problem with an auditor overrelying on management’s representations on the financial statements?arrow_forwardUnder what circumstances auditor may express an unqualified opinion? 1. The view presented by the financial information as a whole is consistent with the auditor's knowledge of the business of the entity. 2. The view presented by the financial information as a whole is inconsistent with the auditor's knowledge of the business of the entity. 3. The auditor concludes that the possible effects on the financial statements of undetected misstatements are both material and pervasive. 1, 2, and 3 1 only 2 and 3 only 1 and 4 only Auditing and Cont..pd 10:3 ENarrow_forwardWhich of the following statements is not true with respect to the auditors’ report on internalcontrol over financial reporting?a. The report will be dated as of the date of the financial statements.b. The report will express an opinion on the effectiveness of internal control over financialreporting.c. The auditor will issue an adverse opinion if one or more material weaknesses exist.d. The report may be presented with the report on the entity’s financial statements as a combined report.arrow_forward
- Which of the following best describes the reason why an independent auditorreports on financial statements?(1) A misappropriation of assets may exist, and it is more likely to be detected byindependent auditors.(2) Different interests may exist between the company preparing the statementsand the persons using the statements.(3) A misstatement of account balances may exist and is generally corrected as theresult of the independent auditor’s work.(4) Poorly designed internal controls may be in existencearrow_forwardGiven the economic and time constraints in which auditors can collect evidence about management assertions about the financial statements, the auditor normally gathers evidence that is: O Irrefutable Completely convincing O Conclusive O Reliablearrow_forwardDoes a qualified opinion on management’s assessment of internal controls over the financial reporting system necessitate a qualified opinion on the financial statements? Explain.arrow_forward
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