Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 4, Problem 18.3MCQ
To determine
Identify the meaning of the rule that requires auditor to be independent.
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Which of the following attributes most clearly differentiates a CPA who audits management's financial statements as contrasted to management?
a. Integrity
b. Competence.
c. Independence.
d. Keeping informed on current professional developments.
If auditor maintains high degree of independence, it will result in _________
a.
Attention of media
b.
Good relationship with the client
c.
Greater reliability of financial statements
d.
Goodwill of the audit firm
An auditor strives to achieve independence in appearance to(1) comply with the auditing standards of fieldwork.(2) become independent in fact.(3) maintain public confidence in the profession.(4) maintain an unbiased mental attitude.
Chapter 4 Solutions
Auditing And Assurance Services
Ch. 4 - Prob. 1RQCh. 4 - Describe an ethical dilemma. How does a person...Ch. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18.1MCQCh. 4 - Prob. 18.2MCQCh. 4 - Prob. 18.3MCQCh. 4 - Prob. 19.1MCQCh. 4 - Prob. 19.2MCQCh. 4 - Prob. 19.3MCQCh. 4 - Prob. 20.1MCQCh. 4 - Prob. 20.2MCQCh. 4 - Prob. 20.3MCQCh. 4 - Prob. 21DQPCh. 4 - Prob. 22DQPCh. 4 - Prob. 23DQPCh. 4 - Prob. 24DQPCh. 4 - Prob. 25DQPCh. 4 - Prob. 26DQPCh. 4 - Prob. 27DQPCh. 4 - Prob. 28DQPCh. 4 - Prob. 30CCh. 4 - Prob. 31CCh. 4 - Prob. 32C
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Similar questions
- b. The Responsibilities principle underlying AICPA auditing standards includes a requirement that (1) field work be adequately planned and supervised. (2) the auditor's report state whether or not the financial statements conform to generally accepted accounting principles. (3) professional judgment be exercised by the auditor. (4) informative disclosures in the financial statements be reasonably adequate. c. What is the general character of the responsibilities characterized by the Performance principles? (1) The competence, independence, and professional care of persons performing the audit. (2) Criteria for the content of the auditor's report on financial statements and related footnote disclosures. (3) The criteria of audit planning and evidence gathering. (4) The need to maintain an independence in mental attitude in all matters per- taining to the audit. 2-17 (Objective 2-7) The following questions concern quality control standards. Choose the best response. a. The nature and…arrow_forwardWhat is the general character of the responsibilities characterized by the Performanceprinciples?(1) The competence, independence, and professional care of persons performingthe audit.(2) Criteria for the content of the auditor’s report on financial statements andrelated footnote disclosures.(3) The criteria of audit planning and evidence gathering.(4) The need to maintain an independence in mental attitude in all matters pertaining to the audit.arrow_forwardAuditors are interested in having independence in appearance becausea. They want to impress the public with their independence in fact.b. They want the public at large to have confidence in the profession.c. They need to comply with the fundamental principles of GAAS.d. Audits should be planned and properly supervised.arrow_forward
- TRUE OR FALSE. AUDITING 1. An audit of accounting and financial system and controls to ensure reliability of recorded financial data is compliance audit. 2. Assurance engagement requires independence on the part of the auditor. 3. The intended user is the person or class of persons who engages the professional accountant 4. Appropriateness refers to quality, while sufficiency refers to quantity of evidential matter 5. The responsible party expresses an conclusion that provides a level of assurance as to whether the subject matter conforms, in all material respects , with the identified suitable criteria 6. The subject matter of an assurance engagement maybe presented as a point in time or covering a period of time. 7. In an audit of financial statements, the suitable criteria to be used is the Philippine Standards of Auditing. 8. Assurance refers to the responsible party’s satisfaction as to the reliability of the assertion being made by one party for use of another party. 9. When…arrow_forwardWhich of the following is most closely related to the responsibilities principle?a. The auditors’ responsibility to issue a report as a result of their examination.b. The requirement that auditors gather sufficient, appropriate evidence upon which to base an opinion on the financial statements.c. The auditors’ compliance with relevant ethical requirements of independence and due care.d. The auditors’ responsibility to plan the audit and properly supervise assistants.arrow_forwardIT audit standards of practice require that IT auditors: [SELECT ALL THAT APPLY] a) Must exercise due professional care when performing audit procedures. b) Must maintain objectivity and independence to avoid introducing bias in their reports. c) Should be professionally competent, and possess the skills and knowledge to conduct the audit. d) Must obtain an audit certificationsarrow_forward
- Practice question: In the context of auditing, having competent technical abilities and skills as an accountant is more important than ensuring auditor independence and understanding the procedures to overcome threats to independence. Do you agree with this statement? Why or why not? Use examples to facilitate your explanation.arrow_forwardIdentify how each of the following statements relates to the performance principle by considering which element(s) of the principle are related to that statement. (A statement may be related to more than one element.) Use the following elements in providing your response: Reasonable assurance • Planning and supervision • Materiality ⚫ Risk assessment • Audit evidence a. Evaluating the effectiveness of the client's internal control in preventing or detecting misstatements. b. Obtaining an understanding of the client's business and industry. c. Acknowledging that the risk of failing to detect a material misstatement cannot be reduced to zero. d. Obtaining confirmations from the client's customers as to the ending balances in accounts receivable. e. Preparing a written audit plan. f. Designing audit procedures to identify misstatements that would have a significant effect on financial statement users' decisions. g. Considering the likelihood that the account balance contains a material…arrow_forwardAuditors’ understanding of the internal control in an entity provides information fora. Determining whether members of the audit team have the required competence and capabilities to perform the audit.b. Ascertaining the independence in mental attitude of members of the audit team.c. Planning the professional development courses the audit staff needs to keep up to datewith new auditing standards.d. Planning the nature, timing, and extent of substantive procedures on an auditarrow_forward
- In making a decision whether to accept or reject an engagement, an auditor should consider competence, independence, integrity of the prospective client's management and its ability to serve the client properly. Furthermore, the auditor is expected to perform the following (choose all the items that apply to the previous statement): * a. Obtain a preliminary knowledge of the client's business and industry to determine whether the client management has the degree of competence required by the engagement. b. Consider whether there are any threats to the firm's independence and objectivity, and if so, whether adequate safeguards can be established. c. Evaluate auditability. d. Investigation of the integrity of the client's management through inquiry to appropriate parties or communication with the successor auditor. e. Agree on the terms of the engagement and prepare a management representation letter. f. Evaluation of the firm's ability to serve the prospective client.arrow_forwardOne of an accounting firm’s basic objectives is to provide professional services that conform to professional standards. Reasonable assurance of achieving this objective can be obtained by followinga. Generally accepted auditing standards.b. Standards within a system of quality control.c. Generally accepted accounting principles.d. International auditing standards.arrow_forwardAccording to the professional standards of practice, Internal Auditors demonstrate due professional care by: 1) In planning the audit, determining the extent of work needed to achieve the engagement's objectives. 2) Understanding the adequacy and effectiveness of governance, risk and related control processes. 3) Determining the relative complexity, materiality, or significance of matters to which assurance procedures are applied. 4) All of the above. 5) Only items 1 and 2.arrow_forward
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