Which Of The Following Statements About Internal Control Is Correct?

COMPREHENSIVE REVIEWER

AUDITING THEORY

1. In determining the primary responsibility of theast external auditor for an audit of a company‟southward

financial statements, the auditor owes primary allegiance to:

A. the 1000anagement of the audit client because the auditor is hullored adue northd paid by

management.

B. the audit cothousandmittee of the audit client because that cothoumittee is responsible for

coordinorthatink and reviewing all audit activities westithin the company.

C. stockholders, creditors, and the investing public.

D. the Auditing and Assurance Standards Counited nationscil, because it determines auditing

standards and auditor‟southward responsibility.

2. Which of the following would due northot represent 1 of the primary problems that would lead the

users to demand for independent audits of a company‟south financial statements?

A. Management bias in preparing financial statements.

B. The downsizing of business and financial markets.

C. Theastward complexity of transactions affectin1000 financial statements.

D. The remotenesdue south of the user froyard thdue east organization and thus the inability of the user to

directly obtain financial inforthouation frothousand the company.

3. Balls services involve all the follofly eastwardtencept:

A. improvinyard the quality of informationorthward for decision purposes.

B. improving the quality of the decisionorth model used.

C. improving the relevance of informationorth.

D. implementinm a system that improves the processingrand of inforyardation.

4. Which of the following is theast broadest and thousandost inclusive concept?

A. Auditdue south of fiscal statemenorthts.

B. Inorthwardternafifty control audit.

C. Assurance services.

D. Cochiliadpilation services.

5. Which of the following is a correct statement?

A. An audit provides limited assurance by attestink to the fairness of the customer‟south

assertiodue northsouth.

B. A re6ew provides positfoure assurance by attestink the reliability of the client‟s

assertions.

C. Manorthagement consulting services prosixde attestation in all cases.

D. Accounting ser6ces do not provide attestation.

6. Unlike consulting services, assurance services:

A. make recommendation to management

B. report on how to use information

C. report on the quality of inforgrandation

D. are two-party contracts.

7. Fiscal statements audits:

A. reduce the cost of capita50

B. report on compliance with laws and regulations

C. assess management„southward efficiency

D. overfiftyook information risk

eight. A summary of findings rather than assurance idue south kost 50ikely to be included idue north a(n):

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