Audit Ch. 1 SB

True or false: The audit definition phrase "communicating the results to interested users" implies that all audit reports must be suitable for use for any and all individuals who may want to see the information.

False

Which of the following usually serves as the basis for evaluating management's assertions in the context of a financial statement audit?

Generally Accepted Accounting Principles (GAAP)

True or false: Assurance services can include almost any service provided by accounting professionals that involves capturing information, improving its quality or enhancing its usefulness for decision makers.

True

Independent professional services that improve the quality of information, or its context, for decision makers are called ______ services.

assurance

Oral or visual information, as well as paper or electronic documents that originate either within or outside the organization are all types of

audit evidence

The end product of an auditor's work is the ______.

audit opinion

Which of the following is a type of attest service?

auditing

The systematic process approach to auditing involves ______.

auditor objectivity evaluating audit evidence searching for audit evidence

In the context of a financial statement audit, generally accepted accounting principles usually serve as the established

criteria

The definition of assurance services focuses on __.

decision making

There is a(n) ______ relation between sample size and materiality, and a(n) ______ relation between sample size and desired level of assurance.

inverse, direct

The auditor's assessments of

materiality audit risk

Audit data analytics is using analysis,

modeling, visualization

Most of the auditor's work in arriving at an opinion on the financial statements consists of ______ audit evidence relating to management's assertions.

obtaining and evaluating

Data analytics is rapidly redefining the concepts of discovering and analyzing

patterns anomalies

Increasing use of audit data analytics _______ auditors' ability to ask the right questions and evaluate the answers yielded by the data.

places a greater premium on

Communicating results to interested users ______.

relates to the audit report varies based on the auditor's findings

Accounting professionals perform various services that provide assurance about the

reliability relevance

The increased used of data analytics in auditing ______.

requires the ability to query, manipulate and interpret information streamlines some tedious audit tasks

The fact that there should be a well-planned and thorough approach for conducting the audit is implied by the phrase

systematic process

True or false: The auditor's report, also known as the audit opinion, is the main product or output of the audit.

true

The most common type of audit report (opinion) issued by auditors is a(n) ______ opinion.

unqualified

These occur when a practitioner is engaged to issue a report on subject matter that is the responsibility of another party.

Attest services

Enhanced transparency of transactions, increased operating efficiency, and greater reliability of data and data trails are all results of the use of

blockchain

The use of decentralized, distributed digital ledgers that record economic transactions is allowed by

blockchain

In order to plan the audit properly, the audit team must make a preliminary assessment of the client's

business materiality

In order to develop and support an audit opinion, the auditor must obtain an understanding of the client's ______.

business and industry risks information systems

When planning an audit, the audit team must determine materiality and make a preliminary analysis of the entity's ______ to determine the risk of material misstatement (RMM).

business risks

Predictive audit data analytics ______.

combines firm, industry and market data to help auditors identify numbers that might be off

The final phase in the audit process is to ______.

evaluate the results and issue an audit report

The conceptual and procedural details of a financial statement audit build on the fundamental concepts of ______.

evidence materiality audit risk

Rapid advances in electronic technologies used by many businesses ______.

facilitates efficient corroboration of the reliability of data can create automatic audit trails

The amount by which a set of financial statements could be misstated without affecting the judgment of a reasonable person is referred to as

materiality

To ensure the audit is conducted effectively and efficiently it is important to ______.

properly plan the audit

When an auditor reports that the financial statements are fairly stated except for a misstatement identified in the inventory account, a(n) ______ opinion should be issued.

qualified

To increase the likelihood that a sample is representative of the population of transactions or account items, auditors use

random

For an audit report to be unqualified ______.

there must be no significant limitations imposed on the auditor's procedures the auditor must be independent the client's financial statements must be free of material departures from GAAP the audit must be done in accordance with applicable standards

When the financial statements are free of material misstatement and the auditor does not find it necessary to specify any exceptions to a "clean" audit opinion, the audit report issued is

unqualified