TRUE-FALSE STATEMENTS 3. A compliance audit involves gathering evidence to ascertain whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform 6. The nature of audit procedures refers to the reliance on evidence provided by the client and its management. 8. An auditor can provide a reasonable level of assurance on information other than historical financial information. 9. A reasonable level of assurance is the highest level of assurance that an auditor can provide.
MULTIPLE CHOICE QUESTIONS 14. Martha Minnati was reviewing the previous year’s audited financial statements of a clothing manufacturer. Her manager explained to her that for a financial statement audit, the clothing company was the accountable party, its shareholders were the users, and the subject matter was the financial statements. What kind of audit engagement was her manager describing? a) consulting engagementb) assurance engagementc) review engagementd) compliance engagementAnswer: b 15. An engagement performed by an auditor or consultant to enhance the reliability of the subject matter can best be described as a(n) 16. An example of the three parties in an assurance engagement would be:
17. A limitation of an audit is caused by period of time and at a reasonable cost. 18. Which of the following groups would be considered users of the financial statements? a) governmentsb) current shareholdersc) general publicd) all of the aboveAnswer: d 19. The sources of demand for audit and assurance services doesnotinclude
20. An audit is one way for investors to insure against at least part of their loss should the company they invest in fail – this is an example of
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- Financial audit, Auditor's report