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Unformatted text preview: 6-1Audit Responsibilities and Objectives Exercise 1. The objective of the ordinary examination by the independent auditor is the expression of an opinion on a. the fairness of the financial statements. b. the accuracy of the financial statements. c. the accuracy of the annual report. d. the balance sheet and income statement. 2. Auditors accumulate evidence to a. defend themselves in the event of a lawsuit. b. justify the conclusions they have otherwise reached. c. satisfy the requirements of the Sarbanes Oxley Act. d. enable them to reach conclusions about the fairness of the financial statements and issue an appropriate audit report. 3. The factor which distinguishes an error from fraud is a. materiality. b. intent. c. whether it is a dollar amount or a process. d. whether it is a caused by the auditor or the client. 4. Which of the following is notone of the five broad categories of management assertions? a. General or specific transaction objectives. b. Existence or occurrence. c. Valuation or allocation. d. Presentation and disclosure. 5. Which of the following statements is most correct regarding errors and fraud? a. An error is unintentional, whereas fraud is intentional. b. Frauds occur more often than errors in financial statements. c. Errors are always fraud and frauds are always errors. d. Auditors have more responsibility for finding fraud than errors. 6. Which of the following statements is true of a public company’s financial statements? a. Sarbanes-Oxley requires the CEO only to certify the financial statements. b. Sarbanes-Oxley requires the CFO only to certify the financial statements. c. Sarbanes-Oxley requires the CEO and CFO to certify the financial statements. d. Sarbanes-Oxley neither requires the CEO nor the CFO to certify the financial statements. 6-27. If a short-term note payable is included on an accounts payable listing, there is a violation of the a. completeness objective. b. existence objective. c. timing objective. d. classification objective. 8. An audit process is a well-defined methodology for organizing an audit to ensure that a. the evidence gathered is both sufficient and competent. b. all appropriate audit objectives are specified. c. all appropriate audit objectives are met. d. all of the above. 9. Professional skepticism requires auditors to possess a ______ mind. a. beautiful. b. questioning. c. intelligent. d. unbelieving. 10. Analytical procedures are those that a. evaluate the accuracy of the account balances. b. assess the overall reasonableness of transactions and balances. c. review the effectiveness of internal control procedures. d. analyze the effect of management procedures on the accounting system....
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- Fall '09
- Balance Sheet