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Pages 20 to 22 are not shown in this preview. Chapter 02 - The Financial Statement Auditing Environment 2*. An >in-charge> auditor t"picall" holds the ran9 ofA. Associate. $" Senior.C. 5anager.6. AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Blooms: Remember Learning !b"ecti#e: $%&$9 (n)erstan) t*e organi0ation an) com,osition of ,ublic accounting firms-.o,ic: Public Accounting Firms 2+. 7hich of the follo%ing best describes the concept of ris9 assessment on %hich auditorscan provide independent assurance8A. The ris9 that financial statements are misstated because of fraud. The ris9 that financial statements are misstated because of error or fraud. C" 7hether management has s"stems in place to evaluate and effectivel" manage the entit"&s business ris9s.6. 6eveloping client acceptance and continuance practices that minimi(e the li9elihood ofla%suits against the auditor. AACSB: Analytic AICPA BB: Critical .*in+ing AICPA FN: Ris+ Analysis Blooms: A,,ly Difficulty: 1 Learning !b"ecti#e: $%&$% Be familiar 6it* t*e #arious ser#ices offere) by assurance ,ro#i)ers.o,ic: .y,es of Au)itors an) Ser#ices 2/. Forensic audits include all of the follo%ing e!ceptA. Criminal investigations. $" 5anufacturers& assertions about product :ualit".C. Emplo"ee fraud.6. 5anagement fraud. AACSB: Communication AICPA BB: In)ustry AICPA FN: Le#eraging .ec*nology Blooms: (n)erstan) Learning !b"ecti#e: $%&$% Be familiar 6it* t*e #arious ser#ices offere) by assurance ,ro#i)ers-.o,ic: .y,es of Au)itors an) Ser#ices 2-2*

Chapter 02 - The Financial Statement Auditing Environment ;ective of an operational audit is for the auditor toA. 6etermine %hether the financial statements present fairl" the entit"&s operations. Evaluate the feasibilit" of attaining the entit"&s operational ob;ectives. C" 5a9e recommendations for improving performance.6. @eport on the entit"&s relative success in attaining profit ma!imi(ation. AACSB: Communication AICPA BB: In)ustry AICPA FN: Le#eraging .ec*nology Blooms: Remember Learning !b"ecti#e: $%&$% Be familiar 6it* t*e #arious ser#ices offere) by assurance ,ro#i)ers-.o,ic: .y,es of Au)itors an) Ser#ices the fairness of financial presentation and includes audits of efficienc"4effectiveness4 andA. 5onetar" stimulus. Evaluation.C. Accurac". #"

Compliance. AACSB: Communication AICPA BB: In)ustry AICPA FN: Le#eraging .ec*nology Blooms: Remember Learning !b"ecti#e: $%&$% Be familiar 6it* t*e #arious ser#ices offere) by assurance ,ro#i)ers-.o,ic: .y,es of Au)itors an) Ser#ices '0. E!ternal auditors are referred to as >e!ternal> becauseA. The" report to users outside of the audited entit". The" are paid b" parties outside of the audited entit". C" The" are not emplo"ees of the entit" being audited.6. Their offices are not at the entit"&s place of business. AACSB: Communication AICPA BB: In)ustry AICPA FN: Decision Ma+ing Blooms: (n)erstan) Learning !b"ecti#e: $%&$1 Be familiar 6it* t*e )ifferent ty,es of au)itors.o,ic: .y,es of Au)itors an) Ser#ices 2-2+

Chapter 02 - The Financial Statement Auditing Environment '1. 7hich is not an attribute of an e!ternal auditor8A. ,ndependence. $" Client advocac".C. b;ectivit".6. Concern for the public interest. AACSB: Communication AICPA BB: In)ustry AICPA FN: Decision Ma+ing Blooms: Remember Learning !b"ecti#e: $%&$1 Be familiar 6it* t*e )ifferent ty,es of au)itors.o,ic: .y,es of Au)itors an) Ser#ices '2. 7hat is the general character of the %or9 conducted in performing a forensic audit for acompan"8A. $" 6etecting or deterring fraudulent activit".C. reliabilit" of the specific assertions made b" management.6. ,dentif"ing the causes of an entit"&s financial difficulties. AACSB: Communication AICPA BB: In)ustry AICPA FN: Le#eraging .ec*nology Blooms: (n)erstan) Learning !b"ecti#e: $%&$% Be familiar 6it* t*e #