$131.$ Multiple Choice Questions

LO $1-1,2$ Select the best answer for each of the following items and give reasons for your choice.

Which of the following best describes the relationship between assurance services and attest services?

While attest services involve financial data, assurance services involve nonfinancial data.

While attest services require objectivity, assurance services do not require objectivity.

All attest services require independence.

Attest and assurance services are different terms referring to the same types of services.

LO $1-3$

Which of the following has primary responsibility for the fairness of the representations made in financial statements?

Client$$s management.

Independent auditor.

Audit committee.

AICPA.

LO $1-3$

The most important benefit of having an annual audit by a public accounting firm is to:

Provide assurance to investors and other outsiders that the financial statements are reliable.

Enable officers and directors to avoid personal responsibility for any misstatements in the financial statements.

Meet the requirements of government agencies.

Provide assurance that illegal acts, if any exist, will be brought to light.

LO $1-7$

The Sarbanes$-$Oxley Act created the Public Company Accounting Oversight Board $($PCAOB$).$ Which of the following is not one of the responsibilities of that board?

Establish independence standards for auditors of public companies.

Review financial reports filed with the SEC.

Establish auditing standards for audits of public companies.

Sanction registered audit firms.

LO $1-7$

Which of these organizations has the responsibility to perform inspections of auditors of public companies?

American Institute of Certified Public Accountants.

Securities and Exchange Commission.

Financial Accounting Standards Board

Public Company Accounting Oversight Board.

LO $1-6$

Governmental auditing, in addition to including audits of financial statements, often includes audits of efficiency, effectiveness, and:

Adequacy.

Evaluation.

Accuracy.

Compliance.

LO $1-6$

In general, internal auditors$$ independence will be greatest when they report directlThe Public Comp