Auditing Quiz Chapter 1 (T/F)

The need for independent assurance arises because the interests of the users of information may be different from the interests of those responsible for providing information.

• True

• False

A bank using Milton Company's financial statements to evaluate Milton’s loan application is an example of a user’s need for unbiased reporting.

• True

• False

Auditors obtain and evaluate evidence regarding assertions about economic actions and events to verify the accuracy of those assertions.

• True

• False

Management may have incentives to present biased financial information, but the various users of the statements are not likely to have conflicting interests in the financial information.

• True

• False

Users rely on the auditors' independent assessment of financial statement presentation because few users have direct knowledge of the company's operations.

• True

• False

If the auditor has no reservations about management’s financial statements, then the auditor will issue a qualified opinion.

• True

• False

Auditors generally need quantitative and mathematical skills more than they need communication and leadership skills.

• True

• False

The foundation for the audit opinion formulation process relies on obtaining evidence to support the auditor’s opinion.

• True

• False

Complex transactions, information, and processing systems provide an opportunity for management to mislead users of financial statements.

• True

• False

Users of audited financial statements include a company’s bondholders but not its stockholders, who are the owners of the company.

• True

• False