1. The nature of audit procedures refers to the reliance on evidence provided by the client and its management.

True

False

2. The expectation gap is caused by unrealistic user expectations such as the auditor providing complete assurance.

True

False

3. Martha Minnati was reviewing the previous years 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?

consulting engagement

review engagement

compliance engagement

assurance engagement

4. Which of the following groups would be considered users of the financial statements?

governments

current shareholders

general public

all of these answers are correct

5. The causes of information risk do not include

reliability.

complexity.

independence.

competing incentives.