In compliance audits the auditor Determine whether a client is following a specific regulation set by some higher authority. Evaluates efficiency and the effectiveness of a certain part of an organization's operating procedures. Determine whether the financial statements are in compliance with the GAAP. Non of the these answers is correct. Question 5 (5 points) In Ocean Manufacturing case, we learned that there are procedures that are performed before accepting a new client. Which of the following procedures is not required by relevant standards? Evaluate the integrity of client management Communicate with the predecessor auditor. Take various steps to obtain an understanding of the client and its industry. Obtain and examine client financial information such as annual reports and income tax returns. Question 12 (5 points) Which of the following statements best describes the primary purpose of Statements on Auditing Standards? They are procedural outlines that are intended to narrow the areas of inconsistency and divergence of auditor opinion. They are interpretations that are intended to clarify the meaning of generally accepted auditing standards." They are authoritative statements, enforced through the Code of Professional Conduct, and are intended to limit the degree of auditor judgment. They are guides intended to set forth auditing procedures that are applicable to a variety of situations. Question 22 (5 points) The purpose of the introductory paragraph in the standard unqualified (public company) report is: to communicate the responsibilities of management in preparing the financial statements and to clarify the respective roles of management and the auditor. all of the answers are correct. to identify the financial statements that were audited and the dates and time periods covered by the report. to identify the entity that was audited. Question 23 (5 points) An auditor's independence is considered impaired if the auditor has: an outstanding $8,000 balance on a credit card issued by a client. a joint, closely held business investment with the client that is material to the auditor's net worth. an immaterial, indirect financial interest in a client an automobile loan from a client bank, collateralized by the automobile