36.

Discuss four factors that are likely to significantly reduce information risk in the
challenging next five to ten years.

Answer:
Four factors that are likely to significantly reduce information risk in the
next five to ten years are:
 technological advances,
 more companies will go on-line, reducing the risk of investors
obtaining outdated information,
 new accounting and auditing standards, and
 auditors will find more efficient and effective audit techniques.

Other Objective Answer Format Questions

37. The criteria by which an auditor evaluates the information under audit may vary
easy with the information being audited.
a a. True
b. False

38. The criteria used by an external auditor to evaluate published financial

easy statements are known as generally accepted auditing standards.
b a. True
b. False

39. (SOX) The Sarbanes-Oxley Act establishes standards related to the audits of privately
easy held companies.
b a. True
b. False

40. (SOX) The Sarbanes-Oxley Act is widely viewed as having ushered in sweeping
easy changes to auditing and financial reporting.
a a. True
b. False

41. Only companies that file annual statements with the Securities and Exchange
easy Commission are required to have an annual external audit.
b a. True
b. False

42. The financial statements most commonly audited by external auditors are the
easy balance sheet, the income statement, and the statement of changes in retained
b earnings.
a. True
b. False

43. The primary purpose of a compliance audit is to determine whether the financial
medium statements are prepared in compliance with generally accepted accounting
b principles.
a. True
b. False

44. Results of compliance audits are typically reported to someone within the
medium organizational unit being audited rather than to a broad spectrum of outside
a users.
a. True
b. False
45. The primary role of the United States General Accounting Office is the
medium enforcement of the federal tax laws as defined by Congress and interpreted by
b the courts.
a. True
b. False

46. CPA firms are never allowed to provide bookkeeping services for audit clients.
medium a. True
b b. False

47. (SOX) Section 404 of the Sarbanes-Oxley Act requires public companies to have an
medium external auditor attest to their internal control over financial reporting.
a a. True
b. False

48. (SOX) The Sarbanes-Oxley Act requires a company’s chairman of the board of
challenging directors, CEO, and CFO to certify the company’s financial statements.
b a. True
b. False

49. (SOX) The criterion that is most likely to be used as a framework in evaluating a
challenging company’s internal control over financial reporting under Section 404 of the
b Sarbanes-Oxley Act is the Enterprise Risk Management framework.
a. True
b. False

50. Most public companies’ audited financial statements are available on the SEC’s
challenging EDGAR database.
a a. True
b. False