Chapter 1: An Introduction to Assurance and Financial Statement Auditing
Chapter 2: The Financial Statement Auditing Environment
Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
Chapter 4: Risk Assessment
Chapter 5: Evidence and Documentation
Chapter 6: Internal Control in a Fi...
Chapter 1: An Introduction to Assurance and Financial Statement Auditing
Chapter 2: The Financial Statement Auditing Environment
Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
Chapter 4: Risk Assessment
Chapter 5: Evidence and Documentation
Chapter 6: Internal Control in a Financial Statement Audit
Chapter 7: Auditing Internal Control over Financial Reporting
Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
Chapter 10: Auditing the Revenue Process
Chapter 11: Auditing the Purchasing Process
Chapter 12: Auditing the Human Resource Management Process
Chapter 13: Auditing the Inventory Management Process
Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets,
and Property, Plant, and Equipment
Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’
Equity, and Income Statement Accounts
Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
Chapter 17: Completing the Audit Engagement
Chapter 18: Reports on Audited Financial Statements
Chapter 19: Professional Conduct, Independence, and Quality Management
Chapter 20: Legal Liability
Chapter 21: Assurance, Attestation, and Internal Auditing Services
,Auditing & Assurance Services
Chapter 01
An Introduction to Assurance and Financial Statement Auditing
True / False Questions
1. Independence standards are required for audits of public companies, but not for audits
of private companies.
True False
2. Decision makers demand reliable information that is provided by accountants.
True False
3. Information asymmetry seldom occurs.
True False
4. Conflicts of interest often occur between absentee owners and managers.
True False
5. Auditing services and attestation services are the same.
True False
6. Auditing is a type of attest service.
True False
7. Testing all transactions that occurred during the period is cost prohibitive.
True False
Multiple Choice Questions
, Auditing & Assurance Services
8. Why do auditors generally use a sampling approach to evidence gathering?
A. Auditors are experts and do not need to look at much to know whether the financial
statements are correct or not.
B. Auditors must balance the cost of the audit with the need for
precision.
C. Auditors must limit their exposure to their auditee to maintain
independence.
D. The auditor's relationship with the auditee is generally adversarial, so the auditor will
not have access to all of the financial information of the company.
9. Which of the following statements best describes a relationship between sample size and
other elements of auditing?
A. If materiality increases, so will the
sample size.
B. If the desired level of assurance increases, sample sizes can be
smaller.
C. If materiality decreases, sample size will need to
increase.
D. There is no relationship between sample size and materiality or the desired level
of assurance.
10. Which of the following statements about the study of auditing is NOT true?
A. The study of auditing can be valuable to future accountants and business decision
makers whether or not they plan to become auditors.
B. The study of auditing focuses on learning the analytical and logical skills necessary to
evaluate the relevance and reliability of information.
C. The study of auditing focuses on learning the rules, techniques, and computations
required to analyze financial statements.
D. The study of auditing begins with the understanding of a coherent logical framework
and techniques useful for gathering and analyzing evidence about others' assertions.
11. The basic purpose of a financial statement audit is to
A. Detect
fraud.
B. Examine individual transactions so that the auditor may certify as to
their validity.
C. Provide assurance regarding whether the auditee's financial statements are
fairly stated.
D. Assure the consistent application of correct accounting
procedures.
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