QUESTION BANK
Auditing & Assurance Services 4th Canadian Edition
By William Messier All Chapters 1 to 21 Covered
1
,Table of Contents
Part One: Introduction To Assurance And Financial Statement Auditing
Chapter 1 An Introduction To Assurance And Financial Statement Auditing
Chapter 2 The Financial Statement Auditing Environment
Part Two: Audit Planning And Basic Auditing Concepts
Chapter 3 Audit Planning, Types Of Audit Tests, And Materiality
Chapter 4 Risk Assessment
Chapter 5 Evidence And Documentation
Part Three: Understanding And Auditing Internal Control
Chapter 6 Internal Control In A Financial Statement Audit
Chapter 7 Auditing Internal Control Over Financial Reporting
Part Four: Statistical And Nonstatistical Sampling Tools For Auditing
Chapter 8 Audit Sampling: An Overview And Application To Tests Of Controls
Chapter 9 Audit Sampling: An Application To Substantive Tests Of Account Balances
Part Five: Auditing Business Processes
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,
Property, Plant, And Equipment, And Goodwill
Chapter 15 Auditing The Financing/Investing Process: Long-Term Liabilities, Shareholders'
Equity, And Income Statement Accounts
Chapter 16 Auditing The Financing/Investing Process: Cash And Investments
Part Six Completing The Audit And Reporting Responsibilities
Chapter 17 Completing The Audit Engagement
Chapter 18 Reports On Audited Financial Statements
Part Seven Professional Responsibilities
Chapter 19 Professional Conduct, Independence, And Quality Control
Chapter 20 Legal Liability Part Eight Assurance, Attestation, And Internal Auditing Services
Chapter 21 Assurance, Attestation, And Internal Auditing Services
2
,Answers at the end of each chapter
Chapter 01 4ce - Messier
1) Auditing focuses on rules, techniques, and computations required to prepare and analyze
financial information.
⊚ 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 attest 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
3
, 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 willnot
have access to all of the financial information of the company.
9) Which of the following statements best describes a relationship between sample size andother
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 frameworkand
techniques useful for gathering and analyzing evidence about others' assertions.
11) The basic definition of auditing states it is a process to:
A) detect fraud.
B) examine individual transactions so that the auditor may certify as to their validity.
C) objectively obtain and evaluate evidence regarding assertions.
D) assure the consistent application of correct accounting procedures.
4
Auditing & Assurance Services 4th Canadian Edition
By William Messier All Chapters 1 to 21 Covered
1
,Table of Contents
Part One: Introduction To Assurance And Financial Statement Auditing
Chapter 1 An Introduction To Assurance And Financial Statement Auditing
Chapter 2 The Financial Statement Auditing Environment
Part Two: Audit Planning And Basic Auditing Concepts
Chapter 3 Audit Planning, Types Of Audit Tests, And Materiality
Chapter 4 Risk Assessment
Chapter 5 Evidence And Documentation
Part Three: Understanding And Auditing Internal Control
Chapter 6 Internal Control In A Financial Statement Audit
Chapter 7 Auditing Internal Control Over Financial Reporting
Part Four: Statistical And Nonstatistical Sampling Tools For Auditing
Chapter 8 Audit Sampling: An Overview And Application To Tests Of Controls
Chapter 9 Audit Sampling: An Application To Substantive Tests Of Account Balances
Part Five: Auditing Business Processes
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,
Property, Plant, And Equipment, And Goodwill
Chapter 15 Auditing The Financing/Investing Process: Long-Term Liabilities, Shareholders'
Equity, And Income Statement Accounts
Chapter 16 Auditing The Financing/Investing Process: Cash And Investments
Part Six Completing The Audit And Reporting Responsibilities
Chapter 17 Completing The Audit Engagement
Chapter 18 Reports On Audited Financial Statements
Part Seven Professional Responsibilities
Chapter 19 Professional Conduct, Independence, And Quality Control
Chapter 20 Legal Liability Part Eight Assurance, Attestation, And Internal Auditing Services
Chapter 21 Assurance, Attestation, And Internal Auditing Services
2
,Answers at the end of each chapter
Chapter 01 4ce - Messier
1) Auditing focuses on rules, techniques, and computations required to prepare and analyze
financial information.
⊚ 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 attest 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
3
, 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 willnot
have access to all of the financial information of the company.
9) Which of the following statements best describes a relationship between sample size andother
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 frameworkand
techniques useful for gathering and analyzing evidence about others' assertions.
11) The basic definition of auditing states it is a process to:
A) detect fraud.
B) examine individual transactions so that the auditor may certify as to their validity.
C) objectively obtain and evaluate evidence regarding assertions.
D) assure the consistent application of correct accounting procedures.
4
