Audit and Assurance Services Exam 1
Assurance Services - ✔✔ correct answer Independent professional services that improve the quality of
information, or its context, for decision makers. Encompasses attest services and financial statement
audits.
Attest - ✔✔ correct answer A service when a practitioner is engaged to issue or does issue a report on
subject matter, or an assertion about subject matter, that is the responsibility of another party.
Encompasses financial statement audits.
Audit Risk - ✔✔ correct answer The risk that the auditor expresses an inappropriate audit opinion when
the financial statements are materially misstated
Auditing - ✔✔ correct answer A systematic process of (1) objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of correspondence
between those assertions and established criteria and (2) communicating the results to interested users
Information Asymmetry - ✔✔ correct answer The concept that the manager generally has more
information about the true financial position and results of operations of the entity than the absentee
owner does
Materiality - ✔✔ correct answer The maximum amount by which the auditor believes the financial
statements could be misstated and still not affect the decisions of users
Misstatement - ✔✔ correct answer An instance where a financial statement assertion is not in
accordance with the criteria against which it is audited. Misstatements can be classified as fraud
(intentional), other illegal acts such as noncompliance with laws and regulations (intentional or
unintentional), and errors (unintentional).
7 Major Phases of an Audit - ✔✔ correct answer 1. Client Acceptance/Continuance
2. Preliminary Engagement Activities
3. Plan the Audit
4. Consider and audit Internal Control
5. Audit business processes and related accounts
6. Complete the Audit
, Audit and Assurance Services Exam 1
7. Evaluate results and Issue Audit Report
6 Assertions about Transactions and Events - ✔✔ correct answer 1. Occurence
2. Completeness
3. Authorization
4. Accuracy
5. Cutoff
6. Classification
4 Assertions about Account Balances (at period end) - ✔✔ correct answer 1. Existence
2. Rights and Obligations
3. Completeness
4. Valuation and allocation
4 Assertions about Presentation and Disclosure - ✔✔ correct answer 1. Occurrence Rights and
Obligations
2. Completeness
3. Classification and Understandability
4. Accuracy and Valuation
External Auditors are often referred to as... - ✔✔ correct answer Independent Auditors
The 4 types of Auditors are - ✔✔ correct answer 1. External Auditors
2. Internal Auditors
3. Government Auditors
4. Forensic Auditors
Government Auditors are usually considered to be a type of... - ✔✔ correct answer Internal auditor
Assurance Services - ✔✔ correct answer Independent professional services that improve the quality of
information, or its context, for decision makers. Encompasses attest services and financial statement
audits.
Attest - ✔✔ correct answer A service when a practitioner is engaged to issue or does issue a report on
subject matter, or an assertion about subject matter, that is the responsibility of another party.
Encompasses financial statement audits.
Audit Risk - ✔✔ correct answer The risk that the auditor expresses an inappropriate audit opinion when
the financial statements are materially misstated
Auditing - ✔✔ correct answer A systematic process of (1) objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of correspondence
between those assertions and established criteria and (2) communicating the results to interested users
Information Asymmetry - ✔✔ correct answer The concept that the manager generally has more
information about the true financial position and results of operations of the entity than the absentee
owner does
Materiality - ✔✔ correct answer The maximum amount by which the auditor believes the financial
statements could be misstated and still not affect the decisions of users
Misstatement - ✔✔ correct answer An instance where a financial statement assertion is not in
accordance with the criteria against which it is audited. Misstatements can be classified as fraud
(intentional), other illegal acts such as noncompliance with laws and regulations (intentional or
unintentional), and errors (unintentional).
7 Major Phases of an Audit - ✔✔ correct answer 1. Client Acceptance/Continuance
2. Preliminary Engagement Activities
3. Plan the Audit
4. Consider and audit Internal Control
5. Audit business processes and related accounts
6. Complete the Audit
, Audit and Assurance Services Exam 1
7. Evaluate results and Issue Audit Report
6 Assertions about Transactions and Events - ✔✔ correct answer 1. Occurence
2. Completeness
3. Authorization
4. Accuracy
5. Cutoff
6. Classification
4 Assertions about Account Balances (at period end) - ✔✔ correct answer 1. Existence
2. Rights and Obligations
3. Completeness
4. Valuation and allocation
4 Assertions about Presentation and Disclosure - ✔✔ correct answer 1. Occurrence Rights and
Obligations
2. Completeness
3. Classification and Understandability
4. Accuracy and Valuation
External Auditors are often referred to as... - ✔✔ correct answer Independent Auditors
The 4 types of Auditors are - ✔✔ correct answer 1. External Auditors
2. Internal Auditors
3. Government Auditors
4. Forensic Auditors
Government Auditors are usually considered to be a type of... - ✔✔ correct answer Internal auditor
