Test Bank for Auditing & Assurance Services A Systematic
Approach 12th Edition by William Messier Jr, Steven
Glover, Douglas Prawit
1|Page
,PART 1: 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 2: 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 3: UNDERSTANDING AND AUDITING INTERNAL CONTROL
Chapter 6: Internal Control in a Financial Statement Audit
Chapter 7: Auditing Internal Control over Financial Reporting
PART 4: 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 5: 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, 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
PART 6: COMPLETING THE AUDIT AND REPORTING RESPONSIBILITIES
Chapter 17: Completing the Audit Engagement
Chapter 18: Reports on Audited Financial Statements
PART 7: PROFESSIONAL RESPONSIBILITIES
Chapter 19: Professional Conduct, Independence, and Quality Management
Chapter 20: Legal Liability
PART 8: ASSURANCE, ATTESTATION, AND INTERNAL AUDITING SERVICES
Chapter 21: Assurance, Attestation, and Internal Auditing Services
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, Chapter 01
1) Why do auditors often use a sampling approach to evidence gathering?
A) Auditors are experts and do not need to look at much to know whether the financial stateme
nts are correct or not.
B) Auditors must balance the cost of the audit with the need for precision and for some types of
evidence, computer data analytic approaches can‘t be used.
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
ha ve access to all of the financial information of the company.
2) Which of the following statements best describes a relationship between sample size and ot
her 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.
3) 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 whet
her or not they plan to become auditors.
B) The study of auditing focuses on learning the analytical and logical skills necessary to evalu
ate the relevance and reliability of information.
C) The study of auditing focuses on learning the rules, techniques, and computations required
to analyze financial statements for making investment recommendations.
D) The study of auditing begins with the understanding of a coherent logical framework a
nd techniques useful for gathering and analyzing evidence about others‘ assertions.
4) The basic definition of auditing essentially indicates that, overall, auditing is a process to:
A) detect fraud.
B) examine individual transactions so that the auditor may certify as to their validity.
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, C) objectively obtain and evaluate evidence regarding assertions made by another party.
D) assure the consistent application of correct accounting procedures.
5) Assurance services may improve all of the following except:
A) relevance.
B) credibility.
C) periodicity.
D) reliability.
6) Evidence is reliable if it:
A) signals the true state of a management assertion.
B) applies to the period being audited.
C) relates to the audit assertion being tested.
D) is sufficient to justify a conclusion.
7) Which of the following best describes the concept of audit risk?
A) The risk of the auditor being sued because of association with an auditee.
B) The risk that the auditor will provide an inappropriate opinion on financial statements that
are, in fact, materially misstated.
C) The overall risk that a material misstatement exists in the financial statements.
D) The risk that auditors use audit procedures that are inappropriate.
8) An auditor who accepts an audit engagement and does not possess expertise with respect to the
business entity‘s industry at that point, should:
A) engage financial experts familiar with the nature of the business entity.
B) obtain a knowledge of matters that relate to the nature of the entity‘s business and the industry
in which it operates.
C) refer a substantial portion of the audit to another CPA, who will act as the principal auditor.
4|Page
Approach 12th Edition by William Messier Jr, Steven
Glover, Douglas Prawit
1|Page
,PART 1: 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 2: 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 3: UNDERSTANDING AND AUDITING INTERNAL CONTROL
Chapter 6: Internal Control in a Financial Statement Audit
Chapter 7: Auditing Internal Control over Financial Reporting
PART 4: 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 5: 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, 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
PART 6: COMPLETING THE AUDIT AND REPORTING RESPONSIBILITIES
Chapter 17: Completing the Audit Engagement
Chapter 18: Reports on Audited Financial Statements
PART 7: PROFESSIONAL RESPONSIBILITIES
Chapter 19: Professional Conduct, Independence, and Quality Management
Chapter 20: Legal Liability
PART 8: ASSURANCE, ATTESTATION, AND INTERNAL AUDITING SERVICES
Chapter 21: Assurance, Attestation, and Internal Auditing Services
2|Page
, Chapter 01
1) Why do auditors often use a sampling approach to evidence gathering?
A) Auditors are experts and do not need to look at much to know whether the financial stateme
nts are correct or not.
B) Auditors must balance the cost of the audit with the need for precision and for some types of
evidence, computer data analytic approaches can‘t be used.
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
ha ve access to all of the financial information of the company.
2) Which of the following statements best describes a relationship between sample size and ot
her 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.
3) 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 whet
her or not they plan to become auditors.
B) The study of auditing focuses on learning the analytical and logical skills necessary to evalu
ate the relevance and reliability of information.
C) The study of auditing focuses on learning the rules, techniques, and computations required
to analyze financial statements for making investment recommendations.
D) The study of auditing begins with the understanding of a coherent logical framework a
nd techniques useful for gathering and analyzing evidence about others‘ assertions.
4) The basic definition of auditing essentially indicates that, overall, auditing is a process to:
A) detect fraud.
B) examine individual transactions so that the auditor may certify as to their validity.
3|Page
, C) objectively obtain and evaluate evidence regarding assertions made by another party.
D) assure the consistent application of correct accounting procedures.
5) Assurance services may improve all of the following except:
A) relevance.
B) credibility.
C) periodicity.
D) reliability.
6) Evidence is reliable if it:
A) signals the true state of a management assertion.
B) applies to the period being audited.
C) relates to the audit assertion being tested.
D) is sufficient to justify a conclusion.
7) Which of the following best describes the concept of audit risk?
A) The risk of the auditor being sued because of association with an auditee.
B) The risk that the auditor will provide an inappropriate opinion on financial statements that
are, in fact, materially misstated.
C) The overall risk that a material misstatement exists in the financial statements.
D) The risk that auditors use audit procedures that are inappropriate.
8) An auditor who accepts an audit engagement and does not possess expertise with respect to the
business entity‘s industry at that point, should:
A) engage financial experts familiar with the nature of the business entity.
B) obtain a knowledge of matters that relate to the nature of the entity‘s business and the industry
in which it operates.
C) refer a substantial portion of the audit to another CPA, who will act as the principal auditor.
4|Page
