, TEST BANK
Akolisa Ufodike
York University
Auditing:
The Art and Science of Assurance
Engagements
Fifteenth Canadian Edition
Alvin A. Arens
Michigan State University
Randal J. Elder
Syracuse University
Mark S. Beasley
North Carolina State University
Chris E. Hogan
Michigan State University
Joanne C. Jones
York University
ISBN: 978-0-13-669229-4
Copyright © 2022 Pearson Canada Inc., Toronto, Ontario. All rights reserved. This work is protected by Canadian
copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning.
Dissemination or sale of any part of this work (including on the Internet) will destroy the integrity of the work and is
not permitted. The copyright holder grants permission to instructors who have adopted Auditing: The Art and Science
of Assurance Engagements, by Arens, Elder, Beasley, Hogan, and Jones, to post this material online only if the use of
the website is restricted by access codes to students in the instructor’s class that is using the textbook and provided the
reproduced material bears this copyright notice.
, CONTENTS
Chapter 1 The Demand for Audit and Other Assurance Services
Chapter 2 The Public Accounting Profession and Audit Quality
Chapter 3 Professional Ethics and Legal Liability
Chapter 4 Audit Responsibilities and Objectives
Chapter 5 Audit Evidence
Chapter 6 Client Acceptance, Preliminary Planning, and Materiality
Chapter 7 Risk Assessment and Inherent Risk
Chapter 8 Understanding the Internal Control System
Chapter 9 Control Risk Assessment
Chapter 10 Risk Response: Audit Strategy, Overall Approach, and Audit Program
Chapter 11 Audit Sampling Concepts
Chapter 12 Audit of the Revenue Cycle
Chapter 13 Audit of the Acquisition and Payment Cycle
Chapter 14 Audit of the Inventory and Distribution Cycle
Chapter 15 Audit of the Human Resources and Payroll Cycle
Chapter 16 Audit of Cash and Cash Equivalents
Chapter 17 Completing the Audit
Chapter 18 Audit Reports on Financial Statements
Chapter 19 Other Audits, Assurance Engagements, and Related Services
Chapter 20 Audit of the Capital Acquisition and Repayment Cycle
Copyright © 2022 Pearson Canada Inc., Toronto, Canada
ii
, Auditing: The Art and Science of Assurance Engagements, 15ce (Arens)
Chapter 1 The Demand for Audit and Other Assurance Services
1.1 Define an assurance engagement.
1) What is the nature of the service provided when an auditor evaluates information using
suitable criteria and issues a report that attests to the reliability of the information?
A) internal audit engagement
B) review engagement
C) compilation engagement
D) attestation engagement
Answer: D
Diff: 2
Learning Objective: 1-1 Define an assurance engagement.
2) The No-Name Agency conducts an independent service for a company to determine if its
suppliers have complied with health and safety regulations, child labour guidelines, and other
employee welfare issues. What type of service is No-Name providing?
A) assurance
B) attest
C) review
D) compilation
Answer: A
Diff: 2
Learning Objective: 1-1 Define an assurance engagement.
3) Which of the following is an example of an attestation engagement?
A) accounting and bookkeeping services for the accounts
B) an audit of internal controls over financial reporting
C) preparation of the annual financial statements with notes
D) completion of provincial and federal tax returns
Answer: B
Diff: 1
Learning Objective: 1-1 Define an assurance engagement.
4) When do individuals and organizations typically need assurance services?
A) usually only when organizations obtain debt or other loans
B) for five years from the start of an organization until debt is retired
C) only when historical data, such as financial information, need to be audited
D) whenever assurance is provided by a practitioner who is independent and unbiased
Answer: D
Diff: 2
Learning Objective: 1-1 Define an assurance engagement.
1
Copyright © 2022 Pearson Canada, Inc.
Akolisa Ufodike
York University
Auditing:
The Art and Science of Assurance
Engagements
Fifteenth Canadian Edition
Alvin A. Arens
Michigan State University
Randal J. Elder
Syracuse University
Mark S. Beasley
North Carolina State University
Chris E. Hogan
Michigan State University
Joanne C. Jones
York University
ISBN: 978-0-13-669229-4
Copyright © 2022 Pearson Canada Inc., Toronto, Ontario. All rights reserved. This work is protected by Canadian
copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning.
Dissemination or sale of any part of this work (including on the Internet) will destroy the integrity of the work and is
not permitted. The copyright holder grants permission to instructors who have adopted Auditing: The Art and Science
of Assurance Engagements, by Arens, Elder, Beasley, Hogan, and Jones, to post this material online only if the use of
the website is restricted by access codes to students in the instructor’s class that is using the textbook and provided the
reproduced material bears this copyright notice.
, CONTENTS
Chapter 1 The Demand for Audit and Other Assurance Services
Chapter 2 The Public Accounting Profession and Audit Quality
Chapter 3 Professional Ethics and Legal Liability
Chapter 4 Audit Responsibilities and Objectives
Chapter 5 Audit Evidence
Chapter 6 Client Acceptance, Preliminary Planning, and Materiality
Chapter 7 Risk Assessment and Inherent Risk
Chapter 8 Understanding the Internal Control System
Chapter 9 Control Risk Assessment
Chapter 10 Risk Response: Audit Strategy, Overall Approach, and Audit Program
Chapter 11 Audit Sampling Concepts
Chapter 12 Audit of the Revenue Cycle
Chapter 13 Audit of the Acquisition and Payment Cycle
Chapter 14 Audit of the Inventory and Distribution Cycle
Chapter 15 Audit of the Human Resources and Payroll Cycle
Chapter 16 Audit of Cash and Cash Equivalents
Chapter 17 Completing the Audit
Chapter 18 Audit Reports on Financial Statements
Chapter 19 Other Audits, Assurance Engagements, and Related Services
Chapter 20 Audit of the Capital Acquisition and Repayment Cycle
Copyright © 2022 Pearson Canada Inc., Toronto, Canada
ii
, Auditing: The Art and Science of Assurance Engagements, 15ce (Arens)
Chapter 1 The Demand for Audit and Other Assurance Services
1.1 Define an assurance engagement.
1) What is the nature of the service provided when an auditor evaluates information using
suitable criteria and issues a report that attests to the reliability of the information?
A) internal audit engagement
B) review engagement
C) compilation engagement
D) attestation engagement
Answer: D
Diff: 2
Learning Objective: 1-1 Define an assurance engagement.
2) The No-Name Agency conducts an independent service for a company to determine if its
suppliers have complied with health and safety regulations, child labour guidelines, and other
employee welfare issues. What type of service is No-Name providing?
A) assurance
B) attest
C) review
D) compilation
Answer: A
Diff: 2
Learning Objective: 1-1 Define an assurance engagement.
3) Which of the following is an example of an attestation engagement?
A) accounting and bookkeeping services for the accounts
B) an audit of internal controls over financial reporting
C) preparation of the annual financial statements with notes
D) completion of provincial and federal tax returns
Answer: B
Diff: 1
Learning Objective: 1-1 Define an assurance engagement.
4) When do individuals and organizations typically need assurance services?
A) usually only when organizations obtain debt or other loans
B) for five years from the start of an organization until debt is retired
C) only when historical data, such as financial information, need to be audited
D) whenever assurance is provided by a practitioner who is independent and unbiased
Answer: D
Diff: 2
Learning Objective: 1-1 Define an assurance engagement.
1
Copyright © 2022 Pearson Canada, Inc.
