,TEST BANK FOR AUDITING & ASSURANCE
SERVICES: A SYSTEMATIC APPROACH, 12TH
EDITION CHAPTERS 1 - 21 COMPLETE
VERSION
1. Which of the following best describes the primary objective of an
audit?
• To detect fraud
• To express an opinion on the financial statements
• To prepare financial statements
• To maintain accounting records
- To express an opinion on the financial statements
Audits are conducted to express an opinion on whether the financial
statements are presented fairly in all material respects.
2. The concept of audit risk includes the risk that:
• An auditor will be sued
• The audit staff is undertrained
,• A material misstatement will not be detected
- The auditor may unknowingly fail to appropriately modify the
opinion on materially misstated financials
Audit risk includes the risk that an auditor may fail to detect material
misstatements and issue an inappropriate opinion.
3. The PCAOB was established by:
• The Internal Revenue Code
• The AICPA
• The SEC
- The Sarbanes-Oxley Act
SOX established the PCAOB to oversee public company audits and
improve audit quality.
4. Which of the following is an attestation service?
• Bookkeeping
• Consulting
• Compilation
- Examination of prospective financial information
Attestation services include reports on subject matter or assertions
made by others, such as forecasts.
5. Independence in fact means:
, • Freedom from control or undue influence
- The auditor's mental attitude of objectivity and impartiality
• Disclosure of relationships with the client
• Appearance of independence
Independence in fact refers to the auditor's actual objectivity and
integrity.
6. What is the purpose of engagement planning?
• To complete the audit faster
- To ensure appropriate attention is devoted to important areas
• To prepare tax returns
• To detect fraud
Proper planning helps auditors focus resources on areas with higher
risk.
7. Which audit procedure is most associated with physical evidence?
• Reperformance
• Confirmation
- Inspection of tangible assets
• Inquiry
Inspecting tangible assets provides physical evidence of their
existence and condition.
8. Materiality is a concept used in:
SERVICES: A SYSTEMATIC APPROACH, 12TH
EDITION CHAPTERS 1 - 21 COMPLETE
VERSION
1. Which of the following best describes the primary objective of an
audit?
• To detect fraud
• To express an opinion on the financial statements
• To prepare financial statements
• To maintain accounting records
- To express an opinion on the financial statements
Audits are conducted to express an opinion on whether the financial
statements are presented fairly in all material respects.
2. The concept of audit risk includes the risk that:
• An auditor will be sued
• The audit staff is undertrained
,• A material misstatement will not be detected
- The auditor may unknowingly fail to appropriately modify the
opinion on materially misstated financials
Audit risk includes the risk that an auditor may fail to detect material
misstatements and issue an inappropriate opinion.
3. The PCAOB was established by:
• The Internal Revenue Code
• The AICPA
• The SEC
- The Sarbanes-Oxley Act
SOX established the PCAOB to oversee public company audits and
improve audit quality.
4. Which of the following is an attestation service?
• Bookkeeping
• Consulting
• Compilation
- Examination of prospective financial information
Attestation services include reports on subject matter or assertions
made by others, such as forecasts.
5. Independence in fact means:
, • Freedom from control or undue influence
- The auditor's mental attitude of objectivity and impartiality
• Disclosure of relationships with the client
• Appearance of independence
Independence in fact refers to the auditor's actual objectivity and
integrity.
6. What is the purpose of engagement planning?
• To complete the audit faster
- To ensure appropriate attention is devoted to important areas
• To prepare tax returns
• To detect fraud
Proper planning helps auditors focus resources on areas with higher
risk.
7. Which audit procedure is most associated with physical evidence?
• Reperformance
• Confirmation
- Inspection of tangible assets
• Inquiry
Inspecting tangible assets provides physical evidence of their
existence and condition.
8. Materiality is a concept used in:
