Solution Manual for Auditing & Assurance Services A Systematic Approach 12th Edition by William Messier Jr, Steven Glover, Douglas Prawit Fully Covered A+ Newest Version

Test Bank Auditing & Assurance Services 4th Canadian Edition William Messier
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,Chapter 01 4ce - Messier
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1) Auditing focuses on rules, techniques, and computations required to prepare and analyze
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gfinancial information.
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⊚ true
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⊚ false
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2) Decision makers demand reliable information that is provided by accountants.
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⊚ true
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⊚ false
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3) Information asymmetry seldom occurs.
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⊚ true
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⊚ false
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4) Conflicts of interest often occur between absentee owners and managers.
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⊚ true
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⊚ false
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5) Auditing services and attest services are the same.
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⊚ true
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⊚ false
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6) Auditing is a type of attest service.
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⊚ true
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⊚ false
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7) Testing all transactions that occurred during the period is cost prohibitive.
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⊚ true
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⊚ false
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,8) Why do auditors generally use a sampling approach to evidence gathering?
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A) Auditors are experts and do not need to look at much to know whether the financial
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statements are correct or not.
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B) Auditors must balance the cost of the audit with the need for precision.
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C) Auditors must limit their exposure to their auditee to maintain independence.
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D) The auditor's relationship with the auditee is generally adversarial, so the auditor will
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not have access to all of the financial information of the company.
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9) Which of the following statements best describes a relationship between sample size and
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gother elements of auditing?
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A) If materiality increases, so will the sample size.
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B) If the desired level of assurance increases, sample sizes can be smaller.
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C) If materiality decreases, sample size will need to increase.
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D) There is no relationship between sample size and materiality or the desired level of
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assurance. g




10) Which of the following statements about the study of auditing is NOT true?
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A) The study of auditing can be valuable to future accountants and business decision
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makers whether or not they plan to become auditors.
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B) The study of auditing focuses on learning the analytical and logical skills necessary to
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evaluate the relevance and reliability of information.
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C) The study of auditing focuses on learning the rules, techniques, and computations
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required to analyze financial statements.
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D) The study of auditing begins with the understanding of a coherent logical framework
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and techniques useful for gathering and analyzing evidence about others' assertions.
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11) The basic definition of auditing states it is a process to:
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A) detect fraud. g


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. g g g g g g


D) assure the consistent application of correct accounting procedures.
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, 12) Assurance services may improve all of the following except:
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A) relevance.
B) credibility.
C) periodicity.
D) reliability.



13) Evidence is most reliable if it:
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A) signals the true state of a management assertion.
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B) applies to the period being audited. g g g g g


C) relates to the audit assertion being tested.
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D) is sufficient to justify a conclusion.
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14) Which of the following best describes the concept of audit risk?
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A) The risk of the auditor being sued because of association with an auditee.
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B) The risk that the auditor will provide a "clean" opinion on financial statements that
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are, in fact, materially misstated.
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C) The overall risk that a material misstatement exists in the financial statements.
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D) The risk that auditors use audit procedures that are inappropriate.
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15) An auditor who accepts an audit engagement and does not possess expertise with respect to
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gthe business entity's industry, should:
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A) engage financial experts familiar with the nature of the business entity.
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B) obtain a knowledge of matters that relate to the nature of the entity's business.
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C) refer a substantial portion of the audit to another CPA, who will act as the principal
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auditor.
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D) first inform management that an unqualified opinion cannot be issued.
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16) During the client acceptance/continuance phase of an audit, a CPA most likely would:
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A) identify specific internal control activities that are likely to prevent fraud.
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B) evaluate the reasonableness of the company's accounting estimates.
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C) evaluate the integrity of management. g g g g


D) inquire of the company's attorney as to whether any unrecorded claims are probable
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or asserted.
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