AUDITING THE ART AND SCIENCE OF
ASSURANCE UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● Assurance Services
Answer: independent professional services that improve the quality of
information, or its context, for decision makers. Encompasses attest
services and financial statement audits
●● Attest Services
Answer: Services provided by a practitioner engaged to issue a report on
subject matter, or an assertion about subject matter, that is the
responsibility of another party. Encompasses financial statement audits
●● Audit Data Analytics
Answer: Using analysis, modeling, and visualization to discover and
analyze patterns, anomalies, and other information in data in the context
of the audit
●● Audit Evidence
Answer: All the information used by the auditor in arriving at the
conclusions on which the audit opinion is based. Audit evidence includes
,the information contained in the accounting records underlying the
financial statements, as well as other information
●● Audit Risk
Answer: The risk that the auditor expresses an inappropriate audit
opinion when the financial statements are materially misstated
●● Auditing
Answer: A systematic process of 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 communicating the results to interested users
●● Information Asymmetry
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
Answer: The maximum amount by which the auditor believes the
financial statements could be misstated and still not affect the decisions
of users
●● Misstatement
, Answer: A departure from the applicable reporting framework (e.g.,
GAAP) that, if material, causes the financial statements to not be
presented fairly. Misstatements may be classified as fraud (intentional),
other illegal acts such as noncompliance with laws and regulations
(intentional or unintentional), and errors (unintentional)
●● Reasonable Assurance
Answer: The concept that an audit done in accordance with auditing
standards may fail to detect a material misstatement in a client's
financial statements. In an auditing context this term has been defined to
mean a high but not absolute level of assurance
●● Reporting
Answer: The end product of the auditor's work, indicating the auditing
standards followed and expressing an opinion as to whether an entity's
financial statements are fairly presented in accordance with agreed-upon
criteria (e.g., GAAP)
●● Risk of Material Misstatement
Answer: The preaudit risk that the entity's financial statements contain a
material misstatement whether caused by error or fraud
●● Unqualified/unmodified audit report
Answer: A "clean" audit report, indicating the auditor's opinion that a
client's financial statements are fairly presented in accordance with
agreed-upon criteria (e.g., GAAP)
ASSURANCE UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● Assurance Services
Answer: independent professional services that improve the quality of
information, or its context, for decision makers. Encompasses attest
services and financial statement audits
●● Attest Services
Answer: Services provided by a practitioner engaged to issue a report on
subject matter, or an assertion about subject matter, that is the
responsibility of another party. Encompasses financial statement audits
●● Audit Data Analytics
Answer: Using analysis, modeling, and visualization to discover and
analyze patterns, anomalies, and other information in data in the context
of the audit
●● Audit Evidence
Answer: All the information used by the auditor in arriving at the
conclusions on which the audit opinion is based. Audit evidence includes
,the information contained in the accounting records underlying the
financial statements, as well as other information
●● Audit Risk
Answer: The risk that the auditor expresses an inappropriate audit
opinion when the financial statements are materially misstated
●● Auditing
Answer: A systematic process of 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 communicating the results to interested users
●● Information Asymmetry
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
Answer: The maximum amount by which the auditor believes the
financial statements could be misstated and still not affect the decisions
of users
●● Misstatement
, Answer: A departure from the applicable reporting framework (e.g.,
GAAP) that, if material, causes the financial statements to not be
presented fairly. Misstatements may be classified as fraud (intentional),
other illegal acts such as noncompliance with laws and regulations
(intentional or unintentional), and errors (unintentional)
●● Reasonable Assurance
Answer: The concept that an audit done in accordance with auditing
standards may fail to detect a material misstatement in a client's
financial statements. In an auditing context this term has been defined to
mean a high but not absolute level of assurance
●● Reporting
Answer: The end product of the auditor's work, indicating the auditing
standards followed and expressing an opinion as to whether an entity's
financial statements are fairly presented in accordance with agreed-upon
criteria (e.g., GAAP)
●● Risk of Material Misstatement
Answer: The preaudit risk that the entity's financial statements contain a
material misstatement whether caused by error or fraud
●● Unqualified/unmodified audit report
Answer: A "clean" audit report, indicating the auditor's opinion that a
client's financial statements are fairly presented in accordance with
agreed-upon criteria (e.g., GAAP)
