Question 1

A no assurance engagement is of little use as no assurance is given to the client.

Accepted Answer

A) True 
 B)False  False

Question 2

Only current investors (not potential investors) are considered to be users of the financial statements.

Accepted Answer

A) True 
 B)False  True

Question 3

Insurance hypothesis is a means whereby the investor can guarantee the success of their investment.

Accepted Answer

A) True 
 B)False  False

Question 4

Maggie Oh performed an audit of a client that had undergone flooding to its operations in St-Jean Sur Richelieu. The client was insured and was able to keep operating. However, there was material damage to the client's warehouse and Maggie felt it would be appropriate to inform the users of the financial statements of this fact in the audit report. This form of audit report is called:

Accepted Answer

A)  an adverse opinion 
B)  unmodified opinion - emphasis of matter 
C)  modified opinion 
D)  disclaimer of opinion 
A)  an adverse opinion 
B)  unmodified opinion - emphasis of matter 
C)  modified opinion 
D)  disclaimer of opinion

Question 5

Larry Dibitonto is a partner in his firm and runs management consulting, mergers and acquisitions, insolvency, tax, and accounting services. How are these services referred to collectively?

Accepted Answer

A)  audit 
B)  non-assurance services 
C)  reviews 
D)  none of the above 
A)  audit 
B)  non-assurance services 
C)  reviews 
D)  none of the above

Question 6

The expectation gap can be reduced by:

Accepted Answer

A)  auditors performing their duties properly 
B)  enhanced reporting to explain what processes have been followed in arriving at an audit or a review opinion 
C)  assurance providers reporting accurately the level of assurance being provided 
D)  all of the above. 
A)  auditors performing their duties properly 
B)  enhanced reporting to explain what processes have been followed in arriving at an audit or a review opinion 
C)  assurance providers reporting accurately the level of assurance being provided 
D)  all of the above.

Question 7

An auditor can provide a reasonable level of assurance on information other than historical financial information.

Accepted Answer

A) True 
 B)False

Question 8

Describe the three levels of assurance. Name the types of engagements they would come up in and the expression of opinions that would be provided by the assurance provider

Accepted Answer

Level of Assurance
Type of Eng

Question 9

Which of the following is NOT true about Corporate Social Responsibility assurance?

Accepted Answer

A)  reporting is voluntary and is becoming more widespread. 
B)  includes both financial and non-financial information. 
C)  is required to be performed by an auditor. 
D)  disclosures include environmental, employee and social reporting. 
A)  reporting is voluntary and is becoming more widespread. 
B)  includes both financial and non-financial information. 
C)  is required to be performed by an auditor. 
D)  disclosures include environmental, employee and social reporting.

Question 10

In addition to the preparation of financial statements, it is also the responsibility of those charged with governance to:

Accepted Answer

A)  identify the financial reporting framework to be used in the preparation and presentation of their financial statements. 
B)  establish and maintain internal controls that are effective in preventing and detecting material misstatements 
C)  selecting and applying appropriate accounting policies and making reasonable accounting estimates 
D)  all of the above. 
A)  identify the financial reporting framework to be used in the preparation and presentation of their financial statements. 
B)  establish and maintain internal controls that are effective in preventing and detecting material misstatements 
C)  selecting and applying appropriate accounting policies and making reasonable accounting estimates 
D)  all of the above.

Question 11

Outline the reasons for the demand for assurance services.

Accepted Answer

Remoteness - As most users do not have a

Question 12

Agency theory can be described as the theory of:

Accepted Answer

A)  hiring an agency to review the work of the management, in this case it is the auditor. 
B)  when the finance function is outsourced to an outside party, and the auditor is required to audit the outside party's work. 
C)  the relationship between the owner and the management of the business when the owner is not the manager of the business. 
D)  none of the above. 
A)  hiring an agency to review the work of the management, in this case it is the auditor. 
B)  when the finance function is outsourced to an outside party, and the auditor is required to audit the outside party's work. 
C)  the relationship between the owner and the management of the business when the owner is not the manager of the business. 
D)  none of the above.

Question 13

The expectation gap is caused by:

Accepted Answer

A)  realistic auditor expectations 
B)  unrealistic user expectations 
C)  realistic user expectations 
D)  unrealistic auditor expectations 
A)  realistic auditor expectations 
B)  unrealistic user expectations 
C)  realistic user expectations 
D)  unrealistic auditor expectations

Question 14

Theodore Heinrich prepared a set of financial statements based on information provided to him. He checked mathematical accuracy of the data, and the client complimented him on the reasonable cost of the work he performed. Theodore performed

Accepted Answer

A)  a compilation 
B)  a review 
C)  an audit 
D)  none of the above 
A)  a compilation 
B)  a review 
C)  an audit 
D)  none of the above

Question 15

Matt Fuller reports to the board and evaluates how the company can improve risk management practices, internal control procedures, and certain governance issues. Who is he?

Accepted Answer

A)  President 
B)  Controller 
C)  Treasurer 
D)  Internal Auditor 
A)  President 
B)  Controller 
C)  Treasurer 
D)  Internal Auditor

Question 16

Mary Logan was careful to undertake her audits in a most responsible manner. Her audit manager complimented her on her diligence and how well she documented her work at the different stages of the audit process. Which element of responsibility did she display?

Accepted Answer

A)  due care 
B)  professional judgment 
C)  professional scepticism 
D)  none of these 
A)  due care 
B)  professional judgment 
C)  professional scepticism 
D)  none of these

Question 17

Which of the following would be an example of a reasonable assurance engagement?

Accepted Answer

A)  the review of annual financial statements. 
B)  the audit of annual financial statements. 
C)  the reporting of procedures performed by the auditor as agreed by the client. 
D)  all of the above. 
A)  the review of annual financial statements. 
B)  the audit of annual financial statements. 
C)  the reporting of procedures performed by the auditor as agreed by the client. 
D)  all of the above.

Question 18

A compliance audit involves gathering evidence to ascertain whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform

Accepted Answer

A) True 
 B)False

Question 19

All modified audit reports are qualified audit opinions.

Accepted Answer

A) True 
 B)False

Question 20

An example of an unmodified audit opinion is:

Accepted Answer

A)  qualified audit opinion 
B)  adverse audit opinion 
C)  unqualified audit opinion with an emphasis of matter. 
D)  none of the above. 
A)  qualified audit opinion 
B)  adverse audit opinion 
C)  unqualified audit opinion with an emphasis of matter. 
D)  none of the above.

A no assurance engagement is of little use as no assurance is given to the client.

Only current investors (not potential investors) are considered to be users of the financial statements.

Insurance hypothesis is a means whereby the investor can guarantee the success of their investment.

Larry Dibitonto is a partner in his firm and runs management consulting, mergers and acquisitions, insolvency, tax, and accounting services. How are these services referred to collectively?

The expectation gap can be reduced by:

An auditor can provide a reasonable level of assurance on information other than historical financial information.

Describe the three levels of assurance. Name the types of engagements they would come up in and the expression of opinions that would be provided by the assurance provider

Which of the following is NOT true about Corporate Social Responsibility assurance?

In addition to the preparation of financial statements, it is also the responsibility of those charged with governance to:

Outline the reasons for the demand for assurance services.

Agency theory can be described as the theory of:

The expectation gap is caused by:

Theodore Heinrich prepared a set of financial statements based on information provided to him. He checked mathematical accuracy of the data, and the client complimented him on the reasonable cost of the work he performed. Theodore performed

Matt Fuller reports to the board and evaluates how the company can improve risk management practices, internal control procedures, and certain governance issues. Who is he?

Mary Logan was careful to undertake her audits in a most responsible manner. Her audit manager complimented her on her diligence and how well she documented her work at the different stages of the audit process. Which element of responsibility did she display?

Which of the following would be an example of a reasonable assurance engagement?

A compliance audit involves gathering evidence to ascertain whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform

All modified audit reports are qualified audit opinions.

An example of an unmodified audit opinion is:

Ethics, Legal Liability and Client Acceptance

Risk Assessment I

Risk Assessment II

Audit Evidence

Gaining an Understanding of the Clients System of Internal Controls

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audit Testing of Controls

Execution of the Audit Performing Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters

Exam 1: Introduction and Overview of Audit and Assurance

A no assurance engagement is of little use as no assurance is given to the client.

Only current investors (not potential investors) are considered to be users of the financial statements.

Insurance hypothesis is a means whereby the investor can guarantee the success of their investment.

Larry Dibitonto is a partner in his firm and runs management consulting, mergers and acquisitions, insolvency, tax, and accounting services. How are these services referred to collectively?

The expectation gap can be reduced by:

An auditor can provide a reasonable level of assurance on information other than historical financial information.

Describe the three levels of assurance. Name the types of engagements they would come up in and the expression of opinions that would be provided by the assurance provider

Which of the following is NOT true about Corporate Social Responsibility assurance?

In addition to the preparation of financial statements, it is also the responsibility of those charged with governance to:

Outline the reasons for the demand for assurance services.

Agency theory can be described as the theory of:

The expectation gap is caused by:

Theodore Heinrich prepared a set of financial statements based on information provided to him. He checked mathematical accuracy of the data, and the client complimented him on the reasonable cost of the work he performed. Theodore performed

Matt Fuller reports to the board and evaluates how the company can improve risk management practices, internal control procedures, and certain governance issues. Who is he?

Mary Logan was careful to undertake her audits in a most responsible manner. Her audit manager complimented her on her diligence and how well she documented her work at the different stages of the audit process. Which element of responsibility did she display?

Which of the following would be an example of a reasonable assurance engagement?

A compliance audit involves gathering evidence to ascertain whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform

All modified audit reports are qualified audit opinions.

An example of an unmodified audit opinion is:

Ethics, Legal Liability and Client Acceptance

Risk Assessment I

Risk Assessment II

Audit Evidence

Gaining an Understanding of the Clients System of Internal Controls

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audit Testing of Controls

Execution of the Audit Performing Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters