TEST BANK For Auditing & Assurance Services A Systematic Approach, 11th Edition & 12th Edi.pdf

TEST BANK For Auditing & Assurance Services:
A Systematic Approach, 12th Edition
Chapters 1 - 21 Complete

Chapter 1: An Introduction to Assurance and Financial Statement Auditing
Chapter 2: The Financial Statement Auditing Environment
Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
Chapter 4: Risk Assessment
Chapter 5: Evidence and Documentation
Chapter 6: Internal Control in a Financial Statement Audit
Chapter 7: Auditing Internal Control over Financial Reporting
Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
Chapter 10: Auditing the Revenue Process
Chapter 11: Auditing the Purchasing Process
Chapter 12: Auditing the Human Resource Management Process
Chapter 13: Auditing the Inventory Management Process
Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets,
and Property, Plant, and Equipment
Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’
Equity, and Income Statement Accounts
Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
Chapter 17: Completing the Audit Engagement
Chapter 18: Reports on Audited Financial Statements
Chapter 19: Professional Conduct, Independence, and Quality Management
Chapter 20: Legal Liability
Chapter 21: Assurance, Attestation, and Internal Auditing Services

Auditing & Assurance Services: A Systematic Approach, 12e (Messier)
Chapter 1 An Introduction to Assurance and Financial Statement Auditing
1) Auditing focuses on rules, techniques, and computations required to prepare and
analyze financial information.
ANSWER: FALSE
Difficulty: 1 Easy
Topic: The Importance for Studying Auditing
Learning Objective: 01-01 Understand why studying auditing can be valuable to you
whether or not you plan to become an auditor, and why it is different from studying
accounting.
Bloom's: Remember
AACSB: Communication
AICPA: BB Legal; FN Decision Making
2) Decision makers demand reliable information that is provided by accountants.
ANSWER: TRUE
Difficulty: 1 Easy
Topic: The Demand for Auditing and Assurance
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
desired characteristics of auditors and audit services through an analogy to a house
inspector and a house inspection service.
Bloom's: Understand
AICPA: FN Decision Making; BB Industry
3) Information asymmetry seldom occurs.
ANSWER: FALSE
Difficulty: 2 Medium
Bloom's: Apply
AICPA: BB Industry; FN Reporting

4) Conflicts of interest often occur between absentee owners and managers.
ANSWER: TRUE
Bloom's: Apply
5) Auditing services and attestation services are the same.
ANSWER: FALSE
Difficulty: 1 Easy
Topic: Auditing, Attest, and Assurance Services Defined
Learning Objective: 01-03 Understand the relationships among auditing, attestation,
and assurance services.
Bloom's: Understand
6) Auditing is a type of attest service.
ANSWER: TRUE
Difficulty: 1 Easy
and assurance services.; 01-04 Know the basic definition of a financial statement
audit.
Bloom's: Understand
7) Testing all transactions that occurred during the period is cost prohibitive.
ANSWER: TRUE
Topic: The Audit Process
Learning Objective: 01-06 Be able to explain why on most audit engagements an auditor
tests only a sample of transactions that occurred.
Bloom's: Apply
AICPA: FN Decision Making; BB Critical Thinking

8) Why do auditors generally use a sampling approach to evidence gathering?
A) Auditors are experts and do not need to look at much to know whether the
financial statements are correct or not.
B) Auditors must balance the cost of the audit with the need for precision.
C) Auditors must limit their exposure to their auditee to maintain independence.
D) The auditor's relationship with the auditee is generally adversarial, so the auditor
will not have access to all of the financial information of the company.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Understand
9) Which of the following statements best describes a relationship between sample size and
other elements of auditing?
A) If materiality increases, so will the sample size.
B) If the desired level of assurance increases, sample sizes can be smaller.
C) If materiality decreases, sample size will need to increase.
D) There is no relationship between sample size and materiality or the desired level of
assurance.
ANSWER: C
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Risk Analysis

10) Which of the following statements about the study of auditing is NOT true?
A) The study of auditing can be valuable to future accountants and business decision
makers whether or not they plan to become auditors.
B) The study of auditing focuses on learning the analytical and logical skills
necessary to evaluate the relevance and reliability of information.
C) The study of auditing focuses on learning the rules, techniques, and computations
required to analyze financial statements.
D) The study of auditing begins with the understanding of a coherent logical
framework and techniques useful for gathering and analyzing evidence about others'
assertions.
ANSWER: C
Topic: The Importance for Studying Auditing
Learning Objective: 01-01 Understand why studying auditing can be valuable to you
whether or not you plan to become an auditor, and why it is different from studying
accounting.
Bloom's: Analyze
11) The basic definition of auditing states it is a process to:
A) detect fraud.
B) examine individual transactions so that the auditor may certify as to their validity.
C) objectively obtain and evaluate evidence regarding assertions.
D) assure the consistent application of correct accounting procedures.
ANSWER: C
Difficulty: 1 Easy
audit.
Bloom's: Remember
AICPA: FN Reporting; BB Critical Thinking

12) Assurance services may improve all of the following except:
A) relevance.
B) credibility.
C) periodicity.
D) reliability.
ANSWER: C
Difficulty: 1 Easy
Bloom's: Remember
13) Evidence is reliable if it:
A) signals the true state of a management assertion.
B) applies to the period being audited.
C) relates to the audit assertion being tested.
D) is sufficient to justify a conclusion.
ANSWER: A
Difficulty: 1 Easy
Topic: Fundamental Concepts in Conducting a Financial Statement Audit
Learning Objective: 01-05 Understand three fundamental concepts that underlie
financial statement auditing.
Bloom's: Understand
AACSB: AnalyticalThinking
AICPA: BB Critical Thinking; FN Measurement
14) Which of the following best describes the concept of audit risk?
A) The risk of the auditor being sued because of association with an auditee.
B) The risk that the auditor will provide a "clean" opinion on financial statements that
are, in fact, materially misstated.
C) The overall risk that a material misstatement exists in the financial statements.
D) The risk that auditors use audit procedures that are inappropriate.
ANSWER: B
Bloom's: Understand

15) An auditor who accepts an audit engagement and does not possess expertise with
respect to the business entity's industry, should:
A) engage financial experts familiar with the nature of the business entity.
B) obtain a knowledge of matters that relate to the nature of the entity's business.
C) refer a substantial portion of the audit to another CPA, who will act as the principal
auditor.
D) first inform management that an unqualified opinion cannot be issued.
ANSWER: B
Topic: The Audit Process; Auditing Demands Logic, Reasoning, Resourcefulness
Learning Objective: 01-07 Be able to describe the basic financial statement auditing
process and the phases in which an audit is carried out.; 01-10 Understand why auditing
demands logic, reasoning, and resourcefulness.
Bloom's: Apply
AACSB: Ethics
16) For publicly-held companies, which of the following is integrated into the audit of
financial statements?
A) Budgetary information audit.
B) The audit of internal controls.
C) Audit of management forecasts.
D) Audit of interim financial statements.
ANSWER: B
Difficulty: 1 Easy
process and the phases in which an audit is carried out.
Bloom's: Remember
AICPA: BB Legal; FN Reporting

17) During the first phase of an audit, a CPA most likely would:
A) identify specific internal control activities that are likely to prevent fraud.
B) evaluate the reasonableness of the company's accounting estimates.
C) evaluate the integrity of management.
D) inquire of the company's attorney as to whether any unrecorded claims are
probable or asserted.
ANSWER: C
Bloom's: Apply
AICPA: FN Decision Making; BB Resource Management
18) In the context of agency theory, information asymmetry refers to the idea that:
A) information can vary in its reliability.
B) information can vary in its relevance.
C) management has more information about the entity's true financial position than
do the absentee owners (i.e., stockholders).
D) management likely will not act in the best interests of the absentee owners.
ANSWER: C
Difficulty: 1 Easy
Bloom's: Understand

19) Which of the following best describes why an independent auditor is asked to
express an opinion on the fair presentation of financial statements?
A) It is difficult to prepare financial statements that fairly present a company's financial
position and changes in cash flows without the expertise of an independent auditor.
B) It is management's responsibility to seek available independent aid in the appraisal
of the financial information shown in its financial statements.
C) The opinion of an independent party is needed because a company is not likely
to be considered objective with respect to its own financial statements.
D) It is a customary courtesy that all stockholders of a company receive an independent
report on management's stewardship in managing the affairs of the business.
ANSWER: C
Bloom's: Apply
AACSB: Reflective Thinking
20) Which of the following best describes the fundamental, underlying reason for why
there is demand for an independent auditor to report on financial statements?
A) A management fraud may exist and it is more likely to be detected by auditors if
they are independent.
B) Different interests may exist between the company preparing the statements and the
parties using the statements.
C) A misstatement of account balances may exist and it is the independent
auditor's responsibility to ensure that financial statements are not misstated.
D) A poorly designed internal control system may be in place.
ANSWER: B
Bloom's: Analyze
AACSB: Reflective Thinking

21) Which of the following best describes why publicly-traded corporations follow the
practice of having the external auditor appointed by the board of directors or elected by
the stockholders?
A) To promote an adversarial relationship between the auditor and the
corporation's management.
B) To enhance auditor independence from the management of the corporation.
C) To encourage a policy of rotation of the independent auditors.
D) To give management more leverage over the auditor's decisions.
ANSWER: B
Bloom's: Analyze
AACSB: Ethics
AICPA: BB Legal; FN Risk Analysis
22) Auditing is defined as a "systematic process of objectively obtaining and evaluating
evidence regarding assertions..." What is meant by "systematic process"?
A) All audits involve obtaining the same evidence.
B) All audits involve evaluating evidence in the same manner.
C) There should be a well-planned approach for obtaining and evaluating evidence.
D) All assertions are equally important for all audits.
ANSWER: C
audit.
Bloom's: Understand

23) Which of the following would best be described as an assurance service?
A) Preparing a report representing a client's position during an IRS audit.
B) Working with a company to develop a more efficient method of processing
financial transactions.
C) Offering an opinion concerning the accuracy of statements made on an entity's
website relating to its online privacy policies.
D) Assisting a company in identifying potential sources of capital for potential
acquisitions.
ANSWER: C
Bloom's: Understand
24) Which of the following statements is not true with respect to assurance, attest, and
audit services?
A) These services are applied only to financial statements and financial statement
accounts.
B) These services all involve obtaining and evaluating evidence.
C) These services all involve determining the correspondence of some information to a
set of criteria.
D) These services all involve issuing a report.
ANSWER: A
Bloom's: Apply

25) Auditors are most likely to use the most rigorous audit procedures to examine:
A) routine transactions.
B) management assertions that are deemed to be of low risk.
C) only the rights and obligations assertion.
D) management assertions that are deemed to be of high risk.
ANSWER: D
Learning Objective: 01-05 Understand three fundamental concepts that underlie financial
statement auditing.
Bloom's: Apply
26) When obtaining an understanding of the entity and its environment, the auditor should
obtain an understanding of internal controls primarily to:
A) identify areas of relatively high risk of misstatement and plan the audit accordingly.
B) provide suggestions for improvement to the company.
C) serve as a basis for setting audit risk and materiality.
D) decide whether to perform an audit for the company.
ANSWER: A
Topic: The Audit Process; Fundamental Concepts in Conducting a Financial Statement
Audit Learning Objective: 01-05 Understand three fundamental concepts that underlie
financial statement auditing.; 01-07 Be able to describe the basic financial statement
auditing process and the phases in which an audit is carried out.
Bloom's: Understand
AICPA: BB Industry; FN Risk Analysis

27) Which one of the following statements best describes the concept of materiality?
A) Materiality is determined by reference to specific quantitative guidelines established
by the AICPA.
B) Materiality depends only on the dollar amount of an item relative to other items
in the financial statements.
C) Materiality depends on the nature of an item but not on the dollar amount of the item.
D) Materiality is largely a matter of professional judgment.
ANSWER: D
Bloom's: Understand
28) Before accepting an engagement to audit a new entity, an auditor is required to:
A) make inquiries of the predecessor auditor.
B) tell the company whether or not the auditor is willing to issue a "clean" opinion.
C) prepare a memorandum setting forth the staffing requirements and
documenting the preliminary audit plan.
D) become a member of the entity's board of directors.
ANSWER: A
Bloom's: Remember

29) An investor is reading the financial statements of the Stankey Corporation and
observes that the statements are accompanied by an auditor's unqualified report. From
this, the investor may conclude that:
A) any disputes over significant accounting issues have been settled to the auditor's
satisfaction.
B) the auditor is satisfied that Stankey will be highly profitable in the future.
C) the auditor is certain that Stankey's financial statements have been prepared
accurately and that all account balances are precisely correct.
D) the auditor has determined that Stankey's management is not qualified to lead the
company.
ANSWER: A
process and the phases in which an audit is carried out.; 01-08 Know what an audit report
is and understand the nature of an unqualified report.
Bloom's: Understand
30) Preliminary engagement activities include:
A) evaluating internal controls.
B) assessing audit risk at the account balance level.
C) setting materiality.
D) performing background checks on top management.
ANSWER: D
Bloom's: Remember

31) The auditor's report is generally addressed to the:
A) chief operating officer.
B) securities and exchange commission.
C) stockholders of the company.
D) chief financial officer.
ANSWER: C
Difficulty: 1 Easy
Learning Objective: 01-08 Know what an audit report is and understand the nature of
an unqualified report.
Bloom's: Remember
32) An auditor would issue an adverse opinion if:
A) the auditor encounters adverse attitudes toward the auditor on the part of
company management.
B) a qualified opinion cannot be given because the auditor is not qualified to do so.
C) an immaterial misstatement is present.
D) the statements taken as a whole do not fairly present the financial condition and
results of operations of the company.
ANSWER: D
Bloom's: Apply

33) Which of the following is true with respect to the auditor's report?
A) The report indicates that the company's financial statements were audited in
accordance with generally accepted accounting standards.
B) The report indicates that the company's financial statements were audited in
accordance with applicable auditing standards.
C) The report indicates that the company's financial statements were audited in
accordance with the auditor's best judgment.
D) The report indicates that the company's financial statements were audited in
accordance with statements issued by the FASB.
ANSWER: B
Difficulty: 1 Easy
Learning Objective: 01-08 Know what an audit report is and understand the nature of an
unqualified report.
Bloom's: Remember
34) Which of the following is not a concept that is included in the scope paragraph
of the auditor's report?
A) The conformance of the financial statements with generally accepted accounting
principles.
B) The audit was conducted in accordance with applicable auditing standards.
C) The audit was planned and performed to obtain reasonable, rather than absolute,
assurance.
D) An audit involves examining items on a test (i.e., sampling) basis.
ANSWER: A
Learning Objective: 01-08 Know what an audit report is and understand the nature of an
unqualified report.
Bloom's: Remember

35) Which of the following is not a benefit of emerging audit technologies?
A) Automate much of the more tedious work that auditors perform.
B) The potential to dramatically enhance the effectiveness and the value of the external
audit.
C) Leave more time for auditors to better understand the businesses they are
auditing the underlying risks related to financial reporting.
D) Remove the challenge of junior auditor work and make that work less interesting.
ANSWER: D
Difficulty: 1 Easy
Topic: Audit Technology
Learning Objective: 01-09 Understand that the way audits are done is changing in exciting
ways due to the application of technology, and data analytics in particular.
Bloom's: Remember
AICPA: BB Critical Thinking; FN Decision Making
36) Information Risk is defined as:
A) the risk that information circulated by a company's management will be false or
misleading.
B) the risk that an assertion contains a misstatement, before considering internal controls.
C) the risk that auditor is has followed appropriate auditing standards and issued a
standard unqualified opinion, and the financial statements contain a material
misstatement.
D) the risk that the internal controls will not prevent or detect a misstatement in the
financial statements.
ANSWER: A
Topic: Audit Demand
Bloom's: Remember
AICPA: BB Critical Thinking; FN Decision Making

37) On a high level, the accounting processes of a business consist of internal
controls, individual transactions, and account balances.
Required:
A. Describe the relationship between internal controls, individual transactions, and
account balances.
B. Discuss how evidence regarding each of these three areas can help an auditor determine
if the financial statements are fairly stated.
ANSWER: A.
A company implements internal controls as a safeguard to ensure appropriate capturing
and recording of individual transactions, which are then collected into ending account
balances. Ending account balances are then used to prepare the financial statements. The
auditor expresses an opinion on the financial statements, which are made up of ending
account balances and disclosures.
B.
The auditor can obtain evidence from all three areas of the accounting process. For
instance, an auditor can directly test the account balance (e.g., by examining a bank
statement reconciliation). This evidence is usually the highest-quality but costliest
evidence. Alternatively, the auditor can obtain indirect information by testing the
individual transactions that make up an account balance. If transactions are handled
properly, this provides indirect evidence that the ending balances are more likely to be
fairly stated. The least direct method of obtaining evidence is to evaluate and test the
company's internal controls, which are implemented to ensure that transactions are
handled properly. If a company's system of internal control is effective, transactions are
more likely to be handled properly, and thus the ending balances making up a set of
financial statements are more likely to be fairly stated. Auditors usually collect evidence
relating to all three areas: internal control, transactions, and ending balances.
Audit Learning Objective: 01-05 Understand three fundamental concepts that underlie
financial statement auditing.; 01-07 Be able to describe the basic financial statement
auditing process and the phases in which an audit is carried out.
Bloom's: Apply

38) Sally Thompson's company, Sally's Shoes, is a successful shoe retail business with one
store. Sally would like to expand to two locations, but the bank has asked for an
independent audit before it will provide financing. Sally hires her brother-in-law, George
Thompson, to perform the audit. George has experience in auditing non-profit
organizations and he decides to perform the audit the same way as his other audits. After
completing all the steps of the audit process, George issues an unqualified opinion
indicating that he is certain that the company's financial statements contain no
misstatements. Comment on any potential problems with George's audit of Sally's Shoes.
ANSWER:
Independence: Because George is Sally's brother-in-law, he is not considered independent.
This presents a problem, both in the perceived value of the audit and in the actual
objectivity of the audit. That is, George may be intentionally or unintentionally biased
towards Sally's Shoes rather than its creditors. This would also violate professional
standards.
Competence: George's competence in this audit is also questionable. While George has
experience in auditing, he has no experience or knowledge of retail stores or even for-
profit organizations. To successfully perform an audit, George would need to obtain an
understanding of the industry. One audit should not be performed exactly the same as
another—rather, audits should be tailored to the specific circumstances and risks.
Other: An unqualified audit opinion provides only reasonable assurance, not certainty or
"absolute" assurance. It also provides assurance only with respect to the fairness of the
financial statements "in all material respects;" it does not provide assurance with respect
to all misstatements, only material ones.
Difficulty: 3 Hard
Topic: The Demand for Auditing and Assurance; The Audit Process
inspector and a house inspection service.; 01-07 Be able to describe the basic financial
statement auditing process and the phases in which an audit is carried out.
Bloom's: Analyze
AACSB: Ethics
AICPA: BB Legal; FN Risk Analysis

39) Explain the relationship between audit, attest and assurance services.
ANSWER: All three services entail the evaluation of evidence to determine the
correspondence of some information to a set of criteria and the issuance of a report to
indicate the degree of correspondence.
Assurance services are independent professional services that improve the quality of
information or its context, for decision makers. Note that assurance services cover both
nonfinancial and financial information. Assurance services can capture information,
improve its quality, and enhance its usefulness for decision makers. The extended reach of
this definition allows professionals to report not only on the reliability and credibility of
information but also on the relevance and timeliness of that information.
Attestation is a type of assurance. Attest services occur when a practitioner is engaged to
issue or does issue a report on subject matter or an assertion about subject matter that is
the responsibility of another party. The practitioner is able to add reliability and credibility
to information beyond traditional financial information. Examples of attest services include
financial forecasts and reports on internal control.
Auditing is a specialized form of an attest service. Auditing is a systematic process of (1)
objectively maintaining and evaluating evidence regarding assertions about economic
actions and events to ascertain the degree of correspondence between those assertions
and established criteria and (2) communicating results to interested users. Examples of
audit services include compliance auditing and audits of financial statements.
Learning Objective: 01-03 Understand the relationships among auditing,
attestation, and assurance services.
Bloom's: Understand

40) Define "information asymmetry" and discuss it in the context of the financial
markets. Include in your discussion how information asymmetry is reduced.
ANSWER: In the context of financial markets, information asymmetry is the concept that
the company's management generally has more information about the true financial
position and results of operations of the entity than the absentee owner does. While
management of a public company works as an agent for the stockholders, a conflict of
interest is apparent because both sides seek to maximize their self-interest. This leads to a
risk that the manager will not always act in the best interest of the owner. Therefore, the
owners attempt to protect themselves through monitoring. Audits provide reasonable
assurance that the information presented by management is fairly stated. The owners are
attempting to reduce information asymmetry by seeking out reliable company
information.
Bloom's: Apply

41) The textbook presented the concept of auditing through an analogy that involved
buying a house and hiring a house inspector. Name three desirable qualities of a house
inspector or an auditor and discuss how those qualities apply to an auditor and why those
qualities are important for an auditor to possess.
ANSWER: A house inspector should be competent, which means he should possess the
required training, expertise, and experience to evaluate the property for sale. An auditor
should also be competent. An auditor must know the acceptable methods to perform an
audit and report an opinion. Furthermore, the auditor should have or obtain knowledge of
the specific industry involved in the audit so she can appropriately adjust the timing,
nature, and extent of auditing procedures.
A house inspector should be objective. He should have no reason to side with the seller; he
is independent of the seller's influence. In the same way, an auditor should be independent
of management's influence. Financial statement audits differ from house inspections in that
auditing fees are paid for by the seller instead of the buyer. Because of this, an auditor
needs to maintain independence in fact and appearance to decrease bias towards the
company's management and garner public confidence for the findings.
A house inspector should be honest; he should conduct himself with integrity and share
all findings with the buyer. If an auditor discovers a material misstatement, she is
required to report the findings to management. If nothing is done to rectify the situation
and the auditor feels the financial statements are not fairly presented, she cannot issue
A house inspector should be skeptical. He will not simply take the seller's assertions at
face value. He will conduct his own analysis and testing. An auditor, in comparison,
should always exercise professional skepticism. An auditor gathers her own evidence to
determine the validity of management's assertions.
A house inspector should be responsible and/or liable. He should stand behind his
assessment with a guarantee and/or be subject to litigation if he fails to act with due care.
An auditor should always act with due care. When a firm issues a report, the report is
signed with the firm's name to signify the firm's responsibility for performing the audit.
Bloom's: Apply
AICPA: FN Decision Making; BB Marketing

42) Discuss an overview of the financial statement audit process using the terms
"assertion," "evidence," and "report."
ANSWER: The auditor gathers evidence about the business transactions that have
occurred (economic activity and events) and about management (the preparer of the
statements). The auditor uses this evidence to compare the assertions contained in the
financial statements to the criteria chosen by the user. The auditor's report communicates
to the user the degree of correspondence between the assertions and the criteria.
Bloom's: Understand
43) You are a new employee at the accounting firm Murray & Murray, CPAs. Before you
are assigned to your first audit, your supervisor tests your knowledge and asks you to
explain the term "scope" in the context of a financial statement audit.
Required:
A. Provide a definition of scope.
B. Describe what influences an auditor's determination of scope.
ANSWER: A.
The scope of an audit is the type and amount of audit work to be performed.
B.
The auditor's assessments of risk and materiality influence the scope of the audit. For
instance, if an auditor sets a lower materiality amount or would like to substantially
reduce audit risk, the scope of the audit would be increased. In establishing the scope of
an audit, the auditor must make decisions about the nature, extent, and timing of evidence
to be gathered in order to evaluate management's assertions.
Difficulty: 1 Easy
Bloom's: Remember

44) Why must an auditor assess materiality?
ANSWER: An auditor must assess materiality because to find all misstatements would not
be cost- efficient, or even feasible. To search for all misstatements, the auditor would need
to examine every transaction. In addition, relatively minor misstatements may not matter
to users. For this reason, when planning and performing an audit the auditor focuses on
misstatements that would affect the users' decisions (i.e., material misstatements).
Audit Learning Objective: 01-06 Be able to explain why on most audit engagements an
auditor tests only a sample of transactions that occurred.; 01-05 Understand three
fundamental concepts that underlie financial statement auditing.
Bloom's: Apply
45) You are a new staff auditor and you are auditing a company's inventory account.
Briefly describe one way you might obtain direct evidence and one way you might
obtain indirect evidence that the inventory account balance is fairly stated.
ANSWER: To obtain direct evidence, an auditor might physically examine and count the
items included in the ending balance of the inventory account. To obtain indirect evidence,
an auditor might examine invoices from suppliers relating to purchases of inventory or test
whether the internal controls over the inventory process were working properly.
Difficulty: 3 Hard
Learning Objective: 01-05 Understand three fundamental concepts that underlie financial
statement auditing.
Bloom's: Apply

46) Name and discuss the seven phases of the audit process.
ANSWER:
1. Client acceptance/continuance: To minimize the likelihood that an auditor will be
associated with companies who lack integrity, prospective auditors are required to
confer with the predecessor auditor and frequently conduct background checks on top
management.
2. Preliminary engagement activities: Preliminary engagement activities include (1)
determining the audit engagement team requirements; (2) ensuring the independence of
the audit team and audit firm; and (3) establishing an understanding with management
regarding the services to be performed and the other terms of the engagement.
3. Plan the audit: The audit team must make a preliminary assessment of materiality and
relevant risks. With those determinations, the audit team can assess risk relating to the
likelihood of material misstatements in the financial statements. Based on these
assessments, the auditor then prepares a written audit plan that sets forth, in reasonable
detail, the nature, extent, and timing of the audit work.
4. Consider and audit internal control: The auditor gains an understanding of internal
control to determine its effectiveness at achieving reliability of financial reporting.
5. Audit business processes and related accounts: The auditor determines and performs
individual audit procedures directed toward specific assertions in the accounts that are
likely to be misstated.
6. Complete the audit: The auditor evaluates the sufficiency of the evidence gathered,
assesses the possibility of contingent liabilities, and searches for any events subsequent
to the balance sheet date that may impact the financial statements.
7. Evaluate results and issue audit report: The auditor reaches a conclusion as to whether
or not the financial statements are fairly stated. If the uncorrected misstatements
incorporated into the financial statements do not cause the statements to be materially
misstated, the auditor issues an unqualified report.
Bloom's: Remember

47) A standard, unqualified auditor's report for a public company contains three sections.
Provide a brief (one or two sentences) description for each section.
ANSWER: The first section, Opinion on the Financial Statements, indicates the name of
the company being audited, the financial statements covered by the report, and the
auditor's opinion concerning the fairness of financial statements. The second section,
Basis for Opinion, communicates to the users, in very general terms, what an audit entails
and how the audit was conducted (in accordance with the PCAOB auditing standards).
The third section, Critical Audit Matters, identifies matters arising from the audit that
involve especially challenging, subjective, or complex auditor judgment, and how the
auditor responded to those matters.
Difficulty: 1 Easy
Bloom's: Remember
48) Explain the relationship between sample size, materiality, and desired level of assurance.
ANSWER: The size of a sample is influenced by the materiality and the desired level of
assurance for the account or assertion being examined. There is an inverse relationship
between sample size and materiality (i.e., if materiality increases then sample size
decreases) and a direct relationship between sample size and the desired level of
assurance (i.e., if the desired level of assurance increases then sample size increases).
Bloom's: Understand

49) Other than a financial statement audit, what are two other assurance services? How do
these assurance services differ from a financial statement audit?
ANSWER: Services like Consumer Reports, Carfax, and Angie's List are all examples of
Assurance Services. Assurance services are defined as independent profession services
that improve the quality of information, or its context for decision makers. Consumer
Reports sells to consumers information about products and services based on Consumer
Reports' scientific testing. Carfax generates reports on used vehicles' maintenance history
and vehicle damage history for used car purchasers. Angie's List provides user reviews of
home project service providers. The user reviews are verified by Angie's List. All of these
assurance services differ from an Audit in that Auditing Standards require auditors to
issue an audit report. The Assurance Services listed provide reports, but there is no
government or regulatory body that requires them to do so. Also auditing is defined as a
systematic process of objectively obtaining and evaluating evidence regarding assertions
about economic actions and events (i.e., financial statements) to ascertain the degree of
correspondence between those assertions and established criteria (e.g., US GAAP) and
communicating the results (i.e., audit report). These items are different than the more
general definition of an assurance service.
Topic: Assurance
Services
Bloom's: Remember
AICPA: BB Critical Thinking; FN Research
50) The cost of capital can be generally defined as the rate of return expected by anyone
who provides capital to a company (e.g., an investor or a bank). How can a financial
statement audit reduce the cost of capital for a company?
ANSWER: An audit adds credibility to a company's financial statements. The audit reduces
information risk, or the risk that information circulated by a company's management will
be false or misleading. With reduced risk of poor information, anyone providing capital
will have better information on which to base their capital decisions. This will lead to a
lower cost to the company for obtaining capital.
Topic: Audit Demand
Bloom's: Analyze

1
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Auditing & Assurance Services: A Systematic Approach, 12e (Messier)
Chapter 2 The Financial Statement Auditing Environment
1) A series of business and related auditing failures led to the passage of the Sarbanes-
Oxley Act (2002).
ANSWER: TRUE
Difficulty: 1 Easy
Topic: A Decade of Challenge and Change for Financial Statement Auditors
Learning Objective: 02-04 Understand the significant changes that have taken place in
the auditing profession over the past two decades.
Bloom's: Remember
AICPA: BB Legal; FN Measurement
2) The primary audit context with which an auditor is concerned is the auditee's
industry or business.
ANSWER: TRUE
Difficulty: 1 Easy
Topic: A Model of Business
Learning Objective: 02-06 Recognize that an audit is shaped by the auditee's business,
industry, and economic environment and understand the essential components and
processes characteristic of most business entities.
Bloom's: Remember
AICPA: BB Industry; FN Decision Making
3) The audit committee generally includes senior executives of the organization.
ANSWER: FALSE
Difficulty: 1 Easy
Bloom's: Remember

2
4) A financial statement audit is generally organized based on the five basic business
processes or cycles.
ANSWER: TRUE
Difficulty: 1 Easy
Learning Objective: 02-07 Be familiar with a five-component model of business processes
used to organize an audit.
Bloom's: Remember
5) One of the five basic business processes is the warehousing cycle.
ANSWER: FALSE
Difficulty: 1 Easy
Learning Objective: 02-07 Be familiar with a five-component model of business processes
used to organize an audit.
Bloom's: Remember
6) The ASB's auditing standards contain a preface that includes Principles Underlying an
Audit Conducted in Accordance with GAAS.
ANSWER: TRUE
Difficulty: 1 Easy
Topic: Auditing Standards
Learning Objective: 02-09 Understand that auditing standards are established by both U.S.
and international standard setters.; 02-10 Be familiar with the "principles underlying an
audit conducted in accordance with generally accepted auditing standards."
Bloom's: Remember

3
7) PCAOB auditing standards must be followed on all financial statement audits
performed in the U.S.
ANSWER: FALSE
Difficulty: 1 Easy
Learning Objective: 02-08 Identify and be familiar with the major organizations that
affect the public accounting profession's environment.
Bloom's: Understand
8) A financial statement audit must be conducted based on GAAP.
ANSWER: FALSE
Difficulty: 1 Easy
Learning Objective: 02-09 Understand that auditing standards are established by both
U.S. and international standard setters.; 02-10 Be familiar with the "principles underlying
an audit conducted in accordance with generally accepted auditing standards."
Bloom's: Understand
9) Generally, the financial statements of U.S. companies must be prepared based on GAAP.
ANSWER: TRUE
Difficulty: 1 Easy
Bloom's: Understand

4
10) PCAOB auditing standards must be followed on all audits of public companies'
financial statements.
ANSWER: TRUE
Difficulty: 1 Easy
Learning Objective: 02-08 Identify and be familiar with the major organizations that affect
the public accounting profession's environment.
Bloom's: Remember
11) The Audit Committee consists of:
A) members of management.
B) a subcommittee of the AICPA who establish the SAS.
C) members of the Board of Directors.
D) appointed government overseers.
ANSWER: C
Difficulty: 1 Easy
Bloom's:
Remembe
r AACSB: Analytical
Thinking
AICPA: FN Measurement; BB Critical Thinking
12) What organization is responsible for setting auditing standards for audits of publicly-
traded companies in the U.S.?
A) AICPA.
B) FASB.
C) GASB.
D) PCAOB.
ANSWER: D
Difficulty: 1 Easy
Learning Objective: 02-08 Identify and be familiar with the major organizations that affect
the public accounting profession's environment.
Bloom's: Remember

5
13) The Public Company Accounting Oversight Board's role is to:
A) conduct the final review of auditors' work before the auditor's opinion is issued.
B) oversee the auditors of public companies in order to protect the interests of investors.
C) conduct audits of governmental entities.
D) sanction auditors who fail to follow GAAS.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Remember
14) The authoritative body designed to promulgate standards concerning a CPA's
association with audited financial statements of an entity that is required to file financial
statements with the SEC is the:
A) financial accounting standards board.
B) general accounting office.
C) public company accounting oversight board.
D) auditing standards board.
ANSWER: C
Difficulty: 1 Easy
Bloom's: Remember

6
15) The auditor must be independent of the auditee unless:
A) the lack of independence does not influence his or her professional judgment.
B) both parties agree that the independence issue is not a problem.
C) the lack of independence is insignificant.
D) none of the above—the auditor cannot lack independence.
ANSWER: D
Topic: Auditing
Standards
Bloom's: Apply
16) Which principle of the Principles Underlying an Audit Conducted in Accordance with
GAAS
describes where auditors are required to plan the work and properly supervise any
assistants?
A) Purpose of an Audit and Premise upon which an Audit is Conducted.
B) Performance.
C) Reporting.
D) Responsibilities.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Remember

7
17) Which of the following best describes the general character of the three principles
that are listed in the Performance section of the Principles Underlying an Audit
Conducted in Accordance with GAAS?
A) The purpose and value of a financial statement audit and lays out the
responsibilities of management for an effective audit to be possible.
B) The fundamental responsibilities and characteristics of an auditor.
C) Auditors' responsibilities in performing an effective audit.
D) Auditors provide a written report that expresses their opinion about the financial
statements.
ANSWER: C
Difficulty: 1 Easy
Topic: Auditing Standards; Auditing, Ethics, and the Code of Professional Conduct
audit conducted in accordance with generally accepted auditing standards."; 02-12
Understand that the auditing profession places a premium on ethical behavior and is
governed by a Code of Professional Conduct.
Bloom's: Understand
18) The Responsibilities section of the Principles Underlying an Audit Conducted in
Accordance with GAAS states that auditors are responsible for having appropriate
competence and:
A) independence with respect to the financial statements and supplementary disclosures.
B) exercising professional care as judged by peer reviewers.
C) capabilities to perform the audit.
D) objectivity as an auditor as verified by proper supervision.
ANSWER: C
Difficulty: 1 Easy
Topic: Auditing Standards; Auditing, Ethics, and the Code of Professional Conduct
audit conducted in accordance with generally accepted auditing standards."; 02-12
Understand that the auditing profession places a premium on ethical behavior and is
governed by a Code of Professional Conduct.
Bloom's: Remember

8
19) The Reporting section of the Principles Underlying an Audit Conducted in Accordance
with GAAS requires that the report, "states whether the financial statements are presented
fairly, in all material respects, in accordance with the applicable financial reporting
framework." This passage requires:
A) a statement of fact by the auditor.
B) an opinion by the auditor.
C) an implied measure of fairness.
D) an objective measure of compliance.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Understand
20) Because of the risk of material misstatement, an audit of financial statements in
accordance with generally accepted auditing standards should be planned and performed
with an attitude of:
A) objective cynicism.
B) independent differentialism.
C) professional skepticism.
D) impartial conservatism.
ANSWER: C
Topic: Auditing, Ethics, and the Code of Professional Conduct; Society's Expectations and
the Auditor's Responsibilities
Learning Objective: 02-12 Understand that the auditing profession places a premium on
ethical behavior and is governed by a Code of Professional Conduct.; 02-05 Know that
management is primarily responsible for the entity's financial statements and
understand the auditor's responsibility for detecting errors, material fraud, and illegal
acts.
Bloom's: Apply
AACSB: Analytical Thinking AICPA:
BB Legal; FN Risk Analysis

9
21) The accuracy of information included in footnotes accompanying the audited
financial statements issued by a company whose shares are traded on a stock
exchange is the primary responsibility of:
A) the stock exchange officials.
B) the independent auditor.
C) the company's management.
D) the securities and exchange commission.
ANSWER: C
Difficulty: 1 Easy
Topic: Society's Expectations and the Auditor's Responsibilities
Learning Objective: 02-05 Know that management is primarily responsible for the
entity's financial statements and understand the auditor's responsibility for detecting
errors, material fraud, and illegal acts.
Bloom's: Remember
22) The primary responsibility for the adequacy of disclosures in the financial
statements of a publicly held company rests with the:
A) partner assigned to the audit engagement.
B) management of the company.
C) auditor in charge of the fieldwork.
D) securities and exchange commission.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Remember

10
23) The largest public accounting firms typically are structured as:
A) subchapter S corporations.
B) professional corporations.
C) limited liability partnerships.
D) limited liability corporations.
ANSWER: C
Difficulty: 1 Easy
Topic: Accounting Firms and Audit Teams
Learning Objective: 02-03 Understand the organization of public accounting firms and the
composition of audit teams.
Bloom's: Remember
AICPA: BB Legal; FN Research
24) Typically, an external auditor first gets supervisory experience at what level of
authority?
A) Associate.
B) Senior.
C) Manager.
D) Partner.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Remember
AICPA: FN Measurement; BB Resource Management
25) An "in-charge" auditor typically holds the rank of:
A) associate.
B) senior.
C) manager.
D) partner.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Remember
AICPA: FN Measurement; BB Resource Management

11
26) Which of the following best describes the concept of risk assessment on which
auditors can provide independent assurance?
A) The risk that financial statements are misstated because of fraud.
B) The risk that financial statements are misstated because of error or fraud.
C) Whether management has systems in place to evaluate and effectively manage the
entity's business risks.
D) Developing client acceptance and continuance practices that minimize the
likelihood of lawsuits against the auditor.
ANSWER: C
Difficulty: 1 Easy
Topic: Types of Other Audit, Attest, and Assurance Services
Learning Objective: 02-02 Be familiar with the various types of audit, attest, and
assurance services offered by accounting professionals.
Bloom's: Apply
27) Forensic audits include all of the following except:
A) criminal investigations.
B) manufacturers' assertions about product quality.
C) employee fraud.
D) management fraud.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Understand
AICPA: BB Industry; FN Leveraging Technology

12
28) A typical objective of an operational audit is for the auditor to:
A) determine whether the financial statements present fairly the entity's operations.
B) evaluate the feasibility of attaining the entity's operational objectives.
C) make recommendations for improving performance.
D) report on the entity's relative success in attaining profit maximization.
ANSWER: C
Difficulty: 1 Easy
Bloom's: Remember
29) Governmental auditing often extends beyond examinations leading to the expression
of an opinion on the fairness of financial presentation and includes audits of efficiency,
effectiveness, and:
A) monetary stimulus.
B) evaluation.
C) accuracy.
D) compliance.
ANSWER: D
Difficulty: 1 Easy
Bloom's: Remember
30) External auditors are referred to as "external" because:
A) they report to users outside of the audited entity.
B) they are paid by parties outside of the audited entity.
C) they are not employees of the entity being audited.
D) their offices are not at the entity's place of business.
ANSWER: C
Difficulty: 1 Easy
Topic: Types of Auditors
Learning Objective: 02-01 Be familiar with the different types of auditors.
Bloom's: Understand

13
31) Which is NOT an attribute of an external auditor?
A) Independence.
B) Auditee advocacy.
C) Objectivity.
D) Concern for the public interest.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Remember
32) What is the general character of the work conducted in performing a forensic audit
for a company?
A) Providing assurance that the financial statements are not materially misstated.
B) Detecting or deterring fraudulent activity.
C) Offering an opinion on the reliability of the specific assertions made by management.
D) Identifying the causes of an entity's financial difficulties.
ANSWER: B
Difficulty: 1 Easy
Bloom's: Understand

14
33) Which of the following is NOT a requirement of the Sarbanes-Oxley Act?
A) Audit firms cannot provide most types of nonaudit services to their public company
auditees.
B) Audit firms are required to rotate audit partners off audit engagements every five
years for public company audits.
C) Firms that audit public companies are subject to inspection by the PCAOB.
D) A certain number of hours, which is based on the size of the company being audited,
must be spent on each audit engagement.
ANSWER: D
Topic: A Decade of Challenge and Change for Financial Statement Auditors; A Model of
Business
Learning Objective: 02-04 Understand the significant changes that have taken place in the
auditing profession over the past two decades.; 02-08 Identify and be familiar with the
major organizations that affect the public accounting profession's environment.
Bloom's: Remember
34) A CPA is most likely to refer to one or more of the items listed in the
Responsibilities section of the Principles Underlying an Audit Conducted in
Accordance with GAAS in determining:
A) the nature of the CPA's report qualification.
B) the scope of the CPA's auditing procedures.
C) requirements for the review of the entity and its environment.
D) whether the CPA should undertake an audit engagement.
ANSWER: D
Topic: A Model of Business; Auditing Standards
processes characteristic of most business entities.; 02-09 Understand that auditing
standards are established by both U.S. and international standard setters.; 02-10 Be
familiar with the "principles underlying an audit conducted in accordance with generally
accepted auditing standards."
Bloom's: Apply

15
35) Who bears ultimate responsibility for the financial statements?
A) Management of the organization, equally with the external auditor that audits the
statements.
B) Management and the shareholders of the organization.
C) The external auditor that audits the statements.
D) Management of the organization.
ANSWER: D
Difficulty: 1 Easy
Bloom's: Remember
36) The Responsibilities section of the Principles Underlying an Audit Conducted in
Accordance with GAAS is concerned with:
A) proper planning and supervision, appropriate materiality levels, and sufficient
appropriate audit evidence.
B) an audit opinion in accordance with the auditor's findings, whether the financials
are presented fairly, and whether the financial are in accordance with the
applicable financial reporting framework.
C) whether the auditor has unrestricted access to those within the entity from whom the
auditor needs to obtain audit evidence.
D) complying with ethical requirement, appropriate competence and maintaining
professional skepticism.
ANSWER: D
Topic: Auditing
Standards
Bloom's: Remember

16
37) The Responsibilities section of Principles Underlying an Audit Conducted in
Accordance with GAAS recognizes that regardless of how capable an individual may be
in other fields, the individual cannot meet the requirements of the auditing standards
without the proper:
A) business and finance courses.
B) quality control and peer review.
C) education and experience in auditing.
D) supervision and review skills.
ANSWER: C
Topic: Auditing
Standards
Bloom's: Understand
AACSB: Diversity
AICPA: FN Decision Making; BB Marketing
38) The main difference between SAS and AU is:
A) they are the same except that SAS are organized chronologically and the AU are
organized by topical area.
B) SAS are issued by the ASB and AU are issued by the PCAOB.
C) SAS are issued by the PCAOB and AU are issued by the ASB.
D) SAS define minimum standards of performance for auditors while AU define
financial accounting principles that must be followed according to GAAP.
ANSWER: A
Topic: Auditing
Standards
Learning Objective: 02-11 Understand the nature of auditing standards.
Bloom's: Analyze

17
39) The AICPA's Statements on Auditing Standards can be described as:
A) providing very specific guidance about the specific activities an auditor must perform on
each engagement.
B) similar to financial accounting standards in that they are developed by the government.
C) tend to be general in nature and require a great deal of professional judgment.
D) providing assurance that an auditor will not issue an incorrect opinion.
ANSWER: C
Topic: Auditing
Standards
Learning Objective: 02-11 Understand the nature of auditing standards.
Bloom's: Understand
40) Due professional care requires auditors to:
A) obtain independent, third party (non-auditee) documentation as evidence for all
information presented in the financial statements.
B) exercise professional skepticism during the audit.
C) disregard any evidence generated by the auditee during the audit.
D) find every error contained in the financial statements prepared by management.
ANSWER: B
Learning Objective: 02-05 Know that management is primarily responsible for the entity's
financial statements and understand the auditor's responsibility for detecting errors,
material fraud, and illegal acts.
Bloom's: Understand

18
41) The objectives of the Reporting section of Principles Underlying an Audit
Conducted in Accordance with GAAS are to provide assurance and include all of the
following except for:
A) an opinion statement of whether the financial statements present fairly.
B) an opinion statement of whether the financials are free of material misstatements.
C) an opinion statement of whether the financials are in accordance with an applicable
financial reporting framework.
D) an opinion statement of whether the financial statements between periods are not
materially affected by changes in accounting principles that are not disclosed.
ANSWER: D
Topic: Auditing
Standards
Bloom's: Understand
42) An internal auditor is likely to be more concerned with than the external
auditor.
A) internal administrative procedures
B) cost accounting procedures
C) the efficiency of operations
D) internal control
ANSWER: C
Topic: Types of Other Audit, Attest, and Assurance Services; Types of Auditors
assurance services offered by accounting professionals.; 02-01 Be familiar with the
different types of auditors.
Bloom's: Apply
AICPA: BB Industry; FN Risk Analysis

19
43) Which of the following is NOT included in the broad category of assurance services?
A) Operational audit.
B) Reporting on internal control.
C) Accounting or review services.
D) Evaluation of the auditee's risk management framework.
ANSWER: C
Bloom's: Apply
44) Which of the following is NOT explicitly a part of the IIA's definition of internal
auditing?
A) Internal auditing is an objective assurance activity.
B) Internal auditing is a consulting activity.
C) Internal auditing should help an organization accomplish its objectives.
D) Internal auditors should help external auditors complete the annual financial statement
audit.
ANSWER: D
Difficulty: 1 Easy
Bloom's: Remember
AICPA: BB Industry; FN Research
45) Which of the following statements regarding the PCAOB is incorrect?
A) It is a public-sector, nonprofit corporation.
B) It is overseen by the SEC.
C) It sets standards for public company audits.
D) It has delegated all of its standard-setting authority to the AICPA.
ANSWER: D
Bloom's: Remember

20
46) Due professional care requires:
A) auditors to maintain an attitude that includes a questioning mind and a critical
assessment of audit evidence.
B) the examination of all available corroborating evidence.
C) the exercise of error-free judgment.
D) a study and review of internal controls that includes tests of controls.
ANSWER: A
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Ethics
47) Which of the following best describes the role of corporate governance?
A) Management decides which accounting principles are the most appropriate.
B) Shareholders vote to decide who should be members of the board of directors.
C) Holding the management team accountable to shareholders and other constituents
for the utilization of the entity's resources.
D) Management often is compensated based on the company's profitability.
ANSWER: C
Difficulty: 3 Hard
Bloom's: Understand

21
48) The Performance section of Principles Underlying an Audit Conducted in Accordance
with GAAS states that the auditor is unable to obtain absolute assurance that the
financials are free of material misstatements because of inherent limitations which arise
from all of the following except:
A) the presentation of the financial statements based on GAAS.
B) the nature of financial reporting.
C) the nature of audit procedures.
D) the need for the audit to be conducted within a reasonable period of time and so as to
achieve a balance between benefit and cost.
ANSWER: A
Topic: Auditing
Standards
Bloom's: Understand
49) Which of the following best describes what is meant by generally accepted
auditing standards?
A) Audit assertions generally determined on audit engagements.
B) Acts to be performed by the auditor.
C) Standards of quality for the auditor's performance.
D) Procedures to be used to gather evidence to support financial statements.
ANSWER: C
Difficulty: 3 Hard
Bloom's: Understand

22
50) The 'Purpose of an Audit and Premise upon which an Audit is Conducted' section of
Principles Underlying an Audit Conducted in Accordance with GAAS states that
management is responsible for all the following except for:
A) the preparation and fair presentation of the financial statement in accordance
with the applicable financial reporting framework.
B) the design, implementation, and maintenance of internal control.
C) providing financial statement users with an opinion on whether the financial
statements present fairly.
D) ensuring that the financial statements are free from material misstatement, whether
due to error or fraud.
ANSWER: C
Difficulty: 3 Hard
Bloom's: Understand
51) The Performance section of Principles Underlying an Audit Conducted in Accordance
with GAAS states that for auditors to obtain reasonable assurance, they need to do all of
the following except:
A) make sure all audit team members have adequate training.
B) obtain sufficient appropriate audit evidence.
C) identify and assess risks of material misstatement.
D) determine and apply appropriate materiality levels.
ANSWER: A
Difficulty: 3 Hard
Bloom's: Remember
IF YOU WANT THIS TEST BANK OR
SOLUTION MANUAL EMAIL ME
donc8246@gmail.com TO RECEIVE ALL
CHAPTERS IN PDF FORMAT

23
IF YOU WANT THIS TEST BANK OR
SOLUTION MANUAL EMAIL ME
donc8246@gmail.com TO RECEIVE ALL
CHAPTERS IN PDF FORMAT

TEST BANK For Auditing & Assurance Services A Systematic Approach, 11th Edition & 12th Edi.pdf

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