Auditing: The Art and Science of Assurance Engagements 15th Canadian Edition by Alvin A Arens Test b
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) What is the nature of the service provided when an auditor evaluates information using suitable criteria and
issues a report that attests to the reliability of the information?
A) compilation engagement B) review engagement
C) attestation engagement D) internal audit engagement
Answer: C
2) The No- Name Agency conducts an independent service for a company to determine if its suppliers have
complied with health and safety regulations, child labour guidelines, and other employee welfare issues. What
type of service is No- Name providing?
A) compilation B) review C) attest D) assurance
Answer: D
3) Which of the following is an example of an attestation engagement?
A) accounting and bookkeeping services for the accounts
B) preparation of the annual financial statements with notes
C) an audit of internal controls over financial reporting
D) completion of provincial and federal tax returns
Answer: C
4) When do individuals and organizations typically need assurance services?
A) whenever assurance is provided by a practitioner who is independent and unbiased
B) usually only when organizations obtain debt or other loans
C) only when historical data, such as financial information, need to be audited
D) for five years from the start of an organization until debt is retired
Answer: A
5) A major type of assurance service performed by large public accounting firms is
A) management consulting. B) compilation.
C) auditing. D) reviewing.
Answer: C
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
6) Two types of services provided by public accounting firms are audits and reviews. Discuss the similarities and
differences between these two types of services. Which type provides the most assurance?
Answer: Two primary types of services are audits of historical financial statements and reviews of historical
financial statements. While both services involve the accumulation and evaluation of evidence regarding
assertions made by management in the company's financial statements, an audit involves a more
extensive examination and provides a higher level of assurance about the client's financial statements
than a review.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
7) Which of the following illustrates the definition of auditing with respect to the evidence analysis process?
A) accumulation and evaluation of evidence regarding assertions
B) making sure that the auditor is competent and understands evidence gathering
C) learning about different types of computing technology, such as mainframes
D) writing an operational audit report that is tailored to the client's situation
Answer: A
8) Auditing should be done by a qualified
A) competent and independent person. B) certified management accountant.
C) chartered accountant. D) professional accountant.
Answer: A
9) Which of the following illustrates the definition of auditing with respect to the reporting process?
A) reporting on the degree of correspondence between financial statements and ASPE/IFRS
B) making sure that the auditor is competent and understands evidence gathering
C) writing an operational audit report that is tailored to the client's situation
D) accumulation and evaluation of evidence about balance sheet accounts
Answer: A
10) In the audit of historical financial statements by PA firms, the criteria used are
A) relevant accounting frameworks.
B) regulations of the provincial securities commissions.
C) generally accepted auditing standards.
D) regulations of the Canada Revenue Agency.
Answer: A
11) A large PA firm has assessed evidence collected during an engagement. Criteria used to assess the financial
statements were International Financial Reporting Standards (IFRS). A high level of assurance was obtained.
The type of engagement conducted was
A) an audit. B) a compilation.
C) a review. D) management consulting.
Answer: A
12) The auditor and the entities being audited should agree on the criteria to be used in the audit
A) at the end of the audit.
B) as they progress with the audit, as they can determine which criteria are most suitable.
C) well in advance before the audit starts.
D) after the audit planning has been done.
Answer: C
13) George had a conversation with the accounting personnel and documented information about how the
accounting systems function. He has also placed copies of accounting forms in his files. George is performing
which task?
A) tax audit B) audit report preparation
C) evidence gathering D) accounting procedures
1) What is the nature of the service provided when an auditor evaluates information using suitable criteria and
issues a report that attests to the reliability of the information?
A) compilation engagement B) review engagement
C) attestation engagement D) internal audit engagement
Answer: C
2) The No- Name Agency conducts an independent service for a company to determine if its suppliers have
complied with health and safety regulations, child labour guidelines, and other employee welfare issues. What
type of service is No- Name providing?
A) compilation B) review C) attest D) assurance
Answer: D
3) Which of the following is an example of an attestation engagement?
A) accounting and bookkeeping services for the accounts
B) preparation of the annual financial statements with notes
C) an audit of internal controls over financial reporting
D) completion of provincial and federal tax returns
Answer: C
4) When do individuals and organizations typically need assurance services?
A) whenever assurance is provided by a practitioner who is independent and unbiased
B) usually only when organizations obtain debt or other loans
C) only when historical data, such as financial information, need to be audited
D) for five years from the start of an organization until debt is retired
Answer: A
5) A major type of assurance service performed by large public accounting firms is
A) management consulting. B) compilation.
C) auditing. D) reviewing.
Answer: C
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
6) Two types of services provided by public accounting firms are audits and reviews. Discuss the similarities and
differences between these two types of services. Which type provides the most assurance?
Answer: Two primary types of services are audits of historical financial statements and reviews of historical
financial statements. While both services involve the accumulation and evaluation of evidence regarding
assertions made by management in the company's financial statements, an audit involves a more
extensive examination and provides a higher level of assurance about the client's financial statements
than a review.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
7) Which of the following illustrates the definition of auditing with respect to the evidence analysis process?
A) accumulation and evaluation of evidence regarding assertions
B) making sure that the auditor is competent and understands evidence gathering
C) learning about different types of computing technology, such as mainframes
D) writing an operational audit report that is tailored to the client's situation
Answer: A
8) Auditing should be done by a qualified
A) competent and independent person. B) certified management accountant.
C) chartered accountant. D) professional accountant.
Answer: A
9) Which of the following illustrates the definition of auditing with respect to the reporting process?
A) reporting on the degree of correspondence between financial statements and ASPE/IFRS
B) making sure that the auditor is competent and understands evidence gathering
C) writing an operational audit report that is tailored to the client's situation
D) accumulation and evaluation of evidence about balance sheet accounts
Answer: A
10) In the audit of historical financial statements by PA firms, the criteria used are
A) relevant accounting frameworks.
B) regulations of the provincial securities commissions.
C) generally accepted auditing standards.
D) regulations of the Canada Revenue Agency.
Answer: A
11) A large PA firm has assessed evidence collected during an engagement. Criteria used to assess the financial
statements were International Financial Reporting Standards (IFRS). A high level of assurance was obtained.
The type of engagement conducted was
A) an audit. B) a compilation.
C) a review. D) management consulting.
Answer: A
12) The auditor and the entities being audited should agree on the criteria to be used in the audit
A) at the end of the audit.
B) as they progress with the audit, as they can determine which criteria are most suitable.
C) well in advance before the audit starts.
D) after the audit planning has been done.
Answer: C
13) George had a conversation with the accounting personnel and documented information about how the
accounting systems function. He has also placed copies of accounting forms in his files. George is performing
which task?
A) tax audit B) audit report preparation
C) evidence gathering D) accounting procedures