Testbank
to accompany
Auditing: a practical
approach 3e
by
Moroney et al.
© John Wiley & Sons Australia, Ltd 2017
, Chapter 1: Introduction and overview of audit and assurance
Chapter 1: Introduction and overview of audit and assurance
True/False
1. The nature of audit procedures refers to the reliance on evidence provided by the
client and its management.
*a. True
b. False
Correct answer: a
Learning Objective 1.2 ~ Discriminate between different types of assurance services
2. 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.
*a. True
b. False
Correct answer: a
Learning Objective 1.2 ~ Discriminate between different types of assurance services
3. An operational audit is an example of a compliance audit.
a. True
*b. False
Correct answer: b
Learning Objective 1.2 ~ Discriminate between different types of assurance services
4. The most common types of assurance engagements are financial report audits,
confirmation audits, performance audits, comprehensive audits and assurance on
corporate social responsibility (CSR) disclosures.
a. True
*b. False
Correct answer: b
Learning Objective 1.2 ~ Discriminate between different types of assurance services
© John Wiley & Sons Australia, Ltd 2017 1.2
,Testbank to accompany Auditing: a practical approach 3e
5. An assurance engagement is performed by an auditor or consultant to enhance the
reliability of the subject matter.
*a. True
b. False
Correct answer: a
Learning Objective 1.2 ~ Discriminate between different types of assurance services
6. An audit of a financial report by the contracted auditors will give absolute assurance
that the financial reports give a true and fair view of the financial performance of the
entity.
a. True
*b. False
Correct answer: b
Learning Objective 1.3 ~ Discriminate between different levels of assurance
7. An audit engagement is performed by an Auditor to provide a reasonable assurance
that the financial report gives a true and fair view of the business activities for the
period.
*a. True
b. False
Correct answer: a
Learning Objective 1.3 ~ Discriminate between different levels of assurance
8. A no assurance engagement is of little use as no assurance is given to the client.
a. True
*b. False
Correct answer: b
Learning Objective 1.3 ~ Discriminate between different levels of assurance
© John Wiley & Sons Australia, Ltd 2017 1.3
, Chapter 1: Introduction and overview of audit and assurance
9. An auditor can provide a reasonable level of assurance on information other than
historical financial information.
*a. True
b. False
Correct answer: a
Learning Objective 1.3 ~ Discriminate between different levels of assurance
10. A negative expression of opinion is only given when there is a disagreement with
management and the auditor.
a. True
*b. False
Correct answer: b
Learning Objective 1.3 ~ Discriminate between different levels of assurance
11. A reasonable level of assurance is the highest level of assurance that an auditor can
provide.
*a. True
b. False
Correct answer: a
Learning Objective 1.3 ~ Discriminate between different levels of assurance
12. All modified audit reports are qualified audit opinions.
a. True
*b. False
Correct answer: b
Learning Objective 1.4 ~ Categorise different audit opinions
13. It is the auditor’s responsibility to prepare the financial statements.
a. True
*b. False
Correct answer: b
Learning Objective 1.5 ~ Discriminate between the different role of the preparer and
the auditor, and discuss the different firms that provide assurance services
© John Wiley & Sons Australia, Ltd 2017 1.4
to accompany
Auditing: a practical
approach 3e
by
Moroney et al.
© John Wiley & Sons Australia, Ltd 2017
, Chapter 1: Introduction and overview of audit and assurance
Chapter 1: Introduction and overview of audit and assurance
True/False
1. The nature of audit procedures refers to the reliance on evidence provided by the
client and its management.
*a. True
b. False
Correct answer: a
Learning Objective 1.2 ~ Discriminate between different types of assurance services
2. 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.
*a. True
b. False
Correct answer: a
Learning Objective 1.2 ~ Discriminate between different types of assurance services
3. An operational audit is an example of a compliance audit.
a. True
*b. False
Correct answer: b
Learning Objective 1.2 ~ Discriminate between different types of assurance services
4. The most common types of assurance engagements are financial report audits,
confirmation audits, performance audits, comprehensive audits and assurance on
corporate social responsibility (CSR) disclosures.
a. True
*b. False
Correct answer: b
Learning Objective 1.2 ~ Discriminate between different types of assurance services
© John Wiley & Sons Australia, Ltd 2017 1.2
,Testbank to accompany Auditing: a practical approach 3e
5. An assurance engagement is performed by an auditor or consultant to enhance the
reliability of the subject matter.
*a. True
b. False
Correct answer: a
Learning Objective 1.2 ~ Discriminate between different types of assurance services
6. An audit of a financial report by the contracted auditors will give absolute assurance
that the financial reports give a true and fair view of the financial performance of the
entity.
a. True
*b. False
Correct answer: b
Learning Objective 1.3 ~ Discriminate between different levels of assurance
7. An audit engagement is performed by an Auditor to provide a reasonable assurance
that the financial report gives a true and fair view of the business activities for the
period.
*a. True
b. False
Correct answer: a
Learning Objective 1.3 ~ Discriminate between different levels of assurance
8. A no assurance engagement is of little use as no assurance is given to the client.
a. True
*b. False
Correct answer: b
Learning Objective 1.3 ~ Discriminate between different levels of assurance
© John Wiley & Sons Australia, Ltd 2017 1.3
, Chapter 1: Introduction and overview of audit and assurance
9. An auditor can provide a reasonable level of assurance on information other than
historical financial information.
*a. True
b. False
Correct answer: a
Learning Objective 1.3 ~ Discriminate between different levels of assurance
10. A negative expression of opinion is only given when there is a disagreement with
management and the auditor.
a. True
*b. False
Correct answer: b
Learning Objective 1.3 ~ Discriminate between different levels of assurance
11. A reasonable level of assurance is the highest level of assurance that an auditor can
provide.
*a. True
b. False
Correct answer: a
Learning Objective 1.3 ~ Discriminate between different levels of assurance
12. All modified audit reports are qualified audit opinions.
a. True
*b. False
Correct answer: b
Learning Objective 1.4 ~ Categorise different audit opinions
13. It is the auditor’s responsibility to prepare the financial statements.
a. True
*b. False
Correct answer: b
Learning Objective 1.5 ~ Discriminate between the different role of the preparer and
the auditor, and discuss the different firms that provide assurance services
© John Wiley & Sons Australia, Ltd 2017 1.4
