SOLUTION MANUAL AUDITING AND
ASSURANCE SERVICES EXAM PREP STUDY
GUIDE 2026 PRACTICE QUESTIONS AND
SOLUTIONS GRADED A+
◉ Confirmation is a representative audit procedure used to test the
PCAOB and ASB assertion of:
a. existence or occurrence
b. presentation and disclosure
c. valuation and allocation
d. rights and obligations. Answer: d. rights and obligations
◉ The substantive audit plan depends almost exclusively upon the:
a. size of the client
b. risk assessment of the client
c. industry the client is in
d. size of the audit team. Answer: b. risk assessment of the client
◉ Selecting an item in the financial records and following the path
back to the source document is referred to as _______________.. Answer:
vouching
,◉ The auditor selects a basic source document and follows the
processing path forward to its final recording and to the financial
statements when engaged in:
a. confirmation
b. tracing
c. vouching
d. inquiry. Answer: b. tracing
◉ The physical presence of assets is an example of evidence
available to test the ASB assertion of _____________.. Answer: existence
◉ Testing the completeness assertion by following a sample of
shipping documents forward to sales invoices, the sales journal and
revenue earned is called _______________.. Answer: tracing
◉ Favorable conclusions about the competence and objectivity of
internal auditors allow external auditors to rely on the work of
internal auditors related to:
a. substantive testing of balances on the audit
b. forming the audit decision
c. assessing the reasonableness of the allowance for doubtful
accounts
d. testing the internal control system. Answer: a. substantive testing
of balance on the audit
, d. testing the internal control system
◉ Computerized audit trails may:
a. require the auditor to alter the nature of testing
b. require the auditor to alter the extent of testing
c. require the auditor to alter the timing of testing
d. provide a permanent transaction trail useful for auditing
purposes. Answer: a. require the auditor to alter the nature of
testing
c. require the auditor to alter the timing of testing
◉ External auditors:
a. may rely on some work completed by the internal audit
department
b. cannot delegate tasks that require professional judgement
c. may delegate supervision of internal auditors to the manager of
internal audit
d. must review, evaluate and perform independent testing of the
internal audit work. Answer: a. may rely on some work completed by
the internal audit department
b. cannot delegate tasks that require professional judgement
d. must review, evaluate and perform independent testing of the
internal audit work
ASSURANCE SERVICES EXAM PREP STUDY
GUIDE 2026 PRACTICE QUESTIONS AND
SOLUTIONS GRADED A+
◉ Confirmation is a representative audit procedure used to test the
PCAOB and ASB assertion of:
a. existence or occurrence
b. presentation and disclosure
c. valuation and allocation
d. rights and obligations. Answer: d. rights and obligations
◉ The substantive audit plan depends almost exclusively upon the:
a. size of the client
b. risk assessment of the client
c. industry the client is in
d. size of the audit team. Answer: b. risk assessment of the client
◉ Selecting an item in the financial records and following the path
back to the source document is referred to as _______________.. Answer:
vouching
,◉ The auditor selects a basic source document and follows the
processing path forward to its final recording and to the financial
statements when engaged in:
a. confirmation
b. tracing
c. vouching
d. inquiry. Answer: b. tracing
◉ The physical presence of assets is an example of evidence
available to test the ASB assertion of _____________.. Answer: existence
◉ Testing the completeness assertion by following a sample of
shipping documents forward to sales invoices, the sales journal and
revenue earned is called _______________.. Answer: tracing
◉ Favorable conclusions about the competence and objectivity of
internal auditors allow external auditors to rely on the work of
internal auditors related to:
a. substantive testing of balances on the audit
b. forming the audit decision
c. assessing the reasonableness of the allowance for doubtful
accounts
d. testing the internal control system. Answer: a. substantive testing
of balance on the audit
, d. testing the internal control system
◉ Computerized audit trails may:
a. require the auditor to alter the nature of testing
b. require the auditor to alter the extent of testing
c. require the auditor to alter the timing of testing
d. provide a permanent transaction trail useful for auditing
purposes. Answer: a. require the auditor to alter the nature of
testing
c. require the auditor to alter the timing of testing
◉ External auditors:
a. may rely on some work completed by the internal audit
department
b. cannot delegate tasks that require professional judgement
c. may delegate supervision of internal auditors to the manager of
internal audit
d. must review, evaluate and perform independent testing of the
internal audit work. Answer: a. may rely on some work completed by
the internal audit department
b. cannot delegate tasks that require professional judgement
d. must review, evaluate and perform independent testing of the
internal audit work
