Chapter 2

I. Multiple choice

1. Which of the following is not an assurance engagement?

A. Compilation.
B. Financial statements audit.
C. Information reliability services.
D. Reviews of prospective financial statements.

2. Nonassurance engagements include all of the following except

A. Agreed upon procedures.
B. Management consulting.
C. Preparation of tax returns where no conclusion is expressed.
D. Compliance audit.

3. Assurance engagements should exhibit the following except

A. A subject matter.
B. Suitable criteria.
C. An engagement process.
D. Appropriate professional fees.

4. Which of the following forms may the subject matter of an assurance engagement take?
A. Historical financial information.
B. Systems and processes.
C. Behavior.
D. All of the above.

5. Which of the following is not an assurance engagement?

A. Information system reliability service.
B. Business performance measurement.
C. Risk assessment service
D. Management consulting service.

II. True or false

1. Engagement risk is influenced by the risks associated except with the unreasonably low
professional fee.
A. True.
B. False.
2. When the professional accountant has obtained sufficient appropriate evidence to
conclude that the subject matter conforms in all material respects with identified
suitable criteria, he/she can provide limited level of assurance.
A. True.
B. False. Reasonable level of assurance.

3. In performing an assurance engagement, a professional accountant typically supplies

litigation support services.
A. True.
B. False. Expresses a conclusion about an assertion.

4. An assurance engagement that provides a high level of assurance that the financial
statements are free of material misstatement is known as agreed upon procedures.
A. True.
B. False. Independent financial statements audit.

5. The practitioner is the person who provides the assurance to the intended users about a
subject matter that is the responsibility of another party.
A. True.
B. False.