Chapter 16 Test Bank

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Chapter 16 - TEST BANK
Auditing and Assurance Service (University of New South Wales)
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Chapter 16
Student: ___________________________________________________________________________
1. Which of the following is not an assurance engagement?

A. A review of historical financial information.
B. An audit of the effectiveness of internal control.
C. A performance audit.
D. A consulting engagement to help an organisation meet its tax obligations.
2. Reasonable assurance is provided by:

A. a review engagement.
B. an audit engagement.
C. an assurance engagement.
D. an agreed-upon procedures engagement.
3. A review engagement provides:

A. reasonable assurance.
B. high but not absolute assurance.
C. low assurance.
D. limited assurance.
4. In performing an assurance service, an auditor typically:

A. assesses control risk at a low level.
B. supplies litigation support services.
C. provides management consulting advice.
D. expresses a conclusion about an assertion.
5. The objective of assurance services is best described as:

A. improving the firm's outcomes.
B. comparing internal information and policies with those of other firms.
C. enhancing decision making.
D. providing reliable information.

lOMoARcPSD|6196095
6. Assurance services are best described as:

A. the expression of an opinion on the truth and fairness of a general purpose financial report.
B. the preparation of a financial report based on the assumptions of a responsible party.
C. independent professional services that improve the quality of information or its context, for decision
makers.
D. services designed for the improvement of operations, resulting in better outcomes.
7. Which of the following best describes an auditor's report on a supplementary financial report prepared in
accordance with
a price-level basis of accounting that has substantial support?
A. An unaudited report on a supplementary report.
B. An assurance report on a supplementary report.
C. A special purpose report on a supplementary report.
D. A limited assurance report on a supplementary report.
8. Which of the following statements, with respect to the auditor's report providing an opinion on a specific
item on a financial
report is correct?
A. Such a report can only be provided if the auditor is also engaged to audit the entire financial report.
B. Materiality must be related to the specified item rather than to the financial report taken as a whole.
C. The auditor who has issued an adverse opinion on the financial report taken as a whole can never express
an opinion on a specified item in that financial report.
D. The attention devoted to the specific item is usually less than it would be if the financial report taken as
a whole were being audited.
9. Which of the following must accompany an unaudited financial report which is prepared by an auditor?
A. Either a disclaimer of opinion or adverse opinion.
B. Only a disclaimer of opinion.
C. Either a disclaimer of opinion or a qualified opinion.
D. None of the given answers.
10. A compiled financial report should be accompanied by a report stating all of the following except:
A. a compilation has been performed.
B. the accountant does not express an opinion or any other form of assurance on the report.
C. a compilation consists principally of inquiries of company personnel and analytical procedures applied to
financial data.
D. a compilation is limited to presenting in the form of a financial report, information that is the representation
of management.

lOMoARcPSD|6196095
11. Whenever special reports, filed on a printed form designed by authorities, call upon the independent
auditor to make an assertion
that the auditor believes is not justified, the auditor should:
A. reword the form or attach a separate report.
B. submit a standard auditor's report with explanations in a separate paragraph of the report.
C. withdraw from the engagement.
D. submit the form with questionable items clearly omitted.
12. Negative assurance is permissible in:

A. reports relating to the results of agreed-upon procedures to one or more specified elements, accounts or
items
of a financial report.
B. reports based on a performance audit of a government department.
C. reports based upon an audit of the interim financial report of a closely held business entity.
D. reports based upon a review engagement.
13. Inquiry of the entity's personnel and analytical procedures are the primary bases for the issuance of a(n):
A. auditor's report on a financial report supplemented with price level information.
B. compilation report on a financial report for a non-public company in its first year of operations.
C. management advisory report prepared at the request of the client's audit committee.
D. half-yearly review report on a comparative financial report for a public company.
14. The report in a limited assurance engagement provides:

A. positive assurance.
B. negative assurance.
C. a summary of findings.
D. assurance in the form of an audit opinion.
15. The statement that 'nothing came to our attention which would indicate that these statements are not fairly
presented' expresses
which of the following?
A. Negative assurance.
B. Disclaimer of an opinion.
C. Piecemeal opinion.
D. Negative confirmation.

lOMoARcPSD|6196095
16. When an auditor performs a review of an interim financial report, which of the following steps would not be
part of the review?
A. Inquiry of management.
B. Testing of the computer controls.
C. Reading the minutes of the shareholders' meetings.
D. Review of ratios and trends.
17. An assurance provider who reviews the financial report of a non-reporting entity should issue a report
containing the statement that a review:
A. provides negative assurance that internal control is functioning as designed.
B. provides a level of assurance that is less than that given in an audit.
C. is substantially more in scope than a compilation.
D. provides a high level of assurance based on inquiry and analytical procedures.
18. Inquiry and analytical procedures ordinarily performed during a review of an entity's half-yearly financial
report include:
A. inquiries concerning actions taken at meetings of the board of directors.
B. analytical procedures designed to identify material weaknesses in internal accounting control.
C. inquiries of knowledgeable outside parties such as the client's attorneys and bankers.
D. analytical procedures designed to test the accounting records by obtaining corroborating evidential matter.
19. Which of the following procedures is usually included in a limited assurance engagement?
A. Inquiries concerning the entity's accounting policies.
B. Tests of controls over the sales-accounts receivable-cash cycle.
C. The confirmation of accounts receivable.
D. Attendance at the inventory stocktake.
20.
During a review of the financial report of a non-reporting entity an assurance provider becomes aware of a lack of adequate disclosure that is
material and pervasive to the financial report and results in it being misleading. If management refuses to correct the financial report
presentations, the assurance provider should:
A. express only limited assurance on the financial report presentations.

B. disclose this departure from accounting standards in a separate paragraph of the report.
C. issue an adverse opinion.
D. issue an 'except for' opinion.

lOMoARcPSD|6196095
21. Following is a list of engagements that an assurance provider may undertake:
I. compiling financial reports

II. agreed-upon procedures
III. review of interim financial information.
For which of these engagements is assurance not provided?

A. I only.
B. II only.
C. III only.
D. I and II only.
22. Which one of the following is generally more important in a review than in an agreed upon procedures
engagement?
A. Obtaining a signed representation letter.
B. Obtaining a signed engagement letter.
C. Gaining familiarity with industry accounting principles.
D. Determining the accounting bases on which the financial report is to be presented.
23. The responsible party for assumptions identified in the preparation of prospective financial statements is
usually:
A. a third-party lending institution.
B. the client's management.
C. the reporting accountant.
D. the client's independent auditor.
24. Responding to a question such as 'what would happen if...' is an attribute of which of the following types of
engagements?
A. Financial projection.
B. Financial forecast.
C. Financial forecast and financial projection.
D. Review.
25. Given one or more hypothetical assumptions, a responsible party may prepare, to the best of its knowledge
and belief, an entity's
expected financial position, results of operations and changes in cash flows. Such prospective financial
statements are known as:
A. financial projections.
B. pro-forma financial statements.
C. financial forecasts.
D. partial presentations.

lOMoARcPSD|6196095
26. When an auditor is associated with the preparation of forecasts, all of the following should be disclosed
except the:
A. character of the work performed by the auditor.
B. sources of information.
C. probability of achieving estimates.
D. major assumptions in the preparation of the forecasts.
27. Which of the following are suitable criteria for providing assurance on a report of the effectiveness of
internal controls?
A. Australian Accounting Standards.
B. AUS 810 'Special Purpose Reports on the Effectiveness of Control Procedures'.
C. ASAE/ISAE 3000 'Assurance Engagements other than Reports or Reviews of Historical Financial
Information'.
D. The revised COSO framework.
28. An auditor's study and evaluation of the internal accounting control system made in connection with an
annual audit is usually
not sufficient to express an opinion on an entity's system because:
A. the audit cost-benefit relationship permits an auditor to express only reasonable assurance that the system
operates as designed.
B. the evaluation of weaknesses is subjective enough that an auditor should not express an opinion on the
internal
accounting controls alone.
C. only those controls on which an auditor intends to rely are reviewed, tested and evaluated.
D. management may change the internal accounting controls to correct weaknesses.
29. An assurance report on internal control structures is least likely to be issued as a result of a:
A. review of the annual financial report of a large company.
B. performance audit of a government agency.
C. special study of related party transactions.
D. special study of a proposed system involving the internal control structure.
30. An engagement to express an opinion on a system of internal accounting control will generally:
A. increase the reliability of the financial report that has already been audited.
B. require procedures that duplicate those already applied in assessing control risk during a financial report
audit.
C. be more limited in scope than the assessment of control risk made during a financial report audit.
D. be more extensive in scope than the assessment of control risk made during a financial report audit.

lOMoARcPSD|6196095
31. Which of the following would be suitable criteria for undertaking an assurance engagement on an
environmental and sustainability report?
A. Australian Auditing Standards/International Auditing Standards.
B. The revised COSO framework.
C. ASAE 3000/ISAE 3000.
D. Global reporting initiative framework.
32. Which of the following is not a major difference between integrated reporting and existing reporting
frameworks?
A. The variety of financial and non-financial metrics covered.
B. The emphasis on internal control.
C. The emphasis on forward-looking information.
D. The reflection of company strategy.
33. ISAE 3410 'Assurance of Greenhouse Gas Statements' is based on which approach to assurance?
A. Risk based approach.
B. Systems based approach.
C. Agreed upon procedures approach.
D. Limited assurance approach.
34. An emission that is associated with the consumption, rather than the production, of electricity by an
assurance client should
be classed as a(n):
A. scope 1 emission.
B. scope 2 emission.
C. scope 3 emission.
D. emission deduction.
35. Which of the following statements is true regarding the performance of an assurance service on an
information system's reliability
by an auditor?
A. The service will require the auditor to apply all of the auditing standards.
B. The performing of this service does not require suitable criteria to be available.
C. Performing the service must be undertaken in accordance with approved accounting standards.
D. The service may be performed even though there are no standards currently issued by the Australian
Auditing
and Assurance Standards Board (AUASB).

lOMoARcPSD|6196095
36. Which of the following statements is true with regards the auditor's likelihood of relying on controls in
electronic commerce environments?
A. The auditor is more likely to identify controls they can rely upon in a B2B electronic commerce
environment than
they are in a B2C electronic commerce environment.
B. The auditor is more likely to identify controls they can rely upon in a B2C electronic commerce
environment than
they are in a B2B electronic commerce environment.
C. The auditor equally likely to identify controls they can rely upon in a B2B electronic commerce
environment as they
are in a B2C electronic commerce environment.
D. The auditor is not likely to identify controls they can rely upon in either a B2B electronic commerce
environment
or a B2C electronic commerce environment.
37. In which of the following scenarios is it more likely that the information provided will be continuously
assured?
A. An entity decides to assure its environmental and sustainability report.
B. An entity has to provide a compliance report with regards whether there has been a breach of the rules with
regards
how confidential credit card details for electronic commerce transactions are stored.
C. An identity identifies that there is a risk that financial investments are not being written down to market
value in the
financial statements, as is required by accounting standards.
D. Financial information where a client determines to assure the quarterly financial reports as well as the
half-yearly
financial reports.
38.
Using XBRL, an audit client decides to make their general purpose financial reports continuously available and up-to-date and to have continuous
assurance from the auditor. What would be the suitable criteria by which the auditor would judge whether or not there had been a material
misstatement?
A. ASAE/ISAE 3000 'Assurance Engagements other than Reports or Reviews of Historical Financial
Information'.
B. Extensible mark-up language (XML).
C. There are no generally available suitable criteria for such engagements. The suitable criteria would have to
be
agreed between and the audit client and the auditor, and these would have to be publicly disclosed.
D. Approved accounting standards.

lOMoARcPSD|6196095
39. What is the general character of the work conducted in performing a forensic audit?
A. Detecting or deterring fraudulent activity.
B. Determining whether internal control is operating efficiently and effectively
C. Identifying the causes of an entity's financial difficulties.
D. Offering an opinion on the reliability of the specific assertions made by management.
40. Forensic audits include all of the following except:

A. employee fraud.
B. criminal investigations.
C. matrimonial disputes.
D. manufacturers' claims about product quality.

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Chapter 16 Key
1. Which of the following is not an assurance engagement?

A. A review of historical financial information.
B. An audit of the effectiveness of internal control.
C. A performance audit.
D. A consulting engagement to help an organisation meet its tax obligations.
Chapter - Chapter 16 #1
Difficulty: Easy
Est time: < 1 min
Learning Objective: 16.1 Appreciate the framework of standards under which assurance services are currently offered, and how specific standards relate to different
types of assurance services.
Section: The current framework for assurance services
2. Reasonable assurance is provided by:

A. a review engagement.
B. an audit engagement.
C. an assurance engagement.
D. an agreed-upon procedures engagement.
Difficulty: Easy
Est time: < 1 min
3. A review engagement provides:

A. reasonable assurance.
B. high but not absolute assurance.
C. low assurance.
D. limited assurance.
Difficulty: Easy
Est time: < 1 min

lOMoARcPSD|6196095
4. In performing an assurance service, an auditor typically:

A. assesses control risk at a low level.
B. supplies litigation support services.
C. provides management consulting advice.
D. expresses a conclusion about an assertion.
Difficulty: Easy
Est time: < 1 min
5. The objective of assurance services is best described as:

A. improving the firm's outcomes.
B. comparing internal information and policies with those of other firms.
C. enhancing decision making.
D. providing reliable information.
Difficulty: Easy
Est time: < 1 min
6. Assurance services are best described as:

A. the expression of an opinion on the truth and fairness of a general purpose financial report.
B. the preparation of a financial report based on the assumptions of a responsible party.
C. independent professional services that improve the quality of information or its context, for decision
makers.
D. services designed for the improvement of operations, resulting in better outcomes.
Difficulty: Medium
Est time: 1–3 mins

lOMoARcPSD|6196095
7. Which of the following best describes an auditor's report on a supplementary financial report prepared in
accordance with
a price-level basis of accounting that has substantial support?
A. An unaudited report on a supplementary report.
B. An assurance report on a supplementary report.
C. A special purpose report on a supplementary report.
D. A limited assurance report on a supplementary report.
Difficulty: Easy
Learning Objective: 16.2 Understand the assurance provider’s obligations in relation to audits of financial information other than general-purpose reports, including
special-purpose reports, components of financial reports and summary financial reports.
Section: Special-purpose audit engagements
8. Which of the following statements, with respect to the auditor's report providing an opinion on a specific
item on a financial
report is correct?
A. Such a report can only be provided if the auditor is also engaged to audit the entire financial report.
B. Materiality must be related to the specified item rather than to the financial report taken as a whole.
C. The auditor who has issued an adverse opinion on the financial report taken as a whole can never express
an opinion on a specified item in that financial report.
D. The attention devoted to the specific item is usually less than it would be if the financial report taken as
a whole were being audited.
Difficulty: Medium
9. Which of the following must accompany an unaudited financial report which is prepared by an auditor?
A. Either a disclaimer of opinion or adverse opinion.
B. Only a disclaimer of opinion.
C. Either a disclaimer of opinion or a qualified opinion.
D. None of the given answers.
Difficulty: Medium

lOMoARcPSD|6196095
10. A compiled financial report should be accompanied by a report stating all of the following except:
A. a compilation has been performed.
B. the accountant does not express an opinion or any other form of assurance on the report.
C. a compilation consists principally of inquiries of company personnel and analytical procedures applied to
financial data.
D. a compilation is limited to presenting in the form of a financial report, information that is the representation
of management.

Difficulty: Hard
11. Whenever special reports, filed on a printed form designed by authorities, call upon the independent
auditor to make an assertion
that the auditor believes is not justified, the auditor should:
A. reword the form or attach a separate report.
B. submit a standard auditor's report with explanations in a separate paragraph of the report.
C. withdraw from the engagement.
D. submit the form with questionable items clearly omitted.

Difficulty: Hard
12. Negative assurance is permissible in:

A. reports relating to the results of agreed-upon procedures to one or more specified elements, accounts or
items
of a financial report.
B. reports based on a performance audit of a government department.
C. reports based upon an audit of the interim financial report of a closely held business entity.
D. reports based upon a review engagement.

Difficulty: Easy
Learning Objective: 16.3 Appreciate the procedures undertaken in a limited assurance (review) engagement and the level of assurance offered by these engagements.
Section: Limited assurance (review) engagements

lOMoARcPSD|6196095
13. Inquiry of the entity's personnel and analytical procedures are the primary bases for the issuance of a(n):
A. auditor's report on a financial report supplemented with price level information.
B. compilation report on a financial report for a non-public company in its first year of operations.
C. management advisory report prepared at the request of the client's audit committee.
D. half-yearly review report on a comparative financial report for a public company.

Difficulty: Easy
14. The report in a limited assurance engagement provides:

A. positive assurance.
B. negative assurance.
C. a summary of findings.
D. assurance in the form of an audit opinion.

Difficulty: Easy
Est time: < 1 min
15. The statement that 'nothing came to our attention which would indicate that these statements are not fairly
presented' expresses
which of the following?
A. Negative assurance.
B. Disclaimer of an opinion.
C. Piecemeal opinion.
D. Negative confirmation.

Difficulty: Easy
Est time: < 1 min

lOMoARcPSD|6196095
16. When an auditor performs a review of an interim financial report, which of the following steps would not be
part of the review?
A. Inquiry of management.
B. Testing of the computer controls.
C. Reading the minutes of the shareholders' meetings.
D. Review of ratios and trends.

Difficulty: Easy
17. An assurance provider who reviews the financial report of a non-reporting entity should issue a report
containing the statement that a review:
A. provides negative assurance that internal control is functioning as designed.
B. provides a level of assurance that is less than that given in an audit.
C. is substantially more in scope than a compilation.
D. provides a high level of assurance based on inquiry and analytical procedures.

Difficulty: Medium
18. Inquiry and analytical procedures ordinarily performed during a review of an entity's half-yearly financial
report include:
A. inquiries concerning actions taken at meetings of the board of directors.
B. analytical procedures designed to identify material weaknesses in internal accounting control.
C. inquiries of knowledgeable outside parties such as the client's attorneys and bankers.
D. analytical procedures designed to test the accounting records by obtaining corroborating evidential matter.

Difficulty: Medium

lOMoARcPSD|6196095
19. Which of the following procedures is usually included in a limited assurance engagement?
A. Inquiries concerning the entity's accounting policies.
B. Tests of controls over the sales-accounts receivable-cash cycle.
C. The confirmation of accounts receivable.
D. Attendance at the inventory stocktake.

Difficulty: Medium
20.
During a review of the financial report of a non-reporting entity an assurance provider becomes aware of a lack of adequate disclosure that is
material and pervasive to the financial report and results in it being misleading. If management refuses to correct the financial report
presentations, the assurance provider should:
A. express only limited assurance on the financial report presentations.

B. disclose this departure from accounting standards in a separate paragraph of the report.
C. issue an adverse opinion.
D. issue an 'except for' opinion.

Difficulty: Medium
21. Following is a list of engagements that an assurance provider may undertake:
I. compiling financial reports

II. agreed-upon procedures
III. review of interim financial information.
For which of these engagements is assurance not provided?

A. I only.
B. II only.
C. III only.
D. I and II only.

Difficulty: Easy
Learning Objective: 16.4 Understand the assurance provider’s obligations in undertaking agreed-upon procedures engagements, and appreciate the level of assurance
offered by such engagements.
Section: Agreed-upon procedures engagements

lOMoARcPSD|6196095
22. Which one of the following is generally more important in a review than in an agreed upon procedures
engagement?
A. Obtaining a signed representation letter.
B. Obtaining a signed engagement letter.
C. Gaining familiarity with industry accounting principles.
D. Determining the accounting bases on which the financial report is to be presented.

Difficulty: Hard
Learning Objective: 16.4 Understand the assurance provider’s obligations in undertaking agreed-upon procedures engagements, and appreciate the level of assurance
offered by such engagements.
Section: Agreed-upon procedures engagements
23. The responsible party for assumptions identified in the preparation of prospective financial statements is
usually:
A. a third-party lending institution.
B. the client's management.
C. the reporting accountant.
D. the client's independent auditor.

Difficulty: Easy
Learning Objective: 16.5 Understand the characteristics of engagements involving the assurance of prospective financial information, and appreciate the assurance
provider’s responsibilities in such engagements.
Section: Assurance of prospective financial information
24. Responding to a question such as 'what would happen if...' is an attribute of which of the following types of
engagements?
A. Financial projection.
B. Financial forecast.
C. Financial forecast and financial projection.
D. Review.

Difficulty: Easy

lOMoARcPSD|6196095
25. Given one or more hypothetical assumptions, a responsible party may prepare, to the best of its knowledge
and belief, an entity's
expected financial position, results of operations and changes in cash flows. Such prospective financial
statements are known as:
A. financial projections.
B. pro-forma financial statements.
C. financial forecasts.
D. partial presentations.

Difficulty: Easy
26. When an auditor is associated with the preparation of forecasts, all of the following should be disclosed
except the:
A. character of the work performed by the auditor.
B. sources of information.
C. probability of achieving estimates.
D. major assumptions in the preparation of the forecasts.

Difficulty: Medium
27. Which of the following are suitable criteria for providing assurance on a report of the effectiveness of
internal controls?
A. Australian Accounting Standards.
B. AUS 810 'Special Purpose Reports on the Effectiveness of Control Procedures'.
C. ASAE/ISAE 3000 'Assurance Engagements other than Reports or Reviews of Historical Financial
Information'.
D. The revised COSO framework.

Difficulty: Easy
Learning Objective: 16.6 Understand the characteristics of engagements involving the assurance of reports on internal controls, and appreciate the assurance
Section: Assurance of reports on the effectiveness of internal controls

lOMoARcPSD|6196095
28. An auditor's study and evaluation of the internal accounting control system made in connection with an
annual audit is usually
not sufficient to express an opinion on an entity's system because:
A. the audit cost-benefit relationship permits an auditor to express only reasonable assurance that the system
operates as designed.
B. the evaluation of weaknesses is subjective enough that an auditor should not express an opinion on the
internal
accounting controls alone.
C. only those controls on which an auditor intends to rely are reviewed, tested and evaluated.
D. management may change the internal accounting controls to correct weaknesses.

Difficulty: Easy
29. An assurance report on internal control structures is least likely to be issued as a result of a:
A. review of the annual financial report of a large company.
B. performance audit of a government agency.
C. special study of related party transactions.
D. special study of a proposed system involving the internal control structure.

Difficulty: Easy
30. An engagement to express an opinion on a system of internal accounting control will generally:
A. increase the reliability of the financial report that has already been audited.
B. require procedures that duplicate those already applied in assessing control risk during a financial report
audit.
C. be more limited in scope than the assessment of control risk made during a financial report audit.
D. be more extensive in scope than the assessment of control risk made during a financial report audit.

Difficulty: Easy

lOMoARcPSD|6196095
31. Which of the following would be suitable criteria for undertaking an assurance engagement on an
environmental and sustainability report?
A. Australian Auditing Standards/International Auditing Standards.
B. The revised COSO framework.
C. ASAE 3000/ISAE 3000.
D. Global reporting initiative framework.

Difficulty: Easy
Learning Objective: 16.7 Understand the characteristics of engagements involving the assurance of environmental and sustainability and integrated reports, and
appreciate the assurance provider’s responsibilities in such engagements.
Section: Assurance of environmental and sustainability reports and of integrated reports
32. Which of the following is not a major difference between integrated reporting and existing reporting
frameworks?
A. The variety of financial and non-financial metrics covered.
B. The emphasis on internal control.
C. The emphasis on forward-looking information.
D. The reflection of company strategy.

Difficulty: Medium
Learning Objective: 16.7 Understand the characteristics of engagements involving the assurance of environmental and sustainability and integrated reports, and
appreciate the assurance provider’s responsibilities in such engagements.
Section: Assurance of environmental and sustainability reports and of integrated reports
33. ISAE 3410 'Assurance of Greenhouse Gas Statements' is based on which approach to assurance?
A. Risk based approach.
B. Systems based approach.
C. Agreed upon procedures approach.
D. Limited assurance approach.

Difficulty: Easy
Learning Objective: 16.8 Understand the demand for assurance of greenhouse gas statements, and appreciate the assurance provider’s responsibilities in such
engagements.
Section: Assurance of greenhouse gas statements

lOMoARcPSD|6196095
34. An emission that is associated with the consumption, rather than the production, of electricity by an
assurance client should
be classed as a(n):
A. scope 1 emission.
B. scope 2 emission.
C. scope 3 emission.
D. emission deduction.

Difficulty: Easy
Learning Objective: 16.8 Understand the demand for assurance of greenhouse gas statements, and appreciate the assurance provider’s responsibilities in such
engagements.
Section: Assurance of greenhouse gas statements
35. Which of the following statements is true regarding the performance of an assurance service on an
information system's reliability
by an auditor?
A. The service will require the auditor to apply all of the auditing standards.
B. The performing of this service does not require suitable criteria to be available.
C. Performing the service must be undertaken in accordance with approved accounting standards.
D. The service may be performed even though there are no standards currently issued by the Australian
Auditing
and Assurance Standards Board (AUASB).

Difficulty: Easy
Learning Objective: 16.9 Understand assurance services provided in e-commerce environments.
Section: Providing assurance services in electronic commerce environments

lOMoARcPSD|6196095
36. Which of the following statements is true with regards the auditor's likelihood of relying on controls in
electronic commerce environments?
A. The auditor is more likely to identify controls they can rely upon in a B2B electronic commerce
environment than
they are in a B2C electronic commerce environment.
B. The auditor is more likely to identify controls they can rely upon in a B2C electronic commerce
environment than
they are in a B2B electronic commerce environment.
C. The auditor equally likely to identify controls they can rely upon in a B2B electronic commerce
environment as they
are in a B2C electronic commerce environment.
D. The auditor is not likely to identify controls they can rely upon in either a B2B electronic commerce
environment
or a B2C electronic commerce environment.

Difficulty: Medium
Learning Objective: 16.9 Understand assurance services provided in e-commerce environments.
Section: Providing assurance services in electronic commerce environments
37. In which of the following scenarios is it more likely that the information provided will be continuously
assured?
A. An entity decides to assure its environmental and sustainability report.
B. An entity has to provide a compliance report with regards whether there has been a breach of the rules with
regards
how confidential credit card details for electronic commerce transactions are stored.
C. An identity identifies that there is a risk that financial investments are not being written down to market
value in the
financial statements, as is required by accounting standards.
D. Financial information where a client determines to assure the quarterly financial reports as well as the
half-yearly
financial reports.

Difficulty: Easy
Learning Objective: 16.10 Appreciate the concepts of continuous assurance and XBRL.
Section: Continuous assurance and XBRL

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38.
Using XBRL, an audit client decides to make their general purpose financial reports continuously available and up-to-date and to have continuous
assurance from the auditor. What would be the suitable criteria by which the auditor would judge whether or not there had been a material
misstatement?
A. ASAE/ISAE 3000 'Assurance Engagements other than Reports or Reviews of Historical Financial
Information'.
B. Extensible mark-up language (XML).
C. There are no generally available suitable criteria for such engagements. The suitable criteria would have to
be
agreed between and the audit client and the auditor, and these would have to be publicly disclosed.
D. Approved accounting standards.

Difficulty: Medium
Learning Objective: 16.10 Appreciate the concepts of continuous assurance and XBRL.
Section: Continuous assurance and XBRL
39. What is the general character of the work conducted in performing a forensic audit?
A. Detecting or deterring fraudulent activity.
B. Determining whether internal control is operating efficiently and effectively
C. Identifying the causes of an entity's financial difficulties.
D. Offering an opinion on the reliability of the specific assertions made by management.

Difficulty: Easy
Learning Objective: 16.11 Understand the types of services offered by forensic auditors.
Section: Forensic auditing
40. Forensic audits include all of the following except:

A. employee fraud.
B. criminal investigations.
C. matrimonial disputes.
D. manufacturers' claims about product quality.

Difficulty: Easy
Learning Objective: 16.11 Understand the types of services offered by forensic auditors.
Section: Forensic auditing

lOMoARcPSD|6196095
Chapter 16 Summary
Category # of Qu
estions
Chapter - Chapter 16 40
Difficulty: Easy 26
Difficulty: Hard 3
Difficulty: Medium 11
Est time: < 1 min 7
Est time: 1–3 mins 33
Learning Objective: 16.1 Appreciate the framework of standards under which assurance services are currently offered, and how specific 6
standards relate to different types of assurance services.
Learning Objective: 16.10 Appreciate the concepts of continuous assurance and XBRL. 2
Learning Objective: 16.11 Understand the types of services offered by forensic auditors. 2
Learning Objective: 16.2 Understand the assurance provider’s obligations in relation to audits of financial information other than general 5
-purpose reports, including special-purpose reports, components of financial reports and summary financial reports.
Learning Objective: 16.3 Appreciate the procedures undertaken in a limited assurance (review) engagement and the level of assurance of 10
fered by these engagements.
Learning Objective: 16.4 Understand the assurance provider’s obligations in undertaking agreed-upon procedures engagements, and app 2
reciate the level of assurance offered by such engagements.
Learning Objective: 16.5 Understand the characteristics of engagements involving the assurance of prospective financial information, an 4
d appreciate the assurance provider’s responsibilities in such engagements.
Learning Objective: 16.6 Understand the characteristics of engagements involving the assurance of reports on internal controls, and appr 4
eciate the assurance provider’s responsibilities in such engagements.
Learning Objective: 16.7 Understand the characteristics of engagements involving the assurance of environmental and sustainability and 2
integrated reports, and appreciate the assurance provider’s responsibilities in such engagements.
Learning Objective: 16.8 Understand the demand for assurance of greenhouse gas statements, and appreciate the assurance provider’s re 2
sponsibilities in such engagements.
Learning Objective: 16.9 Understand assurance services provided in e-commerce environments. 2
Section: Agreed-upon procedures engagements 2
Section: Assurance of environmental and sustainability reports and of integrated reports 2
Section: Assurance of greenhouse gas statements 2
Section: Assurance of prospective financial information 4
Section: Assurance of reports on the effectiveness of internal controls 4
Section: Continuous assurance and XBRL 2
Section: Forensic auditing 2
Section: Limited assurance (review) engagements 9
Section: Providing assurance services in electronic commerce environments 2
Section: Special-purpose audit engagements 5
Section: The current framework for assurance services 6

Chapter 16 Test Bank

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lOMoARcPSD|6196095

Chapter 16 - TEST BANK

Auditing and Assurance Service (University of New South Wales)

Studocu is not sponsored or endorsed by any college or university

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

2. Reasonable assurance is provided by:

3. A review engagement provides:

4. In performing an assurance service, an auditor typically:

5. The objective of assurance services is best described as:

Downloaded by Rujean Salar Altejar (rujeansalaraltejar@gmail.com)

6. Assurance services are best described as:

Downloaded by Rujean Salar Altejar (rujeansalaraltejar@gmail.com)

12. Negative assurance is permissible in:

14. The report in a limited assurance engagement provides:

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A. express only limited assurance on the financial report presentations.

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21. Following is a list of engagements that an assurance provider may undertake:

I. compiling financial reports

For which of these engagements is assurance not provided?

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Downloaded by Rujean Salar Altejar (rujeansalaraltejar@gmail.com)

Downloaded by Rujean Salar Altejar (rujeansalaraltejar@gmail.com)

40. Forensic audits include all of the following except:

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

2. Reasonable assurance is provided by:

3. A review engagement provides:

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4. In performing an assurance service, an auditor typically:

5. The objective of assurance services is best described as:

6. Assurance services are best described as:

Downloaded by Rujean Salar Altejar (rujeansalaraltejar@gmail.com)

Downloaded by Rujean Salar Altejar (rujeansalaraltejar@gmail.com)

Chapter - Chapter 16 #10

Chapter - Chapter 16 #11

12. Negative assurance is permissible in:

Chapter - Chapter 16 #12

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Chapter - Chapter 16 #13

14. The report in a limited assurance engagement provides:

Chapter - Chapter 16 #14

Chapter - Chapter 16 #15

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Chapter - Chapter 16 #16

Chapter - Chapter 16 #17

Chapter - Chapter 16 #18

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Chapter - Chapter 16 #19

A. express only limited assurance on the financial report presentations.

Chapter - Chapter 16 #20

21. Following is a list of engagements that an assurance provider may undertake:

I. compiling financial reports

For which of these engagements is assurance not provided?

Chapter - Chapter 16 #21

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Chapter - Chapter 16 #22

Chapter - Chapter 16 #23

Chapter - Chapter 16 #24

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Chapter - Chapter 16 #25

Chapter - Chapter 16 #26