Correct

1/1 Points
2.Which three of the following are benefits of an assurance report on financial
information?
An assurance report
enhances the credibility of the information being reported on
reduces the risk of management bias in the information being reported on
attests to the correctness of the information being reported on
draws the attention of the user to deficiencies in the information being reported on
Incorrect
0/1 Points
3.Which one of the following best describes the concept of assurance?
Assurance refers to:
an assurance firm's high level of satisfaction as to the reliability of an assertion being made by
one party for the use of another party
an assurance firm's satisfaction as to the reliability of an assertion being made by one party for
the use of another party
a user's satisfaction as to the reliability of an assertion being made by another party 
an assurance firm's limited level of satisfaction as to the reliability of an assertion being made by
one party for the use of another party
Correct
1/1 Points
4.Which one of the following statements best describes the evidence obtained
and the
opinion given in a reasonable assurance engagement?
Sufficient appropriate evidence and a negatively worded opinion
Sufficient appropriate evidence and a positively worded opinion
A lower level of evidence and a negatively worded opinion
A lower level of evidence and a positively worded opinion
Correct
1/1 Points
5.Which two of the following are auditors always required to do on being invited
to accept an
audit engagement?
Ensure they are professionally qualified to act
Ensure they have adequate existing resources to carry out the audit
Obtain references for key personnel within the entity to be audited
 Communicate with the predecessor auditors to discover any reasons they should not accept
appointment
Correct
1/1 Points
6.As used in auditing, which of the following statements best describes
"assertions"?
Assertions are the representations of management as to the reliability of the information system.
Assertions are the auditor's findings to be communicated in the audit report.
Assertions are the representations of management as to the fairness of the financial statements.
Assertions are found only in the footnotes to the financial statements.
Correct
1/1 Points
7.Any services in which the CPA firm issues a written communication that express
a conclusion
with respect to the reliability of a written assertion that is the responsibility of
another party is
a (n)
a. Accounting and bookkeeping service
Management advisory service
Attestation service
Tax service
Correct
1/1 Points
8.Assurance engagement
Option 1
an engagement in which a practitioner is engaged to issue, or does issue, a
written communication that expresses a conclusion about the reliability of a written assertion that is
the responsibility of another party.
a systematic process of objectively obtaining and evaluating evidence regarding assertions about
economic actions and events to ascertain the degree of correspondence between those assertions
and established criteria and communicating the results to interested users.
Is an engagement in which the auditor provides a moderate level of assurance that
the information subject to the engagement is free of material misstatement
Is an engagement intended to enhance the credibility of information about a subject matter by
evaluating whether the subject matter conforms in all material respects with suitable criteria, thereby
improving the likelihood that the information will meet the needs of an intended user
Correct
1/1 Points
9.Which of the following best describes the objective of an audit of financial
statements?
To express an opinion whether the financial statements are prepared in accordance
with prescribed criteria
To express an assurance as to the future viability of the entity whose financial statements are
being audited.
 To express an assurance about the management’s efficiency or effectiveness in conducting the
operations of entity.
To express an opinion whether the financial statements are prepared, in all material respect, in
accordance with an identified financial reporting framework.
Correct
1/1 Points
10.The auditor’s opinion
a. Enhances the credibility of the financial statements.
b. Is an assurance as to the future viability of the entity.
c. Is an assurance as to the efficiency with which management has conducted the affairs of the
entity, but not effectiveness.
d. Certifies the correctness of the financial statements.
Incorrect
0/1 Points
11.When an independent auditor is approached to perform an audit for the first
time, he or she
should make inquiries of the predecessor auditor. Inquiries are necessary because
the
predecessor may be able to provide the successor with information that will assist
the
successor in determining whether
a. The predecessor’s work should be used.
b. The company rotates auditors.
c. In the predecessor’s opinion, control risk is low.
d. The engagement should be accepted.
Incorrect
0/1 Points
12.It refers to the audit procedures deemed necessary in the circumstances to
achieve the
objective of the audit
Scope of an audit
Audit program
 Objective of an audit
Reasonable assurance
Will be reviewed
13.Engagements frequently performed by professional accountants that are not
assurance
engagements include the following excep
Agreed-upon procedures.
Compliance audit
Compilation
Management consulting
Correct
1/1 Points
14.An audit engagement letter least likely includes
a. A reference to the inherent limitation of an audit that some material misstatements
may remain undiscovered.
b. Identification of specific audit procedures that the auditor needs to undertake.
c. Description of any letters or reports that the auditor expects to submit to the client.
d. Arrangements concerning the involvement of internal auditors and other client’s staff.
Will be reviewed
15.Which of the following least likely requires the auditor to send a new
engagement letter?
a. An indication that the client misunderstands the objective and scope of the audit.
b. Any revised or special terms of the engagement.
c. A recent change in the audit firm’s management.
d. Legal requirements and other government agencies’ pronouncements.
All of the above
None of the above
Correct
1/1 Points
16.Which is not true of the intended user?
A. The intended user is the person or class of persons for whom the professional accountant
prepares the report for a specific use or purpose.
B. The intended user(s) is (are) always limited to the addressee of the professional accountant‘s
report.
C. The responsible party may also be the one of the intended users.
D. The intended user(s) may not be the addressee of the professional accountant‘s report.
Option 2
Correct
1/1 Points
17.Which statement does not accurately describe an assurance engagement?
A. The objective of an assurance engagement is for a professional accountant to evaluate or
measure a subject matter that is the responsibility of another party against identified suitable criteria,
and to express a conclusion that provides the intended user with a level of assurance about that
subject matter.
B. Not all engagements performed by professional accountants are assurance engagements.
C. A particular engagement, to be an assurance engagement, depends upon whether it exhibits
all the following elements: a two-party relationship, a subject matter, suitable criteria, and a
conclusion.
D. An engagement in form of agreed-upon procedures result in the expressions of factual
findings.
Option 2
Correct
1/1 Points
18.Engagement letters are widely used in practice for professional engagements
for all types. The primary purpose of the engagement letters is to
a. Remind management that the primary responsibility for the financial statements rests with
management
b. Provide a written record of the agreement with the client as to the services to be provided
c. Satisfy the requirements of the CPA’s liability for insurance policy
d. Provide a starting point for the auditor’s preparation of the preliminary audit program
Correct
1/1 Points
19.On recurring audits, the auditor may decide not to send a new engagement
letter each year. However, he might decide to send a new letter when:
Any indication that the entity misunderstands the objective and scope of the audit.
A change in the financial reporting framework adopted in the preparation of the financial
statements or other reporting requirements
A significant change in ownership
All of the above
Correct
1/1 Points
20.In audit situation, communication between successor and predecessor
auditors should be
authorized in an engagement letter
acknowledged in a representation letter
either written or oral
written and included in the working papers
Will be reviewed
21.Janie Jones, CPA is proposing on a prospective audit engagement for White
Mountain Enterprises. After obtaining written permission of White Mountain,
Janie is required to perform what procedure prior to accepting it as a new client?
Provide full disclosure of fees that will be billed to White Mountain.
Contact the former auditor to ensure all disagreements have been resolved.
Contact the former auditor about certain matters of interest in Janie’s decision to accept White
Mountain as
client.
Contact the former auditor to determine if all fees have been paid, the change in auditors have
been approved and integrity issues have been overcome.
Option 2