BECKER CPA EXAM REVIEW

1-15 (OBJECTIVES 1-5, 1-6) The following questions deal with assurance services and types of audits. Choose the best response.

a. Which of the following is considered an assurance engagement?
(1) Bookkeeping
(2) Preparation
(3) Compilation
(4) Audit

b. Which of the following engagements is most likely to be considered an operational audit?
(1) The auditor determines whether the organization is following provisions of laws and regulations.

Part 1 / THE AUDITING PROFESSION
(2) The auditor examines information presented in an entity’s financial statements to determine whether the financial statements are presented fairly in accordance with the applicable financial reporting framework.

(3) The auditor evaluates the organization’s efficiency in processing payments.
(4) The auditor assists the client in preparation of financial statements.

c. In a financial statement audit, the auditor obtains a reasonable level of assurance about whether the financial statements are free of material misstatement in order to express an opinion. In order to obtain reasonable assurance, the auditor must
(1) have prior experience in the industry in which the audit client operates.
(2) examine all documents available that support the financial statements.
(3) obtain sufficient audit evidence.
(4) test controls around significant transaction cycles.