Quiz Lesson 1

What is an assurance engagement?

• It is a professional service

• It provides credibility and confidence to users

• It reports information to users

• It provides evidence to users

An audit of historical information is a type of assurance engagement?

External audits provides what level of assurance?

• Reasonable assurance

• Limited assurance

What is the meaning of reasonable assurance?

• No assurance

• Negative assurance

• High level of assurance

• Some assurance

What is the main purpose of an external audit?

• To inform to shareholders about the FS

• To provide evidence that FS are true and fair

• To express an opinion about the FS to shareholders

• To evaluate the FS of a company

Independent auditors are.....

• Auditors that perform an audit of financial statements

• Auditors that perform an audit of operations

• Auditors that provide accounting services

• Auditors that come from within an organisation

External audit engagements cannot provide absolute assurance for the following reasons:

• Sampling risk

• Use of judgement can be subjective

• Financial statements may contain errors

• Audit of historical information

An _________ ___________has the objective of expressing an opinion on the ____________and ____________of the financial statements.

External audits focuses on material misstatements in the financial statements

• True

• False

External auditors act solely for the shareholders of a company

• True

• False