Certificate Level
Assurance
Model MCQs with solutions & explanations
Compiled by: Sazzad Hossain ITP CSCA™, CCSM (ISC)2
BBA & MBA (University of Dhaka)
CA (Professional Level)
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Chapter 1 Concept of and need for assurance
General MCQs (60 Questions)
Question 1:
Which of the following is a key element of an assurance
engagement?
A) Suitable criteria
B) Written report
C) Practitioner’s independence
D) All of the above
Answer: D) All of the above
Explanation: All these elements are essential for an assurance
engagement as they contribute to its credibility.
Question 2:
What is the primary benefit of assurance services?
A) To save costs
B) To enhance the credibility of the information
C) To reduce workload
D) To simplify financial statements
Answer: B) To enhance the credibility of the
information
Explanation: Assurance services add credibility to the subject matter,
making it reliable for decision-making.
Question 3:
What level of assurance does an audit provide?
A) Absolute assurance
B) Reasonable assurance
C) Limited assurance
D) No assurance
Answer: B) Reasonable assurance
Explanation: Audits provide reasonable assurance because they reduce
engagement risk to an acceptably low level, but not to zero.
Question 4:
Which of the following is not a type of subject matter in assurance
engagements?
A) Data
B) Systems
C) Historical events
D) Behavior
Answer: C) Historical events
Explanation: Subject matters in assurance engagements typically involve
data, systems, or behavior but not historical events.
Question 5:
What is the relationship between the practitioner and the
responsible party in an assurance engagement?
A) Collaborative
B) Independent
C) Employer-employee
D) Dependent
Answer: B) Independent
Explanation: Independence is critical to ensure the credibility of the
assurance provided.
Question 6:
What is the primary purpose of an assurance engagement?
A) To detect fraud
B) To enhance the degree of confidence in the subject matter
C) To prepare financial statements
D) To manage company operations
Answer: B) To enhance the degree of confidence in the
subject matter
Explanation: Assurance engagements aim to enhance the confidence of
intended users regarding the reliability of the information.
Question 7:
Which of the following is an example of a reasonable
assurance engagement?
A) Internal audit
B) Statutory audit
C) Limited assurance review
D) Fraud investigation
Answer: B) Statutory audit
Explanation: Statutory audits provide a high level of assurance,
classified as reasonable assurance.
Question 8:
What does “sufficient appropriate evidence” refer to in
assurance engagements?
A) Evidence that supports the practitioner’s conclusion
B) All available data related to the subject matter
C) Information provided solely by the client
D) Evidence with a high degree of certainty
Answer: A) Evidence that supports the practitioner’s
conclusion
Explanation: Practitioners gather evidence that is both sufficient and
appropriate to form a valid opinion.
Question 9:
Which of the following is not an inherent limitation of
assurance services?
A) Sampling
B) System limitations
C) Absolute guarantees
D) Professional judgment
Answer: C) Absolute guarantees
Explanation: Assurance services do not provide absolute guarantees due
to inherent limitations such as sampling and judgment.
Question 10:
Who are the primary intended users of an auditor’s report?
A) General public
B) Management
C) Shareholders
D) Regulatory authorities
Answer: C) Shareholders
Explanation: Shareholders rely on the auditor’s report to make informed
decisions.
Question 11:
Why can assurance never be absolute?
A) Practitioners lack expertise
B) Due to inherent limitations in assurance processes
C) Financial systems are unreliable
D) Laws do not allow absolute assurance
Answer: B) Due to inherent limitations in assurance
processes
Explanation: Factors such as sampling, estimation, and reliance on
client information prevent absolute assurance.
Question 12:
What is the primary role of the practitioner in an assurance
engagement?
A) Prepare financial statements
B) Provide independent assurance
C) Approve management decisions
D) Certify the business operations
Answer: B) Provide independent assurance
Explanation: Practitioners enhance confidence by providing an
independent opinion on the subject matter.
Question 13:
What is the expectation gap in auditing?
A) The difference between user expectations and audit outcomes
B) The gap between financial reporting standards and regulations
C) A misunderstanding of auditor qualifications
D) A mismatch of internal controls and audit objectives
Answer: A) The difference between user expectations
and audit outcomes
Explanation: The expectation gap arises when users overestimate what an
audit can achieve.
Question 14:
What does the term "subject matter" refer to in
assurance engagements?
A) The evidence collected
B) The information being evaluated
C) The final audit report
D) The criteria used for evaluation
Answer: B) The information being evaluated
Explanation: The subject matter is the area or data under review in the
assurance engagement.
Question 15:
Which of the following describes professional skepticism?
A) Complete trust in management’s explanations
B) A questioning mindset and critical evaluation of evidence
C) Relying solely on client information
D) Blind adherence to audit procedures
Answer: B) A questioning mindset and critical
evaluation of evidence
Explanation: Professional skepticism helps auditors identify anomalies
or risks in evidence.
Question 16:
Which of the following best describes reasonable assurance?
A) Absolute assurance of correctness
B) A high level of assurance with engagement risk reduced to an acceptably low
level
C) A moderate level of assurance that engagement risk is insignificant
D) No assurance is provided
Answer: B) A high level of assurance with engagement
risk reduced to an acceptably low level
Explanation: Reasonable assurance is a high but not absolute level of
confidence based on sufficient, appropriate evidence.
Question 17:
What is the significance of criteria in assurance
engagements?
A) It helps define the evidence to be gathered
B) It provides a benchmark for evaluation
C) It determines the scope of the practitioner’s work
D) All of the above
Answer: D) All of the above
Explanation: Criteria are essential for defining evidence, evaluation,
and scope in assurance engagements.
Question 18:
Which of the following is an example of limited assurance?
A) Audit of financial statements
B) A review of interim financial information
C) Internal control review
D) Fraud investigation
Answer: B) A review of interim financial information
Explanation: Limited assurance engagements provide a moderate level of
assurance, as seen in reviews.
Question 19:
Why is an engagement letter important in assurance services?
A) It outlines the responsibilities of the parties involved
B) It sets the terms and scope of the engagement
C) It reduces misunderstandings between the practitioner and the client
D) All of the above
Answer: D) All of the above
Explanation: Engagement letters help clarify responsibilities, scope,
and terms, preventing disputes or confusion.
Question 20:
What does "sufficient evidence" mean in assurance
engagements?
A) Enough evidence to eliminate all risks
B) Evidence that is adequate to support the practitioner’s conclusion
C) Evidence provided solely by management
D) The maximum amount of data collected
Answer: B) Evidence that is adequate to support the
practitioner’s conclusion
Explanation: Practitioners gather sufficient evidence to make reliable
and valid conclusions.
Question 21:
Which of the following is not a benefit of assurance
engagements?
A) Enhancing the credibility of information
B) Identifying all fraudulent activities
C) Providing an independent opinion
D) Reducing management bias
Answer: B) Identifying all fraudulent activities
Explanation: Assurance engagements are not designed to detect all fraud
but to enhance credibility and reliability.
Question 22:
What role does professional judgment play in assurance
engagements?
A) It replaces the need for evidence
B) It helps auditors interpret evidence and make informed decisions
C) It minimizes the work required
D) It is used only in fraud investigations
Answer: B) It helps auditors interpret evidence and
make informed decisions
Explanation: Professional judgment is critical for evaluating evidence
and forming valid conclusions.
Question 23:
Which of the following is a key limitation of assurance
engagements?
A) All items in the subject matter are tested
B) Only positive conclusions can be expressed
C) Evidence is persuasive, not conclusive
D) Absolute assurance is guaranteed
Answer: C) Evidence is persuasive, not conclusive
Explanation: Assurance engagements rely on persuasive evidence, which is
sufficient for reasonable conclusions but not definitive.
Question 24:
What is the primary objective of a statutory audit?
A) To detect fraud and errors
B) To confirm compliance with laws
C) To express an opinion on whether financial statements give a true and fair
view
D) To ensure profitability
Answer: C) To express an opinion on whether financial
statements give a true and fair view
Explanation: Statutory audits aim to evaluate and confirm the accuracy
of financial statements.
Question 25:
What is the "expectations gap" in auditing?
A) The gap between audit fees and actual work performed
B) The difference between user expectations and what audits deliver
C) The discrepancy in the auditor's independence
D) The difference between limited and reasonable assurance
Answer: B) The difference between user expectations
and what audits deliver
Explanation: The expectations gap occurs when users misunderstand the
auditor’s role or the scope of the audit.
Question 26:
Why is independence critical in assurance engagements?
A) To simplify the practitioner’s work
B) To prevent management from dictating audit findings
C) To ensure the objectivity and credibility of the engagement
D) To comply with legal requirements
Answer: C) To ensure the objectivity and credibility
of the engagement
Explanation: Independence protects the integrity and reliability of
assurance engagements.
Question 27:
Which of the following best defines the practitioner in an
assurance engagement?
A) The party who prepares the subject matter
B) The independent professional providing assurance
C) The intended user of the assurance report
D) The person responsible for implementing findings
Answer: B) The independent professional providing
assurance
Explanation: The practitioner is the independent expert performing the
engagement.
Question 28:
What is the primary purpose of audit evidence?
A) To identify material misstatements
B) To reduce engagement costs
C) To provide documentation for future audits
D) To ensure client satisfaction
Answer: A) To identify material misstatements
Explanation: Audit evidence is gathered to support conclusions and
detect material misstatements.
Question 29:
Which of the following describes reasonable assurance?
A) Absolute guarantee of accuracy
B) High but not absolute confidence in the subject matter
C) Limited confidence in financial data
D) Full reliance on management’s information
Answer: B) High but not absolute confidence in the
subject matter
Explanation: Reasonable assurance provides a high degree of confidence
but not a guarantee.
Question 30:
What is the purpose of a written assurance report?
A) To serve as legal proof of accuracy
B) To communicate the practitioner’s findings and opinion
C) To provide financial analysis
D) To determine penalties for errors
Answer: B) To communicate the practitioner’s findings
and opinion
Explanation: A written report ensures clarity and formal documentation
of the assurance provided.
General MCQs (Continued: 31–60)
Question 31:
Which of the following factors can hinder professional
skepticism in auditing?
A) Independence of the auditor
B) Excessive reliance on management’s explanations
C) Critical assessment of evidence
D) Regular review by audit managers
Answer: B) Excessive reliance on management’s
explanations
Explanation: Over-reliance on management can reduce the auditor’s
ability to critically assess evidence and apply skepticism.
Question 32:
What is one of the main benefits of an assurance engagement
for investors?
A) It eliminates all financial risks.
B) It enhances the credibility of financial information.
C) It ensures compliance with all regulations.
D) It guarantees profitability of investments.
Answer: B) It enhances the credibility of financial
information.
Explanation: Assurance engagements provide investors with confidence in
the reliability of the information provided.
Question 33:
What is the role of the responsible party in an assurance
engagement?
A) To issue an assurance report
B) To prepare the subject matter for evaluation
C) To provide evidence for the practitioner
D) To act as the intended user of the report
Answer: B) To prepare the subject matter for
evaluation
Explanation: The responsible party is tasked with creating the subject
matter that will be reviewed by the practitioner.
Question 34:
Which of the following is a limitation of assurance
services?
A) They provide absolute assurance.
B) They rely on sampling and do not test every item.
C) They focus only on regulatory compliance.
D) They involve high costs.
Answer: B) They rely on sampling and do not test
every item.
Explanation: Sampling is an inherent limitation because it means not all
items are tested, but a representative sample is used.
Question 35:
What is a primary characteristic of limited assurance?
A) A high level of confidence expressed positively
B) A moderate level of confidence expressed negatively
C) Full compliance with regulatory requirements
D) Absolute assurance
Answer: B) A moderate level of confidence expressed
negatively
Explanation: Limited assurance is communicated with negative phrasing,
such as “nothing has come to our attention.”
Question 36:
In an assurance engagement, who determines the criteria for
evaluation?
A) The responsible party
B) The practitioner
C) The intended users
D) It is jointly decided by all parties
Answer: A) The responsible party
Explanation: The responsible party usually defines the criteria, which
must be suitable and agreed upon by all parties.
Question 37:
Why are material misstatements significant in assurance
engagements?
A) They always indicate fraud.
B) They affect the reliability of the subject matter.
C) They reduce the cost of the engagement.
D) They guarantee the need for an audit.
Answer: B) They affect the reliability of the subject
matter.
Explanation: Material misstatements can mislead users and undermine the
purpose of the assurance engagement.
Question 38:
What is one way practitioners address the expectations gap
in assurance engagements?
A) By offering absolute assurance
B) By communicating the scope and limitations in an engagement letter
C) By increasing the number of samples tested
D) By relying entirely on management-provided evidence
Answer: B) By communicating the scope and limitations
in an engagement letter
Explanation: An engagement letter helps clarify what the engagement
entails and addresses user misconceptions.
Question 39:
What is the difference between positive and negative
assurance?
A) Positive assurance provides a high level of confidence, while negative
assurance provides a moderate level.
B) Positive assurance relies on limited evidence, while negative assurance
relies on extensive evidence.
C) Positive assurance is used for reviews, while negative assurance is used for
audits.
D) Positive assurance is more cost-effective than negative assurance.
Answer: A) Positive assurance provides a high level
of confidence, while negative assurance provides a moderate level.
Explanation: Positive assurance provides direct conclusions, while
negative assurance is phrased as "nothing has come to our attention."
Question 40:
What is the primary purpose of sampling in assurance
engagements?
A) To eliminate risks completely
B) To reduce costs while maintaining representative testing
C) To guarantee no material misstatements
D) To avoid reliance on management-provided evidence
Answer: B) To reduce costs while maintaining
representative testing
Explanation: Sampling allows practitioners to test a subset of data to
draw conclusions without examining every item.
Question 41:
Which of the following reports typically uses negative
assurance?
A) Statutory audit report
B) Review of interim financial information
C) Due diligence report
D) Fraud investigation report
Answer: B) Review of interim financial information
Explanation: Limited assurance engagements, like reviews, often use
negative assurance phrasing.
Question 42:
What ensures the credibility of an assurance engagement?
A) The expertise of the responsible party
B) The independence of the practitioner
C) The complexity of the subject matter
D) The number of items tested
Answer: B) The independence of the practitioner
Explanation: Independence ensures that the practitioner’s opinion is
unbiased and credible.
Question 43:
What is the primary focus of an audit?
A) Ensuring profitability
B) Detecting all instances of fraud
C) Expressing an opinion on financial statements
D) Reviewing management performance
Answer: C) Expressing an opinion on financial
statements
Explanation: The main goal of an audit is to provide reasonable
assurance about the accuracy of financial statements.
Question 44:
What does "suitable criteria" mean in assurance
engagements?
A) Criteria based on laws only
B) Agreed benchmarks for evaluating the subject matter
C) Management-provided guidelines
D) Criteria established solely by the practitioner
Answer: B) Agreed benchmarks for evaluating the
subject matter
Explanation: Suitable criteria provide a framework for assessing the
subject matter.
Question 45:
Why is evidence considered persuasive rather than conclusive
in assurance engagements?
A) Absolute assurance is unnecessary.
B) It reduces engagement costs.
C) Practical limitations prevent the collection of conclusive evidence.
D) Practitioners rely only on management’s assertions.
Answer: C) Practical limitations prevent the
collection of conclusive evidence.
Explanation: Limitations such as sampling and reliance on estimates make
evidence persuasive, not conclusive.
Question 46:
What is one of the key roles of professional judgment in
assurance engagements?
A) To replace the need for evidence
B) To determine the sufficiency and appropriateness of evidence
C) To guarantee the subject matter is free from error
D) To prepare the engagement report
Answer: B) To determine the sufficiency and
appropriateness of evidence
Explanation: Professional judgment is used to evaluate the nature,
timing, and extent of evidence needed to form a conclusion.
Question 47:
Which of the following is an example of an agreed-upon
procedures engagement?
A) Audit of financial statements
B) Review of internal controls
C) Verification of inventory quantities for a specific client request
D) Examination of a sustainability report
Answer: C) Verification of inventory quantities for a
specific client request
Explanation: Agreed-upon procedures engagements involve specific tasks
requested by the client, such as verifying inventory.
Question 48:
Why is documentation critical in assurance engagements?
A) It is legally required in all countries.
B) It ensures the practitioner’s work can be reviewed and justified.
C) It eliminates the risk of errors.
D) It simplifies the engagement process.
Answer: B) It ensures the practitioner’s work can be
reviewed and justified.
Explanation: Documentation provides evidence of the work performed and
supports conclusions drawn during the engagement.
Question 49:
What is the primary difference between an audit and a review
engagement?
A) Audits provide absolute assurance, while reviews provide reasonable
assurance.
B) Audits provide reasonable assurance, while reviews provide limited
assurance.
C) Audits rely on sampling, while reviews examine all transactions.
D) Audits are always required by law, while reviews are not.
Answer: B) Audits provide reasonable assurance, while
reviews provide limited assurance.
Explanation: Audits offer a higher level of assurance than reviews,
which provide moderate confidence with limited procedures.
Question 50:
What is the "true and fair view" concept in
auditing?
A) Compliance with all laws and regulations
B) Presentation of financial statements that are factual and unbiased
C) A guarantee of no errors in financial statements
D) The auditor’s guarantee of profitability
Answer: B) Presentation of financial statements that
are factual and unbiased
Explanation: "True and fair view" refers to the accurate and
impartial presentation of financial statements.
Question 51:
What is the primary purpose of an auditor’s opinion?
A) To verify compliance with tax laws
B) To provide reasonable assurance on the financial statements
C) To certify the company’s profitability
D) To ensure all internal controls are effective
Answer: B) To provide reasonable assurance on the
financial statements
Explanation: The auditor’s opinion is based on their evaluation of
whether financial statements are true and fair.
Question 52:
Which of the following is an example of a statutory
assurance engagement?
A) A voluntary review of internal controls
B) An audit of a public company’s financial statements
C) A review of sustainability disclosures
D) A due diligence engagement for a merger
Answer: B) An audit of a public company’s financial
statements
Explanation: Statutory audits are legally required for certain entities,
such as public companies.
Question 53:
What ensures the reliability of evidence in assurance
engagements?
A) It is provided by management.
B) It is sufficient and appropriate for the engagement.
C) It eliminates all material misstatements.
D) It relies entirely on the auditor’s professional skepticism.
Answer: B) It is sufficient and appropriate for the
engagement.
Explanation: Reliable evidence must be adequate and relevant to support
the practitioner’s conclusions.
Question 54:
What is the impact of inherent limitations on assurance
engagements?
A) They reduce the level of assurance provided.
B) They guarantee the need for sampling.
C) They allow for absolute assurance.
D) They eliminate the need for professional judgment.
Answer: A) They reduce the level of assurance
provided.
Explanation: Limitations such as sampling and reliance on
client-provided information prevent absolute assurance.
Question 55:
What does professional skepticism help auditors identify?
A) Inherent limitations of internal controls
B) Errors or fraud in financial statements
C) The sufficiency of evidence
D) Compliance with engagement letters
Answer: B) Errors or fraud in financial statements
Explanation: Professional skepticism involves critically assessing
evidence to detect potential errors or fraud.
Question 56:
Which of the following is true about materiality in
assurance engagements?
A) It ensures that all errors are eliminated.
B) It refers to the significance of misstatements to users of the information.
C) It is determined solely by the responsible party.
D) It guarantees compliance with legal standards.
Answer: B) It refers to the significance of
misstatements to users of the information.
Explanation: Materiality is based on whether misstatements could
influence users’ decisions.
Question 57:
Which of the following is a key element of reasonable
assurance?
A) Testing all items in the subject matter
B) Expressing a positively worded opinion
C) Relying only on client-provided evidence
D) Providing assurance without any limitations
Answer: B) Expressing a positively worded opinion
Explanation: Reasonable assurance is expressed positively, such as “in
our opinion, the financial statements are true and fair.”
Question 58:
Which type of assurance engagement focuses on non-financial
metrics?
A) Statutory audit
B) Sustainability assurance
C) Limited assurance review
D) Internal control audit
Answer: B) Sustainability assurance
Explanation: Sustainability assurance evaluates non-financial metrics,
such as environmental and social performance.
Question 59:
Why is independence critical in assurance engagements?
A) To enhance the credibility of the practitioner’s opinion
B) To reduce the cost of the engagement
C) To simplify the assurance process
D) To allow management to control the engagement
Answer: A) To enhance the credibility of the
practitioner’s opinion
Explanation: Independence ensures the practitioner’s opinion is unbiased
and trustworthy.
Question 60:
What is the practitioner’s primary responsibility in an
assurance engagement?
A) To prepare the subject matter
B) To provide an independent opinion
C) To ensure profitability of the business
D) To implement corrective actions
Answer: B) To provide an independent opinion
Explanation: The practitioner’s role is to evaluate the subject matter
and express an independent, objective opinion.
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