Quiz Auditing 1

1. This type of audit involves obtaining and evaluating evidence about the efficiency and effectiveness of an entity’s operating activities.

• Financial Statement Audit

• Compliance Audit

• Operational Audit

• Internal Control Audit

2. These auditors are typically CPA’s who render professional auditing services to clients.

• Independent Auditors

• Internal Auditors

• Government Auditors

• IRS Auditors

3. Which of the following is not an economic benefit of a financial statement audit?

• Access to Capital Markets

• Lower Cost of Capital

• Control and Operational Improvements

• Maintain Fair Competition

4. Which of the following is not an inherent limitation of a financial statement audit?

• Reasonable Cost

• Unlimited Timeframe

• Alternative Accounting Principles

• Accounting Estimates

5. Which organization is considered to be a private sector organization?

• State Boards of Accountancy

• Securities and Exchange Commission

• AICPA

• IRS

6. This component of regulatory framework includes the inspection of audits by the PCAOB staff and peers in other accounting firms.

• Standard setting

• Firm regulation

• Inspection and peer review

• Government regulation

7. It is the responsibility of management to complete all of the following except:

• Assess the risk of material misstatement in the financial statements

• Measure and record transaction data

• Classify and summarize recorded data

• Prepare financial statements per GAAP

8. Items that are considered to be _____, are significant to financial statement users

• Verifiable

• Material

• Fairly Presented

• Recorded

9. General Standards include all of the following except:

• Adequate Training

• Independence

• Understanding the Entity

• Due Professional Care

10. All of the following are components of assurance provided by an audit except:

• Auditor independence

• Reasonable assurance

• Detecting and reporting illegal acts

• Guaranteed accuracy of financial statements