AUDIT THEORY QUIZ BEE

1. An attitude that includes a questioning mind and a critical assessment of audit evidence is referred to as

• Due professional care

• Professional skepticism

• Reasonable assurance

• Supervision

2. Professional skepticism requires that an auditor assume that management is

• Honest, in the absence of fraud risk factors.

• Dishonest until completion of tests.

• Neither honest nor dishonest.

• Offering reasonable assurance of honesty.

3. Which of the following has the primary responsibility for the fairness of the representation made in the financial statements?

• Client's management and those charged with governance

• Audit committee

• Independent auditor

• Board of Accountancy

4. The practice of accountancy includes the following except

• Practice in public accountancy.

• Practice in education/academe.

• Practice in the government.

• Practice in commerce and industry, when the CPA is appointed as marketing manager of the enterprise.

5. In assessing sampling risk, the risk of incorrect rejection and the risk of assessing control risk too high relate to the

• Effectiveness of the audit

• Efficiency of the audit

• Audit quality controls

• Selection of the sample

6. The date of the end of the latest period covered by the financial statements, which is normally the date of the most recent balance sheet in the financial statements subject to audit is the

• Date the financial statements are issued

• Date of the auditor’s report.

• Date of the financial statements

• Date of approval of the financial statements

7. Management’s responsibility in a computer system would not include

• ensuring the documentation of the system is complete and up to date

• maintaining a system of transaction processing that includes an audit trail.

• assessment of the control risk.

• making computer resources and knowledgeable personnel available

8. Inherent limitations in an audit stem from the following factors except

• most audit evidence is persuasive rather than conclusive.

• use of testing

• accounting and internal control system limitation.

• incompetence of an auditor.

9. Which of the following services provides the lowest level of assurance on a financial statement?

• An audit

• A review

• Neither service provides assurance on financial statements

• Each service provides the same level of assurance on financial statements

10. An examination of part of an organization's procedures and methods for the purpose of evaluating efficiency and effectiveness is what type of audit?

• Operational audit

• Production audit

• Compliance audit

• Financial statement audit