Audit process

Which of the following is not a type of audit opinion?

• Adverse

• Reverse

• Disclaimer

• Qualified

The objective of the audit plan is

• to conduct the audit in accordance with GAAS

• reduce the risk of material misstatements to an acceptably low level

• prepare an unqualified report

• Both A & B

 What is the independent auditor’s principal purpose for obtaining an understanding of internal control and assessing control risk in a financial statement audit?

• To comply with generally accepted accounting principles

• To obtain a measure of assurance of management’s efficiency

• To determine the nature, timing, and extent of subsequent audit work

• To maintain a state of independence in mental attitude during the audit

An audit designed to determine the extent to which the desired results of an activity established by the legislative or other authorizing body are being achieved is a (an)...

The preliminary audit strategy

• is set before the auditor understands the client's reasons for the audit

• is the detailed steps to be followed for the substantive audit tests

• guides the development of the audit plan

• is determined after the engagement staffing is set

When selecting staff for the audit engagement

• staff assigned to the audit must be knowledgeable about the client's industry

• staff members who are CPAs should be assigned to the audit

• continuity of staff members from year to year should not be a factor

• managers and above need to have appropriate competence and capabilities to perform the audit

Audit program is prepared by

• the auditor and audit assistants

• the auditor

• the auditing firm

• the client

In an audit of financial statements, substantive tests are audit procedures that

• Will increase proportionately when the auditor decreases the assessed level of control risk

• May be test of transactions, test of balance and analytical procedures

• May be eliminated for an account balance under certain conditions

• Are designed to discover significant subsequent events

In what order should the following steps occur?

1. Set preliminary judgment of materiality and performance materiality.

2. Understand the clients business and industry.

3. Perform preliminary analytical procedures.

4. Accept the client and perform initial audit planning.

(Write down the answer in this form: 1234; 2314...)

Unqualified Audit Report reflects that the auditor is satisfied with the points that must be expressed in his report and that too in a positive sense, without any reservations.

• False

• True