Which of the following standards are part of the Generally Accepted Auditing Standards (GAAS)?

General Standards, Standards of Fieldwork, Standards of Reporting

Ethical Standards, Independence Standards, Quality Control Standards

Financial Standards, Operational Standards, Compliance Standards

Risk Assessment Standards, Control Standards, Reporting Standards

In an audit, what is the primary objective of risk assessment procedures?

To obtain an understanding of the entity and its environment

To detect material misstatements in the financial statements

To evaluate the effectiveness of internal controls

To ensure compliance with regulatory standards

Which of the following best describes a dual-purpose test in auditing?

A test that serves as both a substantive test of transactions and a test of controls

A test that evaluates both the design and implementation of internal controls

A test that provides both reasonable and absolute assurance

A test that examines both financial and non-financial data relationships

What is the main focus of an auditor when conducting a financial statement audit in a specific industry?

Assessing the overall financial health of the organization

Ensuring all financial data is accurate and complete

Understanding the unique risks and concerns inherent to that industry

Verifying compliance with all applicable laws and regulations

The term 'reasonable assurance' in auditing means:

The auditor has obtained sufficient appropriate audit evidence to conclude the financial statements are free from material misstatement

The auditor guarantees that there are no material misstatements

The auditor has checked all transactions to ensure accuracy

The auditor provides an absolute guarantee on the accuracy of the financial statements

Which element of professional conduct requires auditors to maintain independence both in fact and in appearance?

Professional Competence and Due Care

what is the impact of using ADA on sample size

ADA allow the auditor to test 100% of the data rather than a sample

it will not effect the sample size

Which of the following best illustrates the concept of sampling risk?

A randomly chosen sample may not be representative of the population as a whole on the characteristic of interest

An auditor may select audit procedures that are not appropriate to achieve the specific objective

An auditor may fail to recognize errors in the documents examined for the chosen sample

The documents related to the chosen sample may not be available for inspection.

Risk of incorrect rejection (Type 1 error).

It is the risk that the sample indicates that the recorded balance is materially misstated when, in fact, it is not.

Does support the auditor's planned assessed level of control risk when the true operating effectiveness of the control does not justify such an assessment.

It is the risk that the sample supports a conclusion that the control is operating effectively when, in fact, it is not operating effectively.

Contains proportionately fewer monetary errors or deviations from prescribed internal controls than exist in the balance or class as a whole.

An advantage of statistical sampling over non-statistical sampling is that statistical sampling helps an auditor to

B. Eliminate the risk of non-sampling errors.

C. Reduce audit risk and materiality to a relatively low level.

D. Minimize the failure to detect errors and fraud.

For which of the following audit tests would an auditor most likely use attribute sampling?

Estimate the proportion of a population that possesses a specified characteristic.

Observation of employees who control mailroom receipts.

Examining invoices in support of the valuation of equipment additions.

Selected accounts receivable for confirmation of account balances.

An auditor plans to examine a sample of 40 accounts payable invoices for proper approval as prescribed by the entity's internal accounting control procedures. One of the invoices in the chosen sample cannot be found, and the auditor is unable to use alternative procedures to determine whether the invoice was properly approved. The auditor should

Treat the missing invoice as a deviation for the purpose of evaluating the sample .

Choose another invoice to replace the missing one in the sample.

Consider this compliance test invalid and proceed with substantive tests because internal control cannot be relied upon.

Select a completely new random set of 40 invoices.

Operational auditing is oriented primarily toward

Efficiency and future improvements to accomplish the goals of management.

The accuracy of data reflected in management's financial records.

Verification that an entity's financial statements are fairly presented.

Past protection provided by existing internal control.

Which of the following statements best describes management's and the external auditor's respective levels of responsibility for a public company's financial statements?

Management has the primary responsibility to ensure that the company's financial statements are prepared in accordance with IFRS, and the auditor provides reasonable assurance that the statements are free of material misstatement.

Management and the external auditor share equal responsibility for the fairness of the entity's financial statements in accordance with IFRS.

Neither management nor the external auditor has significant responsibility for the fairness of the entity's financial statements in accordance with IFRS.

Management has the primary responsibility to ensure that the company's financial statements are prepared in accordance with IFRS, and the auditor provides a guarantee that the statements are free of material misstatement.

An independent audit adds value to the communication of financial information because the audit or Which of the following best describes the reason why independent auditor’s opinion on financial statements?

Provide credibility to the financial statements .

Confirms the exact accuracy of management's financial representations.

Guarantees that financial data are fairly presented.

Assures the readers of financial statements that any fraudulent activity has been corrected.

An entity maintains perpetual inventory records in both quantities and dollars. If the level of control risk were set at high, an auditor would probably:

Insist that the entity perform physical counts of inventory items several times during the year.

Apply gross profit tests to ascertain the reasonableness of the physical counts.

Increase the extent of tests of controls of the inventory system.

Request that the entity schedule the physical inventory count at the end of year.

Which of the following analytical procedures would be most useful in alerting the auditor to the possibility of obsolete inventory?

Compare inventory turnover ratio with previous years’.

Compare gross margin percentage with previous years’.

Compare unit costs of inventory with previous years’

Compare current year manufacturing costs with previous years’.

Which of the following audit procedures would probably provide the most reliable evidence concerning the entity’s assertion of rights and obligations related to inventory?

During physical observation of inventory verify that “bill-and-hold” inventory is segregated and not included in the ending inventory count.

Tracing of test counts noted during the entity’s physical count to the entity’s summarization of quantities.

Inquiry of management to determine whether there are significant purchase commitments that should be considered for disclosure.

Selection of the last few shipping advices used before the physical count and determination of whether the shipments were recorded as sales.

Auditor tests for the physical controls over raw materials, work in process, and finished goods are generally limited to

Observation and reconciliation.

Which one of the following statements is correct?

Audit risk is the risk of a material misstatement in the financial statement.

The risk of material misstatement in the financial statements consist of control risk.

Audit risk is the risk that the auditor will not detect a material misstatement that exist in the financial statements.

Audit risk is the risk of a material misstatement in the financial statement and that the auditor did not detect the material misstatement.

For each of the following independent situations, indicate what type of audit report is most appropriate . · The auditor lacks independence in fact, but not necessarily in appearance. · There is a scope limitation and it is material but the overall financial statements are still presented fairly. The uncorrected misstatements are immaterial.

a. Disclaimer; b. Qualified; c. Unqualified/Unmodified.

qualifide , unqualifide , Disclaimer

Disclaimer, qualifide , unqualifide

qualifide , Unmodified, unqualifide , Disclaimer

Financial statements are prepared following a(an):

Generally Accepted Auditing Standards.

Applicable financial reporting framework.

Set of quality control standards.

An audit should be designed to obtain reasonable assurance of detecting material misstatements due to:

Errors, fraud, and noncompliance with laws with a direct effect on financial statement amounts.

Errors with a direct effect on financial statement amounts.

Errors and fraud with a direct effect on financial statement amounts.

Errors, fraud and noncompliance with all laws.

Advanced Auditing

Quiz

•

Financial Education

•

University

•

Practice Problem

•

Hard

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38 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is a primary responsibility of an audit partner?

A. Perform the audit procedures assigned to them

B. Prepare adequate and appropriate documentation of completed work

C. Ensure the audit is properly planned and conducted in accordance with applicable auditing standards

D. Assist in the development of the audit plan

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What are the three types of audit tests?

A. Risk Assessment Procedures, Tests of Controls, Substantive Procedures

B. Analytical Procedures, Tests of Details, Walkthrough

C. Inspection, Inquiry, Observation

D. Substantive Tests, Dual-Purpose Tests, Analytical Tests

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following best describes 'reasonable assurance' in the context of an audit?

A. Absolute assurance that the financial statements are free of material misstatement

B. High level of assurance that the financial statements are free of material misstatement

C. Minimal assurance that the financial statements are free of material misstatement

D. Moderate assurance that the financial statements are free of material misstatement

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which statement is true about substantive procedures?

A. They are directed toward evaluating the effectiveness of internal controls

B. They involve obtaining an understanding of the entity and its environment

C. They detect material misstatements in a transaction class, account balance, and disclosure component of the financial statements

D. They are primarily used for testing controls

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT a component of the professional conduct expected from auditors?

Independence

Integrity

Confidentiality

Flexibility

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

An example of an internal control test is:

Analytical procedures

Walkthrough

Substantive procedures

Dual-purpose tests

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The audit team member responsible for supervising and reviewing the work of associates is the:

Partner

Manager

Senior/In-Charge

Associate/Staff

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Advanced Auditing

38 questions

Which of the following is a primary responsibility of an audit partner?

What are the three types of audit tests?

Which of the following best describes 'reasonable assurance' in the context of an audit?

Which statement is true about substantive procedures?

Which of the following is NOT a component of the professional conduct expected from auditors?

An example of an internal control test is:

The audit team member responsible for supervising and reviewing the work of associates is the:

Which of the following standards are part of the Generally Accepted Auditing Standards (GAAS)?

In an audit, what is the primary objective of risk assessment procedures?

Which type of audit test involves evaluating the design and operating effectiveness of internal controls?

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