Auditing Quiz

What is the primary objective of an external audit?

• To audit and report on the financial statements

• To prepare the financial statements

• To detect all instances of fraud

• To provide consulting services

Which of the following is a limitation of statutory audits?

• Auditors are required to detect all fraud

• Auditors can examine every transaction

• Auditors rely heavily on management for information

• Auditors must report to the public

What is the main difference between internal and external audits?

• Internal auditors report to shareholders, external auditors report to management

• External audits focus on financial statements, internal audits focus on management controls

• External auditors are employees of the company

• Internal audits are required by law, external audits are not

What does the term 'true and fair view' refer to in auditing?

• The accounts must be exactly correct

• The accounts must be free from material misstatement

• The accounts must be prepared by the auditor

• The accounts must comply with tax regulations

Who is responsible for appointing external auditors?

• The shareholders of the company

• The management of the company

• The internal audit committee

• The government

What is the role of the audit committee?

• To appoint external auditors

• To oversee the internal audit function

• To prepare the financial statements

• To manage the company's finances

Which of the following is NOT a responsibility of external auditors?

• To report on the truth and fairness of financial statements

• To provide an opinion on financial statements

• To report weaknesses in internal controls

• To detect all instances of fraud

What is the primary purpose of internal audits?

• To act as a management control

• To ensure compliance with laws and regulations

• To provide assurance on financial statements

• To prepare the financial statements

What is the expectation gap in auditing?

• The gap in knowledge between auditors and management

• The difference between what auditors do and what the public expects

• The gap between internal and external audit findings

• The difference in audit fees charged by different firms

Which body sets the International Standards on Auditing (ISA)?

• The Financial Accounting Standards Board

• The International Federation of Accountants

• The International Accounting Standards Board

• The Auditing Practices Board