Audit Process

What is the first stage of the audit process?

• Execution
• Planning
• Reporting
• Wrap-up

Which standard deals with understanding the entity and its environment?

• ISA 200
• ISA 210
• ISA 315
• ISA 500

What is the main output of the audit process?

• Management letter
• Audit program
• Audit opinion
• Audit plan

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

• Physical examination
• Inquiry
• Internal audit opinion
• Confirmation

What is the main purpose of the risk assessment procedures?

• To detect fraud
• To assess the control risk
• To identify and assess risks of material misstatement
• To test financial statement balances

Which is the correct order of audit phases?

• Planning – Completion – Risk Assessment – Testing
• Planning – Risk Assessment – Execution – Completion
• Completion – Testing – Planning – Reporting
• Planning – Execution – Risk Assessment – Reporting

What does the engagement letter typically include?

• Audit adjustments
• Management representation
• Scope and responsibilities
• Key audit matters

Which term describes the auditor’s judgment of the level of misstatement that would affect decisions?

• Risk of material misstatement
• Performance materiality
• Detection risk
• Materiality

What type of audit procedure is performed to test internal controls?

• Substantive testing
• Risk assessment
• Control testing
• Final analytical review

What is inherent risk?

• The risk that controls fail
• The risk that the auditor fails to detect a misstatement
• The susceptibility of an assertion to misstatement before controls
• The risk of material misstatement due to fraud