New Staff_Audit Training Post Test_B2

Who is responsible for the preparation and fair presentation of the financial statements?

• The external auditor
• Audit committee
• Company management
• Internal audit

Which is the correct order of audit phases?

• Planning – Completion – Risk Assessment – Risk Response
• Planning – Risk Assessment – Risk Response – Completion
• Completion – Risk Response – Planning – Reporting
• Planning – Risk Response – Risk Assessment – Reporting

Which source would be LEAST helpful for understanding the entity?

• Prior year audit working papers
• Discussions with management
• External industry publications
• The auditor’s own financial statements

Answer explanation

Understanding the entity helps auditors assess risks of material misstatement, which is the foundation of risk-based auditing.

Which of the following is a relevant external factor to consider in understanding an entity?

• Entity’s board meeting minutes
• Auditor’s experience with another client
• Applicable government regulations
• Client’s internal email policy

Answer explanation

Auditor’s remuneration is unrelated to understanding the client’s operations or environment.

Revenue from a long-term contract is recognized in full upfront, even though the performance obligation is not yet fully satisfied. The Company’s policy is to recognize revenue over time. What assertion is most violated?

• Classification
• Occurrence
• Accuracy
• Cutoff

Answer explanation

The revenue exists, but the amount and timing are misstated — this is an accuracy/valuation issue under PSAK 115.

When performing substantive analytical procedures, which factor increases the reliability of the result?

• Using unaudited interim data
• Expectation developed by the client
• Performing the procedure at interim date
• Data derived from independent sources

Answer explanation

Independent data increases reliability — options A–C reduce it.

If the auditor modifies audit documentation after the final audit file has been completed, SA 230 requires the auditor to:

• Replace the original documents with updated versions
• Make no changes whatsoever to the documentation
• Record the date, reason for the change, and identity of the person who made it
• Notify management of the documentation changes

Answer explanation

SA 230.16–17 requires that any modifications after the completion date be clearly marked with the date, reason for the change, and the name of the person making the modification.

Audit documentation should include all of the following EXCEPT:

• Evidence that the audit was planned and performed in accordance with ISAs
• Conclusions reached on significant matters
• Identity of the auditor performing and reviewing the work
• Copies of all email correspondence between the audit team and the client

Answer explanation

Not all correspondence is required to be documented. Only correspondence relevant to significant audit matters or conclusions needs to be included as evidence.

What should the auditor do when confirmation responses indicate discrepancies?

• Ignore the difference if immaterial
• Send a follow-up confirmation
• Investigate and evaluate the discrepancies
• Remove the balance from the financial statements

Which of the following is an example of a positive blank confirmation?

• A confirmation with a stated balance
• A confirmation requesting the recipient to write in the amount
• A confirmation that doesn't require a reply
• A confirmation that includes all supporting documents