Audit Questions

The main purpose of auditing financial statements according to Arens is:

• Finding all existing fraud

• Providing an opinion on the fairness of financial statements

• Calculating tax payable

• Preparing financial statements

General audit standards include the following, except:

• Technical competence of auditors

• Independence in mental attitude

• Adequate planning and supervision

• Ensuring the company's profits increase

The most reliable type of audit evidence according to Arens is:

• Direct confirmation from third parties

• Auditor's observation

• Management statements

• Internal documents that have not been audited

Operational audit focuses more on:

• Compliance with accounting standards

• Efficiency and effectiveness of operations

• Assessment of the fairness of financial statements

• Tax reporting

An independent mental attitude of an auditor means:

• Not owning shares in the client

• Impartial and free from influence

• Not accepting fees from the client

• Not knowing the client's management

Analytical procedures are used to:

• Determine initial materiality

• Compare financial and non-financial data

• Test internal control systems

• Calculate the final cash balance

Internal audit differs from external audit because:

• Internal audit is only conducted by KAP

• Internal audit focuses on compliance and efficiency

• External audit does not require independence

• Internal audit does not require a written report

The concept of materiality is used to:

• Measure the level of tolerable error

• Determine whether financial statements need to be audited

• Decide on the audit opinion

• Determine control methods

The main function of the engagement letter is:

• Request confirmation of bank balances

• Establish the scope and responsibilities of the audit

• Arrange the payment schedule for fees

• Provide the audit results report

Audit risk consists of the following three components, except:

• Inherent risk

• Control risk

• Detection risk

• Financing risk