Audit Test one: chapter 1-4

The primary purpose of an audit is to:

• Detect all fraud

• provide reasonable assurance about the reliability of financial statement

• guarantee profitability

• prepare financial statements

In principle-agent relationship, principals are typically:

• Managers hired by the company

• external auditors

• Stockholders who own the company

• suppliers and creditors

Why don't auditors provide absolute assurance?

• auditors are biased toward management

• the audit process is incomplete

• Due to limitations in evidence and inherent risks in auditing

• stakeholders don't need certainty

which of the following is NOT a fundamental concept of an audit?

• materiality

• Audit risk

• Audit Evidence

• Market Valuation

The quality of audit evidence is evaluated based on:

• Relevance and reliability

• Quantity alone

• Management preference

• Auditor's reputation

Which technology allows auditors to analyze entire populations of transactions?

• Blockchain

• Sampling

• Audit Data Analytics

• Paper ledgers

Which section of the audit report explains the scope and responsibilities of the auditor?

• Opinion on the financial statements

• Critical Audit matters

• Basis for Opinion

• Auditor Signature Section

what is the relationship between materiality and evidence collection?

• higher materiality requires more evidence

• lower materiality requires more evidence

• Materiality doesn't impact evidence collection

• evidence is unrelated to materiality

When an auditor may mistakenly conclude that financial statements are free of material misstatement, is known as WHAT??

The threshold or criterion that guides auditors in assessing the importance of financial information...