WorksheetsLSSU Audit Quiz
Total questions: 20
Worksheet time: 39mins
Name
Class
Date
1.
Under which of the following circumstances would the expression of a disclaimer of opinion be inappropriate?
a)
The auditor is unable to obtain the audited financial statements of a consolidated investee.
b)
Management does not provide reasonable justification for a change in accounting principles.
c)
The company failed to make a count of its physical inventory during the year and the auditor was unable to apply alternative procedures to verify inventory quantities.
d)
Management refuses to allow the auditor to have access to the company's canceled checks and bank statements.
2.
An auditor assesses control risk because it:
a)
Is relevant to the auditor's understanding of the control environment.
b)
Provides assurance that the auditor's materiality levels are appropriate.
c)
Indicates to the auditor where inherent risk may be the greatest.
d)
Affects the level of detection risk that the auditor may accept.
3.
Which of the following procedures would an auditor most likely perform in the planning stage of an audit?
a)
Make a preliminary judgment about materiality.
b)
Confirm a sample of the entity's accounts payable with known creditors.
c)
Obtain written representations from management that there are no unrecorded transactions.
d)
Communicate management's initial selection of accounting policies to the audit committee.
4.
Which of the following activities would be most helpful to a CPA in deciding whether to accept a new audit client?
a)
Reviewing industry benchmarking data.
b)
Considering the client's compensation methods
c)
Evaluating the CPA's ability to properly service the client.
d)
Evaluating the most recent peer review of the client's previous auditor.
5.
Which of the following most accurately describes the process of a walkthrough?
a)
Testing and documenting the results of tests of selected controls.
b)
Testing and documenting the results of tests of selected controls.
c)
Observation of an entity's activities and operations.
d)
Following a transaction from its origination until it is reflected in the financial statements.
6.
Before accepting an engagement to audit a new client, a CPA is required to obtain:
a)
An assessment of fraud risk factors likely to cause material misstatements.
b)
An understanding of the prospective client's industry and business.
c)
The prospective client's consent to make inquiries of the predecessor.
d)
The prospective client's signature to a written engagement letter.
7.
Analytical procedures used in planning an audit should focus on:
a)
Reducing the scope of tests of controls and substantive tests.
b)
Providing assurance that potential material misstatements will be identified.
c)
Enhancing the auditor's understanding of the client's business.
d)
Assessing the adequacy of the available audit evidence.
8.
Which of the following is a component of internal control?
a)
Risk assessment.
b)
Financial reporting.
c)
Operating effectiveness.
d)
Organizational structure.
9.
The permanent file of the audit documentation for an engagement generally would not include:
a)
Bond indenture agreements.
b)
Working trial balance.
c)
Lease agreements.
d)
Flowchart of internal control.
10.
Each of the following is an ethical principle that should guide the work of auditors in the conduct of audits under government auditing standards, except:
a)
Materiality.
b)
Integrity.
c)
The public interest.
d)
Proper use of government information.
11.
In designing a written audit plan, an auditor should establish specific audit objectives that relate primarily to the:
a)
Timing of audit procedures.
b)
Cost-benefit of gathering evidence.
c)
Selected audit techniques.
d)
Financial statement assertions.
12.
Which of the following best describes the earliest date for an auditor's report?
a)
The last day of audit fieldwork.
b)
The date the auditor has obtained sufficient appropriate audit evidence to support the opinion.
c)
The date all audit procedures have been completed and the audit file has been assembled.
d)
The date audit documentation was completed.
13.
The in-charge auditor most likely would have a supervisory responsibility to explain to the staff assistants:
a)
That fraud is not to be reported to those charged with governance
b)
How the results of various auditing procedures performed by the assistants should be evaluated.
c)
What benefits may be attained by the assistants' adherence to established time budgets.
d)
Why certain documents are being transferred from the current file to the permanent file.
14.
After fieldwork audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second or wrap-up review of the audit documentation. This second review usually focuses on:
a)
The fair presentation of the financial statements in conformity with GAAP.
Fraud involving the client's management and its employees.
Fraud involving the client's management and its employees.
b)
Fraud involving the client's management and its employees.
c)
The materiality of the adjusting entries proposed by the audit staff.
d)
The communication of internal control weaknesses to those charged with governance.
15.
Which of the following procedures would an auditor most likely include in the planning phase of a financial statement audit?
a)
Perform cutoff tests of the entity's sales and purchases.
b)
Identify specific internal control activities designed to prevent fraud.
c)
Obtain an understanding of the entity's risk assessment process.
d)
Evaluate the reasonableness of the entity's accounting estimates.
16.
Which of the following could indicate source document fraud?
a)
The same invoice number appears on different invoices
b)
The same customer purchase order number appears on different customer invoices.
c)
The same item code appears on different invoices.
d)
The same invoice date appears on different invoices.
17.
What is the primary objective of the fraud brainstorming session?
a)
Determine audit risk and materiality.
b)
Identify whether analytical procedures should be applied to the revenue accounts.
c)
Assess the potential for material misstatement due to fraud.
d)
Determine whether the planned procedures in the audit program will satisfy the general audit objectives.
18.
Which of the following best characterizes an auditor’s exercise of professional skepticism?
a)
Conducting all fraud-related inquiries in a nonconfrontational manner.
b)
Obtaining adequate conclusive evidence in support of the fairness of the financial statements.
c)
Having an attitude that includes a questioning mind.
d)
Taking into account past relationships and experiences with management.
19.
Regardless of the assessed level of control risk, an auditor would perform some:
a)
Tests of controls to determine the effectiveness of internal control.
b)
Analytical procedures to verify the design of internal control.
c)
Substantive tests to restrict detection risk for significant transaction classes.
d)
Dual purpose tests to evaluate both the risk of monetary misstatement and preliminary control risk.
20.
On receiving a client's bank cutoff statement, an auditor most likely would trace:
a)
Prior-year checks listed in the cutoff statement to the year-end outstanding checklist.
b)
Prior-year checks listed in the cutoff statement to the year-end outstanding checklist.
c)
Checks dated after year-end listed in the cutoff statement to the year-end outstanding checklist.
d)
Deposits recorded in the cash receipts journal after year-end to the cutoff statement.
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