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WorksheetsAudit process
Total questions: 20
Worksheet time: 7mins
Which of the following is not a type of audit opinion?
Adverse
Reverse
Disclaimer
Qualified
The objective of the audit plan is
to conduct the audit in accordance with GAAS
reduce the risk of material misstatements to an acceptably low level
prepare an unqualified report
Both A & B
What is the independent auditor’s principal purpose for obtaining an understanding of internal control and assessing control risk in a financial statement audit?
To comply with generally accepted accounting principles
To obtain a measure of assurance of management’s efficiency
To determine the nature, timing, and extent of subsequent audit work
To maintain a state of independence in mental attitude during the audit
An audit designed to determine the extent to which the desired results of an activity established by the legislative or other authorizing body are being achieved is a (an)...
(a)
The preliminary audit strategy
is set before the auditor understands the client's reasons for the audit
is the detailed steps to be followed for the substantive audit tests
guides the development of the audit plan
is determined after the engagement staffing is set
When selecting staff for the audit engagement
staff assigned to the audit must be knowledgeable about the client's industry
staff members who are CPAs should be assigned to the audit
continuity of staff members from year to year should not be a factor
managers and above need to have appropriate competence and capabilities to perform the audit
Audit program is prepared by
the auditor and audit assistants
the auditor
the auditing firm
the client
In an audit of financial statements, substantive tests are audit procedures that
Will increase proportionately when the auditor decreases the assessed level of control risk
May be test of transactions, test of balance and analytical procedures
May be eliminated for an account balance under certain conditions
Are designed to discover significant subsequent events
In what order should the following steps occur?
1. Set preliminary judgment of materiality and performance materiality.
2. Understand the clients business and industry.
3. Perform preliminary analytical procedures.
4. Accept the client and perform initial audit planning.
(Write down the answer in this form: 1234; 2314...)
(a)
Unqualified Audit Report reflects that the auditor is satisfied with the points that must be expressed in his report and that too in a positive sense, without any reservations.
False
True
A firm has obtained information that would have caused it to decline an engagement had the information been available earlier. Actions available to the auditor would include the following, except:
Withdraw from the engagement
Issue a disclaimer of opinion
Reporting the information and its implications to the person/s who appointed the CPA
Withdraw from the client relationship
Which of the following best describes the primary purpose of audit programmed preparation?
To comply with GAAP.
To detect errors or fraud.
To assess audit risk.
To gather sufficient appropriate evidence.
The quantity of audit working papers complied on engagement would most be affected by
Auditor’s experience and professional judgement
Management’s integrity
Control risk
Auditor’s qualification
An entity changed the depreciation method for all newly acquired assets. This change has no material effect on the current year's financial statements but is reasonably certain to have a substantial effect in later years. If the change is disclosed in the notes to the financial statements, the auditor should issue a report with a(n)
Unqualified Report
Disclaimer Report
Qualified report
Adverse Report
What is the primary objective of analytical procedures used in the overall review stage of an audit?
To help to corroborate the conclusions drawn from individual components of financial statements.
To reduce specific detection risk.
To direct attention to potential risk areas.
To satisfy doubts when questions arise about a client ability of continue.
As acceptable audit risk is decreased, the likely cost of conducting an audit increases.
True
False
What type of opinion is issued when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements?
Adverse
Disclaimer
Qualified
Unqualified
Audit is a fact-finding process that compares actual results with
specified standards and plans
expected results
generally accounting standards
preliminary results
When developing the overall strategy for the audit, the auditor will
decide whether to accept a new client.
identify why the auditor needs an audit.
determine if any audit specialists will be required.
obtain an engagement letter.
(a) is a potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place
