WorksheetsChapter 5: Professional Auditing Standards Quiz
Total questions: 20
Worksheet time: 10mins
Which body issues auditing standards for audits of public companies in the U.S.?
AICPA
PCAOB
IAASB
SEC
Which standards are most closely aligned with International Standards on Auditing (ISA)?
PCAOB
AICPA (ASB standards)
SEC regulations
Sarbanes-Oxley Act
Which of the following is NOT one of the foundational principles of auditing standards?
Responsibilities
Performance
Independence
Reporting
The principle of performance emphasizes:
Exercising professional skepticism
Gathering sufficient appropriate audit evidence
Complying with laws and regulations
Maintaining independence
The first phase in the audit opinion formulation process is:
Client acceptance and continuance
Testing internal controls
Substantive procedures
Completing the audit
Which phase involves substantive testing of account balances and disclosures?
Phase II – Risk assessment
Phase III – Internal control testing
Phase IV – Substantive procedures
Phase V – Opinion formation
The revenue cycle typically includes which of the following?
Purchasing and payables
Payroll and HR
Cash receipts and sales
Inventory write-downs
Why do auditors divide audits into accounting cycles?
To simplify staff training
To focus on fraud detection
To understand interrelated processes and risks
To comply with PCAOB rules only
The assertion that recorded transactions actually occurred relates to:
Completeness
Existence/Occurrence
Valuation
Rights and Obligations
The assertion that all transactions that should have been recorded are recorded relates to:
Completeness
Existence
Presentation
Valuation
Which of the following is NOT an audit procedure category?
Risk assessment procedures
Tests of controls
Substantive procedures
Managerial estimates
The reliability of audit evidence is highest when:
Obtained from the client’s management representations
Obtained directly by the auditor from independent sources
Generated internally by the client’s IT system
Based on auditor judgment alone
Audit documentation should be sufficient to:
Support the audit opinion and facilitate review
Satisfy management’s reporting needs
Replace internal control testing
Serve as legal contracts
Which of the following is a required element of audit documentation?
Audit programs and procedures performed
Management approval of findings
Peer-review ratings
Client press releases
In Phase II (risk assessment), auditors primarily aim to:
Gather evidence on account balances
Identify material misstatement risks
Issue preliminary findings
Review audit fees
In Phase V (completing the audit), which activity is most common?
Issuing management letter
Performing final analytical procedures
Negotiating audit fees
Revising internal control systems
Professional skepticism requires auditors to:
Always distrust management
Critically assess audit evidence without bias
Focus only on fraud detection
Assume client honesty
Which ethical principle ensures that auditors avoid bias and conflicts of interest?
Integrity
Objectivity
Professional competence
Confidentiality
Which of the following best describes the audit opinion formulation process?
A one-time verification of numbers and transactions
A continuous cycle of evidence gathering, evaluation, and reporting
A compliance exercise for regulatory filings only
A financial advisory process for clients and business
The ultimate goal of the audit opinion formulation process is to:
Eliminate fraud and abuse in organisation
Provide absolute assurance to shareholders
Provide reasonable assurance and express an opinion on F/S
Guarantee profitability of business performance
