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WorksheetsIT Audit Quiz
Total questions: 75
Worksheet time: 56mins
All the following are steps in an IT audit EXCEPT:
tests of controls
audit fieldworks
audit planning
substantive testing
Inherent risk:
is the likelihood that the auditor will not find material misstatements.
exists because all control structures are flawed in some ways.
is associated with the unique characteristics of the business or industry of the client.
is the likelihood that material misstatements exist in the financial statements of the firm.
The completeness assertion declares that no material assets, equities, or transactions have been omitted from the financial statements.
completeness
rights and obligations
existence
presentation and disclosure
The difference between internal and external auditing is that:
internal auditors perform IT audits and external auditors perform forensic audits.
internal auditors focus on financial statement audits and external auditors focus on operational audits and financial statement audits.
external auditors assist internal auditors, but internal auditors cannot assist external auditors.
internal auditors represent the interests of the organization and external auditors represent shareholders.
The following condition is an example of familiarity threat: "The audit firm’s long association with the audit client may be over influencing the auditor’s professional judgment with regard to the audit."
self-interest
self-review
familiarity
advocacy
Refer to Section 263 of the Companies Act, the following are requirements to be an approved company auditor EXCEPT:
apply for a license from the Ministry of Finance.
has good character and competent to perform the duties of an auditor.
has not less than five years' practical accounting experience.
pass examination of bachelor’s degree program (accountancy) from public universities in Malaysia.
The following are factors that contribute to self-interest threat EXCEPT:
overdue fee from an audit client.
receive contingent fee.
a large portion of the audit firm’s total earnings from one audit client.
the background of audit client.
The following are contents of the audit engagement letter EXCEPT:
the type of audit report to be provided.
timing of the audit services.
expected fees and the basis on which they will be billed.
auditor responsibilities including the search for fraud.
Which of the following documents is NOT to be classified in the permanent files?
Specimen of director’s signature.
Copy of loan agreement.
Prior year working trial balance.
Confirmation letter sent to clients’ customers.
The following are sources of tools to understand the client’s business and accounting system EXCEPT:
interview with stakeholders.
previous years’ audit files.
article in trade magazines or financial press.
Company’s interim, internal & management’s accounts.
A forensic audit is an independent audit performed by an auditor who expresses an opinion regarding the presentation of financial statements.
True
False
Not Sure
None of the above
The audit committee serves as an independent 'check and balance' for the internal audit functions and liaison with external auditors.
True
False
Not Sure
None of the above
The purpose of supervision is to ensure that only authorised personnel have access to the firm's assets.
True
False
Not Sure
None of the above
Mistake in extending prices times quantity on sales invoice is an example of fraud.
True
False
Not Sure
None of the above
Accounting records is a compilation of source documents, journals and ledgers that provide an audit trail.
True
False
Not Sure
None of the above
An audit which is carried out to enhance the accountability of public expenditure and public funds is the responsibility of:
internal auditor
forensic auditor
government auditor
external auditor
The following statements relate to the internal control system of a company EXCEPT:
It plays an important role in how management meets its stewardship or agency responsibilities.
It is a system that guarantees that the financial statement is free from any error.
Proper internal control system ensures that assets and records are safeguarded.
The effectiveness of internal control system is influenced by the control environment such as management's philosophy and operating style.
In the audit of a startup technology company, the auditor identifies that the company has limited resources and a lack of experienced management. What type of risk is likely to be higher?
inherent risk
control risk
detection risk
operational risk
A shipping system that automatically calculates shipping costs based on package weight and destination is an example of an application control that primarily:
ensures data privacy
increases sales revenue
enhances customer satisfaction
focuses on accurate financial transactions
Under the Companies Act 2016, an auditor is allowed to accept an audit engagement if he is:
a discharged bankrupt
responsible to keep the registers of members of the company
a former employee for the last nine months
a shareholder in the company
MIA By-Laws (On Professional Ethics, Conduct and Practice) stipulates that before accepting an audit engagement, a successor auditor should make specific inquiries on the predecessor auditor regarding the predecessor's:
opinion of any subsequent events occuring since the predecessors audit report was issued
awareness of the consistency in the application of approved accounting standards during the tenure as auditor
evaluation of all matters of continuing accounting significance
knowledge on the reasons for the proposed change
Which of the following would an auditor consider in his audit plan when he reviews the client’s accounting policies and procedures?
Method of sampling to be used.
Preliminary judgement about materiality levels.
Nature of reports to be rendered.
Understanding the client’s operations and business.
Which of the following techniques would most likely provide an auditor with the most assurance about the effectiveness of the operation of an internal control?
Inquiry of client personnel.
Re-computation of account balance.
Observation of client personnel.
Confirmation with outside parties.
Which of the following types of documentary evidence should the auditor consider to be the most reliable?
A sales invoice issued by the client and supported by a delivery receipt from an outsourced transport company.
Confirmation of an accounts payable balance mailed by and returned directly to the auditor.
A cheque which is issued by the client company and included in the bank statements.
An audit schedule prepared by the client’s accounts executive which is reviewed by the accountant.
The management is responsible for establishing and maintaining the internal control system.
True
False
Advisory services are an emerging field that goes beyond auditor's traditional attestation function.
True
False
An IT auditor expresses an opinion on the fairness of the financial statements.
True
False
Audit risk refers to the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated?
True
False
External auditors can cooperate with and use evidence gathered by internal audit departments that are organizationally independent and that report to the audit committee of the boards of directors.
True
False
A/an ______ is responsible to investigate anomalies and gather evidence of fraud that may lead to criminal conviction.
fraud audit
compliance audit
financial statement audit
operational audit
Which of this is not an audit assertion.
Existence
Accuracy
completeness
valuation
The following are example of fraud EXCEPT.
Cashier steal cash at the time processing sales receipt from customer
Intentional overstatement of sales near the balance sheet date to increase reported earnings
falsify inventory record upon receiving stock from vendor
overlooking older inventory in determining the market value for inventory
An approved company auditor should posseses the following EXCEPT
Obtained a postgraduate qualification
Having good character and competent
An audit licence from Ministry of finance
Members of Malaysian Institute of accountants
Which of the following name is prohibited to be used in establish an audit firm?
Manjit & co
Sulaiman & Yassin Associates
Che Aminah business advisory
Celik Bijak services
Which of the following is not criterion to decide on audit fees?
The degree of responsibility & urgency that the work entails
The level of training & experience of the persons necessarily engaged in the work
The financial background of an audit firms
The skill & knowledge required for the type of work involved
An ........................... is the detailed instruction that explains the audit evidence to be obtained during the audit
Audit procedure
Audit objective
Audit client
Audit program
The following are issues to be considered by the auditor during audit planning stage except
a requirement to use an expert
The applicable laws and regulations
The going concern issue
The background of staff of audit client
The following are sources of information used for analytical procedures during audit planning stage except
interim financial statements
drafted audited financial statements
management reports
budget and forecasts
Advisory services are an emerging field that goes beyond the auditor's traditional attestation function
True
False
External auditing is an independent appraisal function established within an organisation to examine and evaluate its activities as a service to the organisation.
True
False
The same internal control objectives apply to manual and computer based information systems.
True
False
Test of controls determine whether the database contents fairly reflects the organisations systems
True
False
An IT auditor expressess an opinion on the fairness of the financial statements.
True
False
Fraud is unintentional misstatement of the financial statements.
True
False
Not applicable
Cannot be determined
A/An ______ is conducted to determine whether the overall financial statements are stated in accordance with specific criteria, for example, an approved accounting standard.
compliance audit
operation audit
financial statement audit
fraud audit
Which of this is NOT an audit assertion?
Existence
Accuracy
Completeness
Valuation
Poor segregation of duties, lack of monitoring, and inadequate records are examples of ______.
inherent risk
corrective risk
control risk
detection risk
The following are examples of fraud EXCEPT ______.
Cashier steals cash at the time of processing sales receipt from a customer.
Intentional overstatement of sales near the balance sheet date to increase reported earnings.
Falsify inventory record upon receiving stock from a vendor.
Overlooking older inventory in determining the market value for inventory.
An approved company auditor should possess the following EXCEPT ______.
Obtained a postgraduate qualification.
Having good character and competent.
An audit license from the Ministry of Finance.
Members of the Malaysian Institute of Accountants.
Which of the following names is prohibited to be used in establishing an audit firm?
Manjit & Co.
Sulaiman & Yassin Associates
Che Aminah Business Advisory
Celik Bijak Services
Which of the following is NOT a criterion to decide on audit fees?
The degree of responsibility & urgency that the work entails
The level of training & experience of the persons necessarily engaged in the work
The financial background of an audit firm
The skill & knowledge required for the type of work involved
An ________ is the detailed instruction that explains the audit evidence to be obtained during the audit.
audit procedure
audit objective
audit client
audit program
The following are issues to be considered by the auditor during audit planning stage EXCEPT:
a requirement to use an expert
the applicable laws and regulations
the going concern issue
the background of staff of audit client
The following are sources of information used for analytical procedures during audit planning stage EXCEPT:
interim financial statements
drafted audited financial statements
management reports
budget and forecasts
Advisory services are an emerging field that goes beyond the auditor's traditional attestation function. Is this statement True or False?
True
False
External auditing is an independent appraisal function established within an organisation to examine and evaluate its activities as a service to the organisation. Is this statement True or False?
True
False
The same internal control objectives apply to manual and computer-based information systems. Is this statement True or False?
True
False
Tests of controls determine whether the database contents fairly reflect the organisation's transactions. Is this statement True or False?
True
False
An IT auditor expresses an opinion on the fairness of the financial statements. Is this statement True or False?
True
False
The concept of reasonable assurance suggests that:
the cost of an internal control should be less than the benefit it provides.
a well-designed system of internal controls will detect all fraudulent activity.
the objectives achieved by an internal control system vary depending on the data processing method.
the effectiveness of internal controls is a function of the industry environment.
Which of the following is NOT an element of the internal control environment?
Management philosophy and operating style.
Organizational structure of the firm.
Well-designed documents and records.
The functioning of the board of directors and the audit committee.
The following are examples of advisory services offered by public accounting firms EXCEPT:
audit financial statements.
designing financial information systems.
providing internal audit services.
proving bookkeeping of the accounting records.
Which of the following is known as a compensating control for the absence of segregation controls?
Access control.
Independent verification.
Authorisation.
Supervision.
A person is disqualified from becoming an auditor of a company if:
he owes the company a sum of RM28,000.
he is a discharged bankrupt.
he is charged with an offence involving fraud.
he is 24 years old.
Section 174(1) of Companies Act 2016 states that remuneration of the auditor shall be fixed by the following parties EXCEPT:
by the members of a company.
by the board of directors of a company.
by the Securities Commission Malaysia.
by the Companies Commission of Malaysia.
An auditor strives to achieve independence in appearance:
to maintain public confidence in the profession.
to become independent in fact.
to comply with the approved auditing standards of field work.
to maintain unbiased mental attitude.
According to the Companies Act 2016, the auditor has the following rights EXCEPT:
The rights of access at all times to the books and records.
The rights for information he considers necessary.
The rights to be heard at any general meeting that concerns him as an auditor.
The rights to prevent his removal from office by the company at general meeting.
Choose the most reliable audit evidence from the audit procedures below:
Inquiries of the entity's internal audit staff are held in private.
Inspection of pre-numbered purchase orders filed in the vouchers payable department.
Analytical procedures performed by the auditor on the entity's trial balance.
Inspection of bank statements obtained by the client from the entity's financial institution.
Audit working papers are used to record the results of the auditor's evidence-gathering procedures. When preparing working papers, the auditor should remember that working papers should be:
Kept on the client's premises so that the client can have access to them for reference purposes.
The primary support for the financial statements being audited.
Considered as a part of the client's accounting records that are retained by the auditor.
Designed to meet the circumstances and the auditor's needs on each engagement.
Which of the following factors should be considered by an auditor in determining materiality for an audit?
The auditor's personal preferences.
The client's market share.
The size and nature of financial statement items.
The cost of the audit engagement.
The purpose of financial statement audit is to determine whether the company's operation adhered to laws and regukations
True
false
Internal auditor is employed by a company to audit for the companys board of directors and management
True
False
Forensic audits include thorough inspection of documents to ensure thst auditee is following the stipulated rules and regulation
True
False
One of the inherent limitations of internal controls is management overrides the controls
True
False
The auditor's assessment of inherent risk based on the clients effectiveness of internal control system
true
false
