Question 1

Which of the following would not affect an auditor's judgment concerning internal controls?

Accepted Answer

A)  The assertion being tested. 
B)  The design of the control. 
C)  The operation of the control. 
D)  The level of inherent risk. 
A)  The assertion being tested. 
B)  The design of the control. 
C)  The operation of the control. 
D)  The level of inherent risk.

Question 2

Which of the following is not a control that the PCAOB has identified that auditors should consider in evaluating whether or not an organization has sufficiently addressed fraud risk?

Accepted Answer

A)  Controls over significant, unusual transaction. 
B)  Controls over related-party transactions. 
C)  Controls related to marketable securities. 
D)  Controls related to significant management estimates. 
A)  Controls over significant, unusual transaction. 
B)  Controls over related-party transactions. 
C)  Controls related to marketable securities. 
D)  Controls related to significant management estimates.

Question 3

Which assertion addresses whether the financial statements items are properly classified in the financial statements?

Accepted Answer

A)  Completeness. 
B)  Existence. 
C)  Valuation. 
D)  Presentation and Disclosure. 
A)  Completeness. 
B)  Existence. 
C)  Valuation. 
D)  Presentation and Disclosure.

Question 4

Which type of audit documentation is required by PCAOB standards?

Accepted Answer

A)  Flowcharts 
B)  Narratives 
C)  Questionnaires 
D)  A specific form of documentation is not required. 
A)  Flowcharts 
B)  Narratives 
C)  Questionnaires 
D)  A specific form of documentation is not required.

Question 5

Audit phases.
Identify at least five steps involved in an audit.

Accepted Answer

Phase I Making Client Acceptance and Con

Question 6

Explain the meaning of due professional care.

Accepted Answer

Due professional care refers to the skil

Question 7

Auditors are responsible for having the appropriate competence and capabilities to perform the audit, should comply with ethical requirements, and maintain professional skepticism throughout the audit.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following terms describes procedures designed to detect material misstatements in accounts ?

Accepted Answer

A)  Substantive procedures. 
B)  Control Tests 
C)  Risk assessment procedures 
D)  Business risk procedures. 
A)  Substantive procedures. 
B)  Control Tests 
C)  Risk assessment procedures 
D)  Business risk procedures.

Question 9

Inherent risk refers to the susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be immaterial, either individually or when aggregated with other misstatements, before consideration of any related controls.

Accepted Answer

A) True 
 B)False

Question 10

For an integrated audit, the auditor's opinion about internal control effectiveness is based on control effectiveness at year-end as opposed to throughout the year.

Accepted Answer

A) True 
 B)False

Question 11

Within each cycle, the audit is designed around the specific audit procedures required by the PCAOB general standards.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements about assertions is true?

Accepted Answer

A)  All assertions are equally important for all accounts. 
B)  The importance of an assertion depends upon the account. 
C)  Assertions are not related to accounts. 
D)  None of the above. 
A)  All assertions are equally important for all accounts. 
B)  The importance of an assertion depends upon the account. 
C)  Assertions are not related to accounts. 
D)  None of the above.

Question 13

Which of the following items is not included in the engagement letter?

Accepted Answer

A)  The responsibilities of the auditor. 
B)  The responsibilities of management. 
C)  The objective of the financial statements. 
D)  Identification of the applicable financial reporting framework for the preparation of the financial statements. 
A)  The responsibilities of the auditor. 
B)  The responsibilities of management. 
C)  The objective of the financial statements. 
D)  Identification of the applicable financial reporting framework for the preparation of the financial statements.

Question 14

Which one of the following has the most affect on the reliability of financial statements?

Accepted Answer

A)  The size of the client 
B)  The industry of the client 
C)  The client's internal control structure. 
D)  The client's trend of earnings. 
A)  The size of the client 
B)  The industry of the client 
C)  The client's internal control structure. 
D)  The client's trend of earnings.

Question 15

There is an inverse relationship between the assessment of risk of material misstatement in an account and the amount of evidence required.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is correct concerning the auditor's opinion on internal control effectiveness?

Accepted Answer

A)  The report describes any material weaknesses and discusses actions taken by management to remediate the problems. 
B)  The report does not discuss whether the control weaknesses were first identified by management or the auditor. 
C)  The report does not recognize the integrated nature of the audit and the affect of the material weakness on the planning of the financial statement audit. 
D)  The report identifies management's actions to remedy the prior year's control weaknesses. 
A)  The report describes any material weaknesses and discusses actions taken by management to remediate the problems. 
B)  The report does not discuss whether the control weaknesses were first identified by management or the auditor. 
C)  The report does not recognize the integrated nature of the audit and the affect of the material weakness on the planning of the financial statement audit. 
D)  The report identifies management's actions to remedy the prior year's control weaknesses.

Question 17

The AICPA's fundamental principles can be divided into four sections: purpose of the audit, responsibility of the auditor, performance of the audit, and reporting of the results.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a reason why an auditor needs an understanding of internal controls?

Accepted Answer

A)  To provide individual comments on internal control non-compliance. 
B)  To become comfortable that the client will pay its audit bills. 
C)  To assess materiality. 
D)  To assess the risk of possible misstatements in the financial statements. 
A)  To provide individual comments on internal control non-compliance. 
B)  To become comfortable that the client will pay its audit bills. 
C)  To assess materiality. 
D)  To assess the risk of possible misstatements in the financial statements.

Question 19

Which of the following is the primary assertion related to testing inventory on hand to see if it includes consignment goods ?

Accepted Answer

A)  Existence 
B)  Completeness 
C)  Valuation 
D)  Rights and Obligations 
A)  Existence 
B)  Completeness 
C)  Valuation 
D)  Rights and Obligations

Question 20

Recalculation involves independently performing procedures or controls that were originally performed by the client, such as reperforming a bank reconciliation.

Accepted Answer

A) True 
 B)False

Which of the following would not affect an auditor's judgment concerning internal controls?

Which of the following is not a control that the PCAOB has identified that auditors should consider in evaluating whether or not an organization has sufficiently addressed fraud risk?

Which assertion addresses whether the financial statements items are properly classified in the financial statements?

Which type of audit documentation is required by PCAOB standards?

Audit phases. Identify at least five steps involved in an audit.

Explain the meaning of due professional care.

Auditors are responsible for having the appropriate competence and capabilities to perform the audit, should comply with ethical requirements, and maintain professional skepticism throughout the audit.

Which of the following terms describes procedures designed to detect material misstatements in accounts ?

Inherent risk refers to the susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be immaterial, either individually or when aggregated with other misstatements, before consideration of any related controls.

For an integrated audit, the auditor's opinion about internal control effectiveness is based on control effectiveness at year-end as opposed to throughout the year.

Within each cycle, the audit is designed around the specific audit procedures required by the PCAOB general standards.

Which of the following statements about assertions is true?

Which of the following items is not included in the engagement letter?

Which one of the following has the most affect on the reliability of financial statements?

There is an inverse relationship between the assessment of risk of material misstatement in an account and the amount of evidence required.

Which of the following statements is correct concerning the auditor's opinion on internal control effectiveness?

The AICPA's fundamental principles can be divided into four sections: purpose of the audit, responsibility of the auditor, performance of the audit, and reporting of the results.

Which of the following is a reason why an auditor needs an understanding of internal controls?

Which of the following is the primary assertion related to testing inventory on hand to see if it includes consignment goods ?

Recalculation involves independently performing procedures or controls that were originally performed by the client, such as reperforming a bank reconciliation.

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters

Exam 5: Professional Auditing Standards and the Audit Opinion Formulation Process

Which of the following would not affect an auditor's judgment concerning internal controls?

Which of the following is not a control that the PCAOB has identified that auditors should consider in evaluating whether or not an organization has sufficiently addressed fraud risk?

Which assertion addresses whether the financial statements items are properly classified in the financial statements?

Which type of audit documentation is required by PCAOB standards?

Audit phases. Identify at least five steps involved in an audit.

Explain the meaning of due professional care.

Auditors are responsible for having the appropriate competence and capabilities to perform the audit, should comply with ethical requirements, and maintain professional skepticism throughout the audit.

Which of the following terms describes procedures designed to detect material misstatements in accounts ?

Inherent risk refers to the susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be immaterial, either individually or when aggregated with other misstatements, before consideration of any related controls.

For an integrated audit, the auditor's opinion about internal control effectiveness is based on control effectiveness at year-end as opposed to throughout the year.

Within each cycle, the audit is designed around the specific audit procedures required by the PCAOB general standards.

Which of the following statements about assertions is true?

Which of the following items is not included in the engagement letter?

Which one of the following has the most affect on the reliability of financial statements?

There is an inverse relationship between the assessment of risk of material misstatement in an account and the amount of evidence required.

Which of the following statements is correct concerning the auditor's opinion on internal control effectiveness?

The AICPA's fundamental principles can be divided into four sections: purpose of the audit, responsibility of the auditor, performance of the audit, and reporting of the results.

Which of the following is a reason why an auditor needs an understanding of internal controls?

Which of the following is the primary assertion related to testing inventory on hand to see if it includes consignment goods ?

Recalculation involves independently performing procedures or controls that were originally performed by the client, such as reperforming a bank reconciliation.

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters