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MCQ4

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In class test practice sample for Advanced Auditing Principles and Practice
clara.azurmendi
Quiz by clara.azurmendi, updated more than 1 year ago
clara.azurmendi
Created by clara.azurmendi about 8 years ago
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Resource summary

Question 1

Question
Evidence is used by which of the following professionals?
Answer
  • Auditors
  • Scientists
  • Lawyers
  • All of the above

Question 2

Question
An _________ programme is a list of audit procedures for an audit area or an entire audit.
Answer
  • Control
  • Evidence
  • Data
  • Audit

Question 3

Question
Characteristics that effect the reliability of evidence include:
Answer
  • Independence of provider
  • Timeliness of evidence
  • Auditors direct knowledge
  • All of the above

Question 4

Question
The following are all types of audit evidence except:
Answer
  • Analytical procedures
  • Physical examination
  • Organization
  • Confirmation

Question 5

Question
An insurance policy is an example of:
Answer
  • External documents
  • Other
  • Internal documents
  • Both external and internal documents

Question 6

Question
The Sarbanes-Oxley Act requires auditors of public companies to retain audit files for no less than:
Answer
  • Ten years
  • Twenty years
  • Three years
  • Seven years

Question 7

Question
Which of the following is an example of a supporting schedule which is support of specific amounts on the client's financial statements?
Answer
  • A. Reconciliation
  • B. Scanning
  • C. Trial balances
  • All of the above
  • A and B only
  • C and B only
  • A and C only

Question 8

Question
If an auditor believes the financial statements of a client are not fairly presented then the auditor should:
Answer
  • Notify users through an auditor report
  • Report the findings to the government
  • Notify the external users by advertising its findings
  • All of the above

Question 9

Question
Fair representation in the financial statements:
Answer
  • Rest with the creditors
  • Rests with the shareholder
  • Rests with the auditors
  • Rests with the management

Question 10

Question
When an auditor believes a client is involved in illegal acts, the auditor should:
Answer
  • Help the client destroy all evidence of the illegal act
  • Go to management at a level above those likely to be involved in the potential illegal act
  • Withdraw from the engagement immediately
  • Go to the press

Question 11

Question
Audit objectives should be estimated for each of the following except:
Answer
  • Management Reports
  • Balances
  • Transactions
  • Presentations and Disclosures

Question 12

Question
_____________ uses comparison and relationship to assess whether account balances or other data appear reasonable.
Answer
  • Test of details
  • Internal details
  • Analytical procedures
  • Walk through tests

Question 13

Question
___________ judgment should be used when setting and applying materiality guidelines.
Answer
  • Professional
  • Minimum
  • Amateur
  • Maximum

Question 14

Question
Materiality is allocated to accounts on the balance sheet while keeping the following items in mind:
Answer
  • Certain accounts
  • Audit costs of the allocation
  • Overstatements and understatements
  • All the above

Question 15

Question
The risk that the portion of the population selected for review does not accurately represent the population, is what type of risk?
Answer
  • Sampling
  • Audit
  • Detection
  • Inherent

Question 16

Question
As inherent risk increases, planned detection risk
Answer
  • Stays the same
  • Increases
  • Decreases
  • Becomes negative

Question 17

Question
If the level of audit assurance is 97%, the level of acceptable audit risks is
Answer
  • 7%
  • 3%
  • 5%
  • 10%

Question 18

Question
In evaluating engagement risks, the auditor should be aware of items such as:
Answer
  • The clients previous year's profits
  • The clients method of financing growth
  • The client liquidity position
  • All of the above

Question 19

Question
Factors affecting inherent risks include:
Answer
  • A. Non routine transaction
  • B. Internal controls
  • C. Initial audit
  • All of the above
  • A and B only
  • A and C only
  • B and C only

Question 20

Question
The major limitation of using the audit risk model is the:
Answer
  • Objective nature of its components
  • There is no limitation to the model
  • Application of the model
  • Subjective nature of its components

Question 21

Question
Because of legal liability and loss of professional reputation most auditors are concerned about:
Answer
  • A. Status- quo auditing
  • B. Over-auditing
  • C. Under-auditing
  • All of the above
  • A and B only
  • A and C only
  • B and C only

Question 22

Question
Materiality and risk are_________ related.
Answer
  • Inversely
  • Directly
  • Equally
  • None of the above

Question 23

Question
_________ smoothing is a form of earning management in which revenues and expenses are shifted between periods to reduce fluctuations in earnings.
Answer
  • Expense
  • Equity
  • Revenue
  • Income

Question 24

Question
Fraudulent financial reporting may be contributed to:
Answer
  • External Performance Pressures
  • Lack of Segregation of Duties
  • Internal Performance Pressures
  • All of the above

Question 25

Question
If an auditor discovers fraud, an auditor should:
Answer
  • Conduct further investigations
  • Approach the appropriate level of management
  • Consider withdrawing from the audit if the fraud is significant
  • All of the above
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