Audit Final

79 Questions  I  By Pimen103

  
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1.  An independent audit aids in the communication of economic data because the audit
A.
B.
C.
D.
2.  Which of the following best describes the reason why an independent auditor is often retained to report on fianncial statements?
A.
B.
C.
D.
3.  Which of the following best describes relationships among auditing, attest, and assurance services?
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B.
C.
D.
4.  Which of the following statments relating to attest and assurance services is not correct?
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B.
C.
D.
5.  For what primary purpose does the auditor obtain an understanding of the entity and its environment?
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B.
C.
D.
6.  Which of the following statements best describes the role of materiality in a financial statement audit?
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B.
C.
D.
7.  Which of the following is the most important reason for an auditor to gain an understanding of an audit client's system of internal control over financial reporting?
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B.
C.
D.
8.  Preplanning the audit includes:
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B.
C.
D.
9.  Which of the following statements best describes what is meant by unqualified audit opinion?
A.
B.
C.
D.
10.  The auditing standards used to guide the conduct of the audit are
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B.
C.
D.
E.
F.
11.  A client has used an inappropriate method of accounting for its pension liability on the balance sheet.  The resulting misstatement is moderately material, but the auditor does not consider it to be pervasive.  The auditor is unable to convince the client to alter its accounting treatment.  The rest of the financial statements are fairly stated in the auditor's opinion.  Which kind of audit report would an auditor most likely issue under these circumstance?
A.
B.
C.
D.
12.  Which of the following best places the events of the last several years in proper sequence?
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B.
C.
D.
13.  Which of the following best describes the relationship between business objectives, strategies, processes, control and transactions?
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B.
C.
D.
14.  Which of the following best describes the general character of the three generally accepted auditing standards classified as standards of field work?
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B.
C.
D.
15.  Which of the following statements best describes management's and the external auditor's respective levels of responsibility for a public company's financial statements?
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B.
C.
D.
16.  The Public Company Accounting Oversight Board
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B.
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D.
17.  Which of the following is not a part of the role of internal auditors?
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B.
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D.
18.  Operational auditing is oriented primaritly toward
A.
B.
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D.
19.  Which of the following would be considered an assurance service engagement? I.  Expressing an opinion about the reliability of a client's financial statments. II.  Reviewing and commenting on a client-prepared business plan.
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B.
C.
D.
20.  Which of the following concepts are pervasive in the application of generally accepted auditing standards, particularly the standards of fieldwork and reporting?
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B.
C.
D.
21.  The existence of audit risk is recognized by the statement in the auditor's standard report that the auditor
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C.
D.
22.  Risk of material misstatement refers to a combination of which two "client" components of the audit risk model?
A.
B.
C.
D.
23.  Auditing standards require auditors to make certain inquiries of management regarding fraud.  Which of the following inquiries is required?
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B.
C.
D.
24.  Which of the following characteristics most likely would heighten an auditor's concern about the risk of intentional manipulation of financial statements?
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B.
C.
D.
25.  Which of the folliwng is a misappropriation of assets?
A.
B.
C.
D.
26.  Which of the following is an example of fraudulent financial reporting?
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B.
C.
D.
27.  When is a duty to disclose fraud to parties other than the client's senior management and its audit committee most likely to exist?
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B.
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D.
28.  Tolerable misstatement is
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D.
29.  As lower acceptable levels of both audit risk and materiality are established, the auditor should plan more work on individual accounts to
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C.
D.
30.  Which of the following procedures would an auditor most likely rely on to verity management's assertion of completeness?
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B.
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D.
31.  In testing the existence assertion for an asset, an auditor ordinarily works from the
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D.
32.  Which of the following statements concerning audit evidence is correct? 
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B.
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D.
33.  Which of the following procedures would provide the most reliable audit evidence?
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B.
C.
D.
34.  Which of the following types of audit evidence is the least reliable?
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B.
C.
D.
35.  Audit evidence can come in different forms with different degrees of reliability. Which of the following is the most persuasive type of evidence?
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B.
C.
D.
36.  An auditor would be least likely to use confirmations in connection with the examination of
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B.
C.
D.
37.  The current file of the auditor's working papers should generally include
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B.
C.
D.
38.  The permanent file section of the working papers that is kept for each audit client most likely contains
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B.
C.
D.
39.  An audit document that reflects the major components of an amount reported in the financial statements is referred to as a(n)
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B.
C.
D.
40.  Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's
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B.
C.
D.
41.  A written understanding between the auditor and the client concerning the auditor's responsibility for the discovery of illegal acts is usually set forth in a(n)
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B.
C.
D.
42.  Miller Retailing, Inc. maintains a staff of three full-time internal auditors who report directly to the audit committee. In planning to use the internal auditors to help in performing the audit, the independent auditor most likely will
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B.
C.
D.
43.  During the initial planning phase of an audit, a CPA most likely would
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B.
C.
D.
44.  When planning an audit, an auditor should
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B.
C.
D.
45.  As generally conceived, the audit committee of a publicly held company should be made up of
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D.
46.  An auditor who discovers that a client's employees paid small bribes to municipal officials most likely would withdraw from the engagement if
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C.
D.
47.  Which of these statements concerning illegal acts by clients is correct?
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B.
C.
D.
48.  To help plan the nature, timing, and extent of substantive procedures, preliminary analytical procedures should focus on
A.
B.
C.
D.
49.  The primary objective of final analytical procedures is to
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D.
50.  The substantive analytical procedure known as trend analysis is best described by
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B.
C.
D.
51.  The assurance bucket is filled with all of the following types of evidence except
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B.
C.
D.
52.  An auditor's primary consideration regarding an entity's internal controls is whether they
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B.
C.
D.
53.  Which of the following statements about internal control is correct?
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B.
C.
D.
54.  Which of the following is not a component of an entity's internal control system?
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B.
C.
D.
55.  In which of the following situations would an auditor most likely use a reliance strategy?
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B.
C.
D.
56.  After obtaining an understading of an entity's internal control system, an auditor may set control risk at the maximum level for some assertions because he or she
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D.
57.  Regardless of the assessed level of control risk, an auditor would perform some
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D.
58.  Assessing control risk below maximum involves all of the following except
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B.
C.
D.
59.  Which of the following audit techniques would most likely provide an auditor with the most assurance about the effectiveness of the operation of a control?
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B.
C.
D.
60.  Audit evidence concerning proper segregation of duties ordinarily is best obtained by
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D.
61.  Reports by the service organization's auditor typically
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D.
62.  Significant deficiencies are matters that come to an auditor's attention that should be communicated to an entity's audit committee because they represent
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B.
C.
D.
63.  An auditor's flowchart of a client's accounting system is a diagrammatic representation that depicts the auditor's
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C.
D.
64.  An auditor anticipates assessing control risk at a low level in an IT environment. Under these circumstances, on which of the following controls would the auditor initially focus?
A.
B.
C.
D.
65.  The Sarbanes-Oxley Act of 2002 requires management to include a report on the effectiveness of ICFR in the entity's annual report. It also requires auditors to report on the effectiveness of ICFR. Which of the following statements concerning these requirements is false?
A.
B.
C.
D.
66.  A control deviation caused by an employee performing a control procedure that he or she is not authorized to perform is always considered a
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C.
D.
67.  Which of the following is not a factor that might affect the likelihood that a control deficiency could result in a misstatement in an account balance?
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B.
C.
D.
68.  Entity-level controls can have a pervasive effect on the entity's ability to meet the control criteria. Which one of the following is not an entity-level control?
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B.
C.
D.
69.  Which of the following controls would most likely be tested during an interim period?
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B.
C.
D.
70.  If the financial reporting risks for a location are low and the entity has good entity-level controls, management may rely on which of the following for their assessment.
A.
B.
C.
D.
71.  Auditing standard 5 requires an auditor to perform a walkthrough as part of the internal control audit. A walkthrough requires an auditor to
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B.
C.
D.
72.  When auditors report on the effectiveness of internal control "as of" a specific date and obtain evidence about the operating effectiveness of controls at an interim date, which of the following items would be the least helpful in evaluating the additional evidence to gather for the remaining period?
A.
B.
C.
D.
73.  AnnaLisa, an auditor for N. M. Neal & Associates, is prevented by the management of Lileah Company from auditing controls over inventory. Lileah is a public company. Management explains that controls over inventory were recently implemented by a highly regarded public accounting firm that the company hired as a consultant and insists that it is a waste of time for AnnaLisa to evaluate these controls. Inventory is a material account, but procedures performed as part of the financial statement audit indicate the account is fairly stated. AnnaLisa found no material weaknesses in any other area of the client's internal control relating to financial reporting. What kind of report should AnnaLisa issue on the effectiveness of Lileah's internal control?
A.
B.
C.
D.
74.  In auditing a public company client, Natalie, an auditor for N. M. Neal & Associates, identifies four deficiencies in ICFR. Three of the deficiencies are unlikely to result in financial misstatements that are material. One of the deficiencies is reasonably likely to result in misstatements that are not material but significant. What type of audit report should Natalie issue?
A.
B.
C.
D.
75.  In auditing ICFR for a public company client, Emily finds that the company has a significant subsidiary located in a foreign country. Emily's accounting firm has no offices in that country, and the company has thus engaged another reputable firm to conduct the audit of internal control for that subsidiary. The other auditor's report indicates that there are no material weaknesses in the foreign subsidiary's ICFR. What should Emily do?
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B.
C.
D.
76.  Which of the following statements concerning control deficiencies is true?
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B.
C.
D.
77.  Significant deficiencies and material weaknesses must be communicated to an entity's audit committee because they represent
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B.
C.
D.
78.  Which of the following most likely represents a weakness in internal control of an IT system?
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B.
C.
D.
79.  A primary advantage of using generalized audit software packages to audit the financial statements of a client that uses an IT system is that the auditor may
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B.
C.
D.
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