Audit Exam

Topics: Audit, Auditing, Financial audit Pages: 61 (9534 words) Published: October 17, 2013
Audit exam 1
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Which is usually included in an engagement letter? (A reference to GAAP/A reference to GAAS) A. Yes/Yes
B. No/No
C. Yes/No
D. No/Yes



Which of the following statements is true?
A) Auditors have generally found that the most effective and efficient way to conduct an audit is to obtain some assurance for each class of transaction and for the ending balance of the related account. B) Management's assertions follow and are closely related to the audit objectives. C) The auditor's primary responsibility is to find and disclose fraudulent management assertions. D) Assertions about presentation and disclosure deal with whether the accounts have been included in the financial statements at appropriate amounts.



After general audit objectives are understood, specific audit objectives for each account balance on the financial statements can be developed. Which of the following statements is true?
A) There should be at least one specific objective for each relevant general objective. B) There will be only one specific objective for each relevant general objective. C) There will be many specific objectives developed for each relevant general objective. D) There must be one specific objective for each general objective.



An auditor uses monetary unit sampling with a sampling interval of $20,000 and detects an item with a recorded amount of $10,000 with an audited value of $4,000. The projected misstatement of the sample is: A) $12,000.

B) $6,000.
C) $10,000.
D) $3,000.



The primary difference between an audit of the balance sheet and an audit of the income statement is that the audit of the income statement deals with the verification of:
A) transactions.
B) balances.
C) costs.
D) cutoffs.



The objective of the ordinary audit of financial statements is the expression of an opinion on: A) the fairness of the financial statements in all material respects. B) the accuracy of the financial statements.

C) the accuracy of the annual report.
D) the accuracy of the balance sheet and income statement.



Management assertions are:
A) directly related to the financial reporting framework used by the company, usually U.S. GAAP or IFRS B) stated in the footnotes to the financial statements.
C) explicitly expressed representations about the financial statements. D) provided to the auditor in the assertions letter, but are not disclosed on the financial statements.



A successor auditor may perform which of the following for a new audit client? (Speak to local attorneys, banks and other businesses regarding the company's reputation/Speak to the predecessor auditors about disagreements they had with management) A. Yes/Yes

B. No/No
C. Yes/No
D. No/Yes



PPS samples can be obtained in an efficient manner using all but which of the following? A) hand selection by the auditor
B) computer software
C) random number tables
D) systematic sampling techniques



Which of the following statements best describes the auditor's responsibility with respect to illegal acts that do not have a material effect on the client's financial statements?
A) Generally, the auditor is under no obligation to notify parties other than personnel within the client's organization. B) Generally, the auditor is under an obligation to inform the PCAOB. C) Generally, the auditor is obligated to disclose the relevant facts in the auditor's report. D) Generally, the auditor is expected to compel the client to adhere to requirements of the Foreign Corrupt Practices Act.



An auditor should recognize that the application of auditing procedures may produce evidence indicating the possibility of errors or fraud and therefore should:
A) plan and perform the engagement with an attitude of professional skepticism. B) not rely on internal controls that are designed to prevent or detect...
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