AUDIT Exam 1 Latest Practice Test 2026-
2027 with 200+ Questions and Correct
Answers/ Audit Exam 1 prep
The Sarbanes-Oxley Act of 2002 requires that the key company officials certify the
financial statements. Certification means that the company CEO and CFO must
sign a statement indicating:
they have read the financial statements
they are not aware of any false or misleading statements (or any key omitted
disclosures)
they believe that the financial statements present an accurate picture of the
company's financial condition
All of the these choices are correct - ANSWER-All of the these choices are correct
Which of the following auditor concerns most likely could be so serious that the
auditor would conclude that a financial statement audit cannot be conducted?
The entity has no formal written code of conduct
The integrity of entity's management is suspect
Procedures requiring separation of duties are subject to management override
Management fails to modify prescribed controls for changes in conditions -
ANSWER-The integrity of entity's management is suspect
Auditors try to achieve independence in appearance in order to:
1
,maintain public confidence in the profession
become independent in fact
comply with the responsibilities principle
maintain an unbiased mental attitude - ANSWER-maintain public confidence in
the profession
Which of the following is an element of a system of quality control that should be
considered by a public accounting firm in establishing its quality control policies
and procedures?
Lending credibility to a client's financial statements
Using statistical sampling techniques
Acceptance and continuance of client relationships and specific engagements
Membership in the Center for Public Company Audit Firms - ANSWER-
Acceptance and continuance of client relationships and specific engagements
Which of the following does not directly relate to an auditor's responsibility for
having appropriate competence and capabilities to perform the audit?
Participating in continuing professional education
Gaining experience through hands-on practice
Obtaining reliable documentary evidence
Attending on-the-job training - ANSWER-Obtaining reliable documentary
evidence
An audit of the financial statements of Camden Corporation is being conducted by
external auditors. The external auditors are expected to:
2
,certify the correctness of Camden's financial statements
make a complete examination of Camden's records and verify all of Camden's
transactions
give an opinion on the fair presentation of Camden's financial statements in
conformity with the applicable financial reporting framework (e.g., GAAP, IFRS)
give an opinion on the attractiveness of Camden for investment purposes and
critique the wisdom and legality of its business decisions - ANSWER-give an
opinion on the fair presentation of Camden's financial statements in conformity
with the applicable financial reporting framework (e.g., GAAP, IFRS)
Which of the following statements is generally correct about the appropriateness of
audit evidence?
Auditors' direct personal knowledge, obtained through observation and inspection,
is of higher quality than information obtained indirectly from independent outside
sources
To be reliable, audit evidence must be either valid or relevant, but need not be both
Client accounting data alone may be considered sufficient appropriate audit
evidence to issue an unmodified opinion on client financial statements
Appropriateness of audit evidence refers to the amount of corroborative evidence
to be obtained - ANSWER-Auditors' direct personal knowledge, obtained through
observation and inspection, is of higher quality than information obtained
indirectly from independent outside sources
Internal evidence
is obtained directly from third parties independent of the client
originates outside of the client's system but has been received and processed by the
client
3
, consists of documents that are produced, used, and stored within the client's
information system
consists of representations made by the client's officers, directors, owners, and
employees - ANSWER-consists of documents that are produced, used, and stored
within the client's information system
Which of the following is not a concept from the performance principle under
generally accepted auditing standards?
The auditor must plan the work and properly supervise any assistants
The auditor must express an opinion in accordance with the auditor's findings
The auditor must obtain sufficient appropriate evidence about whether material
misstatements exist
The auditor must determine and apply an appropriate materiality level throughout
the audit - ANSWER-The auditor must express an opinion in accordance with the
auditor's findings
Which of the following is not true with respect to the auditors' report for an issuer?
The report title should contain the word "independent"
The report provides a detailed listing of major auditing procedures performed
during the examination
The opinion assesses the financial statements against an applicable financial
reporting framework
The report specifically identifies the financial statements and years examined by
the auditor - ANSWER-The report provides a detailed listing of major auditing
procedures performed during the examination
4
2027 with 200+ Questions and Correct
Answers/ Audit Exam 1 prep
The Sarbanes-Oxley Act of 2002 requires that the key company officials certify the
financial statements. Certification means that the company CEO and CFO must
sign a statement indicating:
they have read the financial statements
they are not aware of any false or misleading statements (or any key omitted
disclosures)
they believe that the financial statements present an accurate picture of the
company's financial condition
All of the these choices are correct - ANSWER-All of the these choices are correct
Which of the following auditor concerns most likely could be so serious that the
auditor would conclude that a financial statement audit cannot be conducted?
The entity has no formal written code of conduct
The integrity of entity's management is suspect
Procedures requiring separation of duties are subject to management override
Management fails to modify prescribed controls for changes in conditions -
ANSWER-The integrity of entity's management is suspect
Auditors try to achieve independence in appearance in order to:
1
,maintain public confidence in the profession
become independent in fact
comply with the responsibilities principle
maintain an unbiased mental attitude - ANSWER-maintain public confidence in
the profession
Which of the following is an element of a system of quality control that should be
considered by a public accounting firm in establishing its quality control policies
and procedures?
Lending credibility to a client's financial statements
Using statistical sampling techniques
Acceptance and continuance of client relationships and specific engagements
Membership in the Center for Public Company Audit Firms - ANSWER-
Acceptance and continuance of client relationships and specific engagements
Which of the following does not directly relate to an auditor's responsibility for
having appropriate competence and capabilities to perform the audit?
Participating in continuing professional education
Gaining experience through hands-on practice
Obtaining reliable documentary evidence
Attending on-the-job training - ANSWER-Obtaining reliable documentary
evidence
An audit of the financial statements of Camden Corporation is being conducted by
external auditors. The external auditors are expected to:
2
,certify the correctness of Camden's financial statements
make a complete examination of Camden's records and verify all of Camden's
transactions
give an opinion on the fair presentation of Camden's financial statements in
conformity with the applicable financial reporting framework (e.g., GAAP, IFRS)
give an opinion on the attractiveness of Camden for investment purposes and
critique the wisdom and legality of its business decisions - ANSWER-give an
opinion on the fair presentation of Camden's financial statements in conformity
with the applicable financial reporting framework (e.g., GAAP, IFRS)
Which of the following statements is generally correct about the appropriateness of
audit evidence?
Auditors' direct personal knowledge, obtained through observation and inspection,
is of higher quality than information obtained indirectly from independent outside
sources
To be reliable, audit evidence must be either valid or relevant, but need not be both
Client accounting data alone may be considered sufficient appropriate audit
evidence to issue an unmodified opinion on client financial statements
Appropriateness of audit evidence refers to the amount of corroborative evidence
to be obtained - ANSWER-Auditors' direct personal knowledge, obtained through
observation and inspection, is of higher quality than information obtained
indirectly from independent outside sources
Internal evidence
is obtained directly from third parties independent of the client
originates outside of the client's system but has been received and processed by the
client
3
, consists of documents that are produced, used, and stored within the client's
information system
consists of representations made by the client's officers, directors, owners, and
employees - ANSWER-consists of documents that are produced, used, and stored
within the client's information system
Which of the following is not a concept from the performance principle under
generally accepted auditing standards?
The auditor must plan the work and properly supervise any assistants
The auditor must express an opinion in accordance with the auditor's findings
The auditor must obtain sufficient appropriate evidence about whether material
misstatements exist
The auditor must determine and apply an appropriate materiality level throughout
the audit - ANSWER-The auditor must express an opinion in accordance with the
auditor's findings
Which of the following is not true with respect to the auditors' report for an issuer?
The report title should contain the word "independent"
The report provides a detailed listing of major auditing procedures performed
during the examination
The opinion assesses the financial statements against an applicable financial
reporting framework
The report specifically identifies the financial statements and years examined by
the auditor - ANSWER-The report provides a detailed listing of major auditing
procedures performed during the examination
4
