ACC400 (Auditing) Final Assessment Review 2026 (With Solns).

ACC400

Auditing


Final Assessment Review


(With Solutions)



2026




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,1. Case: An auditor discovers management has overridden controls
to accelerate revenue recognition.
Q: Which audit risk is most relevant?
- A. Detection risk
- B. Control risk
- C. Inherent risk
- D. Sampling risk
Answer: C
Rationale: Management override increases inherent risk of material
misstatement.

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2. Case: In planning an audit, materiality is set at 5% of net income.
Q: Why is materiality important?
- A. It determines audit fees
- B. It guides audit scope and testing
- C. It eliminates audit risk
- D. It ensures independence
Answer: B
Rationale: Materiality helps auditors decide which misstatements are
significant.

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3. Case: An auditor uses analytical procedures in planning.
Q: Primary purpose?
- A. Detect fraud
- B. Identify unusual trends
- C. Confirm balances
- D. Reduce audit fees
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, Answer: B
Rationale: Analytical procedures highlight anomalies for further
testing.

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4. Case: A client uses complex derivatives.
Q: Which specialist may be needed?
- A. IT auditor
- B. Valuation expert
- C. Tax consultant
- D. Internal auditor
Answer: B
Rationale: Valuation experts assist with fair value of derivatives.

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5. Case: Audit sampling is used because:
- A. Auditors must test 100% of transactions
- B. It reduces audit risk to zero
- C. It allows conclusions about population
- D. It eliminates materiality concerns
Answer: C
Rationale: Sampling enables reasonable assurance without full
testing.

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6. Case: An auditor finds inventory overstated.
Q: Which assertion is violated?
- A. Completeness
- B. Existence
- C. Rights and obligations
- D. Presentation
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