Audit Quizzes UPDATED Exam Questions
and CORRECT Answers
Matt Stairs performed work for a client in the real estate business and issued a Notice to
Reader. What degree of assurance does a Notice to Reader provide to the user of the
statements?
a) None of the above
b) Reasonable assurance
c) No assurance
d) Moderate assurance - CORRECT ANSWER- C
A limitation of an audit is caused by:
a) The nature of audit procedures
b) The need for the audit to be conducted within a reasonable period of time and at a
reasonable cost
c) The nature of financial reporting
d) All of the above - CORRECT ANSWER- D
In a review engagement, which of the following is least likely to occur during the
engagement?
a) Analytical procedures
b) Discussions with management
c) Enquires with management and other personnel
d) Review of the internal controls of the entity - CORRECT ANSWER- D
The wording of a negative expression of opinion generally states that:
a) There is nothing wrong with the subject matter
,b) There is something wrong with the subject matter
c) There is nothing that has come to the attention of the auditors that would lead them to
believe that the information being assured is not true and fair
d) There is something that has come to the attention of the auditors that would lead them to
believe that the information being assured is not true and fair - CORRECT ANSWER- C
The expectation gap is caused by:
a) Unrealistic auditor expectations
b) Realistic user expectations
c) Unrealistic user expectations
d) Realistic audit expectations - CORRECT ANSWER- C
Philip wrote up an advertisement for his firm. In his draft to the local newspaper he indicated
that the firm was able to provide services that he knew it could not deliver. Which part of the
professional standards or codes of conduct was Phillip breaking?
a) Communication
b) Confidentiality
c) Professional Behaviour
d) Objectivity - CORRECT ANSWER- C
An example of an unmodified audit opinion is:
a) Qualified audit opinion
b) Adverse audit opinion
c) Unqualified audit opinion
d) None of the above - CORRECT ANSWER- C
Intimidation threats to independence include:
a) A close business relationship with the client
, b) Representing the client in a legal dispute
c) Preparing information for the client that is then assured
d) The threat that that the client will use a different assurance firm next year - CORRECT
ANSWER- D
Cliff Kelly has been an audit manager at Copeland CPA's for the past 10 years. 2 years ago,
Cliff performed human resources and internal audit functions for 9 months while his client
underwent a major restructuring. Cliff's firm has a policy of changing audit partners and
managers every 5-7 years. Cliff is reluctant to take on the audit because he believes that there
is an independence threat, specifically a:
a) Advocacy threat
b) Familiarity threat
c) Integrity threat
d) Self-review threat - CORRECT ANSWER- D
Shayna audits a company that has market capitalization of $20 mill. There is also a
requirement that the partners in her firm be rotated every 7 years and that the audit committee
must pre-approve all services provided to the client by Shayna's firm. What kind of client is
this?
a) Partnership
b) Diversified
c) Small business
d) Reporting issuer - CORRECT ANSWER- D
Theodore prepared a set of F/S based on information provided to him. He checked
mathematical accuracy of the data, and the client complimented him on the reasonable cost of
the work he performed. Theodore performed:
a) An audit
b) A compilation
c) A review
d) None of the above - CORRECT ANSWER- B
and CORRECT Answers
Matt Stairs performed work for a client in the real estate business and issued a Notice to
Reader. What degree of assurance does a Notice to Reader provide to the user of the
statements?
a) None of the above
b) Reasonable assurance
c) No assurance
d) Moderate assurance - CORRECT ANSWER- C
A limitation of an audit is caused by:
a) The nature of audit procedures
b) The need for the audit to be conducted within a reasonable period of time and at a
reasonable cost
c) The nature of financial reporting
d) All of the above - CORRECT ANSWER- D
In a review engagement, which of the following is least likely to occur during the
engagement?
a) Analytical procedures
b) Discussions with management
c) Enquires with management and other personnel
d) Review of the internal controls of the entity - CORRECT ANSWER- D
The wording of a negative expression of opinion generally states that:
a) There is nothing wrong with the subject matter
,b) There is something wrong with the subject matter
c) There is nothing that has come to the attention of the auditors that would lead them to
believe that the information being assured is not true and fair
d) There is something that has come to the attention of the auditors that would lead them to
believe that the information being assured is not true and fair - CORRECT ANSWER- C
The expectation gap is caused by:
a) Unrealistic auditor expectations
b) Realistic user expectations
c) Unrealistic user expectations
d) Realistic audit expectations - CORRECT ANSWER- C
Philip wrote up an advertisement for his firm. In his draft to the local newspaper he indicated
that the firm was able to provide services that he knew it could not deliver. Which part of the
professional standards or codes of conduct was Phillip breaking?
a) Communication
b) Confidentiality
c) Professional Behaviour
d) Objectivity - CORRECT ANSWER- C
An example of an unmodified audit opinion is:
a) Qualified audit opinion
b) Adverse audit opinion
c) Unqualified audit opinion
d) None of the above - CORRECT ANSWER- C
Intimidation threats to independence include:
a) A close business relationship with the client
, b) Representing the client in a legal dispute
c) Preparing information for the client that is then assured
d) The threat that that the client will use a different assurance firm next year - CORRECT
ANSWER- D
Cliff Kelly has been an audit manager at Copeland CPA's for the past 10 years. 2 years ago,
Cliff performed human resources and internal audit functions for 9 months while his client
underwent a major restructuring. Cliff's firm has a policy of changing audit partners and
managers every 5-7 years. Cliff is reluctant to take on the audit because he believes that there
is an independence threat, specifically a:
a) Advocacy threat
b) Familiarity threat
c) Integrity threat
d) Self-review threat - CORRECT ANSWER- D
Shayna audits a company that has market capitalization of $20 mill. There is also a
requirement that the partners in her firm be rotated every 7 years and that the audit committee
must pre-approve all services provided to the client by Shayna's firm. What kind of client is
this?
a) Partnership
b) Diversified
c) Small business
d) Reporting issuer - CORRECT ANSWER- D
Theodore prepared a set of F/S based on information provided to him. He checked
mathematical accuracy of the data, and the client complimented him on the reasonable cost of
the work he performed. Theodore performed:
a) An audit
b) A compilation
c) A review
d) None of the above - CORRECT ANSWER- B
