AUDIT TEST 1 MULTIPLE CHOICE
(AIAF114) EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
Which of the following would be the most reliable audit evidence?
A.) inquiries of the client's internal audit staff
B.) inspection of prenumbered client purchase orders filed in the vendors payable
department
C.) inspection of vendor sales invoices received from client personnel
D.) inspection of bank statements obtained directly from the client's financial institution -
ANSWER-D
Breaux & Co. CPAs require that all audit documentation indicate the identity of the
preparer and the reviewer. This procedure provides evidence relating to which of the
following?
a. Independence.
b. Adequate competence and capabilities.
c. Adequate planning and supervision.
d. Gathering sufficient appropriate evidence. - ANSWER-c. Adequate planning and
supervision.
Which of the following concepts is LEAST related to the standard of due care?
A.) independence in fact
B.) professional skepticism
C.) prudent auditor
D.) reasonable assurance - ANSWER-D
The evidence considered most appropriate by auditors is best described as
A.) internal documents such as sales invoice copies produced under conditions of
strong internal control
B.) written representation made by the president of the entity
C.) documentary evidence obtained directly from independent external sources
D.) direct personal knowledge obtained through physical observation and mathematical
recalculation - ANSWER-D
Auditor's understanding of the internal control in an entity provides information for
A.) determining whether members of the audit team have the required competence and
capabilities to perform the audit
B.) ascertaining the independence in mental attitude of members of the audit team
, C.) planning the professional development courses the audit staff needs to keep up to
date WUTH new auditing standards
D.) planning the nature, timing, and extent of substantive procedures of an audit -
ANSWER-D
Kramer, CPA, consulted an independent appraiser regarding the valuation of fine art for
a not-for-profit museum. Consultation with the appraiser in this case would
A.) be considered as exercising proper due care
B.) be considered failure to follow generally accepted auditing standards because
Kramer should have known how to value fine art before accepting the engagement
C.) not be considered a violation of generally accepted auditing standards because
generally accepted auditing standards does not apply to not-for-profit entities
D.) none of the above - ANSWER-A
Which of the following is NOT addressed in the auditor's report for an issuer?
A.) responsibilities of the auditor and management in the financial reporting process
B.) absolute assurance regarding the fairness of the entity's financial statements in
accordance with GAAP
C.) a description of an audit engagement
D.) a summary of the auditors' opinion on the effectiveness of the entity's internal
control over financial reporting - ANSWER-B
Which of the following opinions would be issued if auditors believed that the entity's
financial statements were NOT presented in conformity with GAAP?
A.) adverse opinion
B.) disclaimer of opinion
C.) qualified opinion
D.) unmodified ppio. - ANSWER-A
It is always a good idea for auditors to begin an audit with the professional skepticism
characterized by the assumption that
A.) a potential conflict of interest always exists between the auditor and the
management of the enterprise under audit
B.) in audits of financial statements, the auditor acts exclusively in the capacity of an
auditor
C.) the professional status of the independent auditor imposes commensurate
professional obligations
D.) financial statements and financial data are verifiable - ANSWER-A
In an attestation engagement, a CPA is engaged to
(AIAF114) EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
Which of the following would be the most reliable audit evidence?
A.) inquiries of the client's internal audit staff
B.) inspection of prenumbered client purchase orders filed in the vendors payable
department
C.) inspection of vendor sales invoices received from client personnel
D.) inspection of bank statements obtained directly from the client's financial institution -
ANSWER-D
Breaux & Co. CPAs require that all audit documentation indicate the identity of the
preparer and the reviewer. This procedure provides evidence relating to which of the
following?
a. Independence.
b. Adequate competence and capabilities.
c. Adequate planning and supervision.
d. Gathering sufficient appropriate evidence. - ANSWER-c. Adequate planning and
supervision.
Which of the following concepts is LEAST related to the standard of due care?
A.) independence in fact
B.) professional skepticism
C.) prudent auditor
D.) reasonable assurance - ANSWER-D
The evidence considered most appropriate by auditors is best described as
A.) internal documents such as sales invoice copies produced under conditions of
strong internal control
B.) written representation made by the president of the entity
C.) documentary evidence obtained directly from independent external sources
D.) direct personal knowledge obtained through physical observation and mathematical
recalculation - ANSWER-D
Auditor's understanding of the internal control in an entity provides information for
A.) determining whether members of the audit team have the required competence and
capabilities to perform the audit
B.) ascertaining the independence in mental attitude of members of the audit team
, C.) planning the professional development courses the audit staff needs to keep up to
date WUTH new auditing standards
D.) planning the nature, timing, and extent of substantive procedures of an audit -
ANSWER-D
Kramer, CPA, consulted an independent appraiser regarding the valuation of fine art for
a not-for-profit museum. Consultation with the appraiser in this case would
A.) be considered as exercising proper due care
B.) be considered failure to follow generally accepted auditing standards because
Kramer should have known how to value fine art before accepting the engagement
C.) not be considered a violation of generally accepted auditing standards because
generally accepted auditing standards does not apply to not-for-profit entities
D.) none of the above - ANSWER-A
Which of the following is NOT addressed in the auditor's report for an issuer?
A.) responsibilities of the auditor and management in the financial reporting process
B.) absolute assurance regarding the fairness of the entity's financial statements in
accordance with GAAP
C.) a description of an audit engagement
D.) a summary of the auditors' opinion on the effectiveness of the entity's internal
control over financial reporting - ANSWER-B
Which of the following opinions would be issued if auditors believed that the entity's
financial statements were NOT presented in conformity with GAAP?
A.) adverse opinion
B.) disclaimer of opinion
C.) qualified opinion
D.) unmodified ppio. - ANSWER-A
It is always a good idea for auditors to begin an audit with the professional skepticism
characterized by the assumption that
A.) a potential conflict of interest always exists between the auditor and the
management of the enterprise under audit
B.) in audits of financial statements, the auditor acts exclusively in the capacity of an
auditor
C.) the professional status of the independent auditor imposes commensurate
professional obligations
D.) financial statements and financial data are verifiable - ANSWER-A
In an attestation engagement, a CPA is engaged to
