AUDIT TEST 1 QUESTIONS AND
CERTIFIED SOLUTIONS
a qualified opinion is one that ANSW✅✅has and "exception"
an adverse opinion is one ANSW✅✅that says there are material misstatements
disclaimer opinion is ANSW✅✅one where the auditor can not provide an opinion
3 responsibilities of the auditor ANSW✅✅1. having appropriate competence to complete the
audit
2. complying with relevant ethical requirements
3. maintaining professional skepticism
what is the first stage of an audit ANSW✅✅obtain engagement
auditors are expected to remain independent in __________ and independent in _____________
ANSW✅✅fact, appearance
auditors should always be skeptical about __________ evidence, and the _____________ of
documents and evidence ANSW✅✅contradictory evidence, reliability
what is materiality? ANSW✅✅focusing on what matters are more important to financial
statement users
materiality is commonly determined by using ANSW✅✅financial statement subtotals
effective internal controls ___________ control risk ANSW✅✅reduces
appropriateness represents evidence quality/quantity ANSW✅✅quality
, sufficiency represents evidence quality/quantity ANSW✅✅quantity
acceptance/continuance stage of the audit process involves: ANSW✅✅researching the company
background checks
evaluation of relationship
talk to predecessor auditor
what does an engagement letter do? ANSW✅✅it lays out what the audit will entail (price,
timeline, terms)
internal controls and financial statements are the _____________'s responsibility
ANSW✅✅management
determining performance materiality involves choosing a ANSW✅✅tolerable error
what is the responsibilities principle? ANSW✅✅requires auditors to comply with appropriate
ethical requirements
independence in mental attitude mean.... ANSW✅✅remaining impartial as a state of mind
independence in appearance means.... ANSW✅✅that other people must believe that you are
independent too
an audit plan involves ANSW✅✅1. making sure that the firm has adequate staff to conduct the
audit
2. determine materiality
3. outline audit procedures that need to be completed
how is materiality used in an audit? ANSW✅✅-directs attention to high risk accounts
-sets a level to determine uncorrected/misstated information
-making decisions on important accounts
CERTIFIED SOLUTIONS
a qualified opinion is one that ANSW✅✅has and "exception"
an adverse opinion is one ANSW✅✅that says there are material misstatements
disclaimer opinion is ANSW✅✅one where the auditor can not provide an opinion
3 responsibilities of the auditor ANSW✅✅1. having appropriate competence to complete the
audit
2. complying with relevant ethical requirements
3. maintaining professional skepticism
what is the first stage of an audit ANSW✅✅obtain engagement
auditors are expected to remain independent in __________ and independent in _____________
ANSW✅✅fact, appearance
auditors should always be skeptical about __________ evidence, and the _____________ of
documents and evidence ANSW✅✅contradictory evidence, reliability
what is materiality? ANSW✅✅focusing on what matters are more important to financial
statement users
materiality is commonly determined by using ANSW✅✅financial statement subtotals
effective internal controls ___________ control risk ANSW✅✅reduces
appropriateness represents evidence quality/quantity ANSW✅✅quality
, sufficiency represents evidence quality/quantity ANSW✅✅quantity
acceptance/continuance stage of the audit process involves: ANSW✅✅researching the company
background checks
evaluation of relationship
talk to predecessor auditor
what does an engagement letter do? ANSW✅✅it lays out what the audit will entail (price,
timeline, terms)
internal controls and financial statements are the _____________'s responsibility
ANSW✅✅management
determining performance materiality involves choosing a ANSW✅✅tolerable error
what is the responsibilities principle? ANSW✅✅requires auditors to comply with appropriate
ethical requirements
independence in mental attitude mean.... ANSW✅✅remaining impartial as a state of mind
independence in appearance means.... ANSW✅✅that other people must believe that you are
independent too
an audit plan involves ANSW✅✅1. making sure that the firm has adequate staff to conduct the
audit
2. determine materiality
3. outline audit procedures that need to be completed
how is materiality used in an audit? ANSW✅✅-directs attention to high risk accounts
-sets a level to determine uncorrected/misstated information
-making decisions on important accounts
