Audit Exam 1 Review ACTUAL UPDATED
Exam Questions and CORRECT Answers
Business Risk - CORRECT ANSWER - The risk that an entity will fail to meet its
objectives
Information Risk - CORRECT ANSWER - The probability that the information circulated
by a company will be false or misleading
Auditing - CORRECT ANSWER - A systematic process of objectively obtaining and
evaluating evidence regarding assertions about economic actions and events to ascertain the
degree of correspondence between the assertions and established criteria and communicating the
results to interested users
What is the established criteria for an audit? - CORRECT ANSWER - GAAP
What is the goal of an audit? - CORRECT ANSWER - To give an OPINION by utilizing
managements assertions, evidence, and then giving your opinion
Attestation Engagements - CORRECT ANSWER - A practitioner assesses and reports on
"subject matter or an assertion about the subject matter that is the responsibility of another party"
Attestation Examples - CORRECT ANSWER - Financial: Financial forecasts &
projections, Pro forma financial information
Non Financial: Effectiveness of internal controls, compliance with environment regulations,
sustainability reporting
Assurance Services - CORRECT ANSWER - Independent professional services that
improve the quality of information, or its context, for decision makers
, Assurance Examples - CORRECT ANSWER - XBRL Reporting, customer satisfaction
surveys, internal audit outsourcing, cyber risk assessment & assurance, fraud
prevention/deterrence
Audit, Attestation, & Assurance Relationshpi - CORRECT ANSWER - Assurance →
Attestation → Finc Audit (General to specific)
Sox and Financial Statements with CEO & CFO - CORRECT ANSWER - 1) They sign
saying they read the financial statements
2) They sign saying they aren't aware of any false/misleading statements
3) They believe that the financial statements present an accurate picture of the company's
financial position
Existence/Occurence - CORRECT ANSWER - Assets and liabilities included in the
accounts exist and recorded transactions are valid and have actually occurred
Completeness - CORRECT ANSWER - All balances and transactions have been recorded
in the financial statements
Valuation/Allocation - CORRECT ANSWER - Assets, liabilities and recorded transactions
have been valued in accordance with GAAP
Rights/Obligations - CORRECT ANSWER - Entity has a legal claim on all assets and
revenues reported and has a legal responsibility for all liabilities and expenses
Presentation/Disclosure - CORRECT ANSWER - All accounts are presented in the
appropriate place and all information required has been disclosed in the statements and footnotes
Professional Skepticism - CORRECT ANSWER - Refers to an auditor's questioning
mindset towards representations made by management and evidential matter gathered
Exam Questions and CORRECT Answers
Business Risk - CORRECT ANSWER - The risk that an entity will fail to meet its
objectives
Information Risk - CORRECT ANSWER - The probability that the information circulated
by a company will be false or misleading
Auditing - CORRECT ANSWER - A systematic process of objectively obtaining and
evaluating evidence regarding assertions about economic actions and events to ascertain the
degree of correspondence between the assertions and established criteria and communicating the
results to interested users
What is the established criteria for an audit? - CORRECT ANSWER - GAAP
What is the goal of an audit? - CORRECT ANSWER - To give an OPINION by utilizing
managements assertions, evidence, and then giving your opinion
Attestation Engagements - CORRECT ANSWER - A practitioner assesses and reports on
"subject matter or an assertion about the subject matter that is the responsibility of another party"
Attestation Examples - CORRECT ANSWER - Financial: Financial forecasts &
projections, Pro forma financial information
Non Financial: Effectiveness of internal controls, compliance with environment regulations,
sustainability reporting
Assurance Services - CORRECT ANSWER - Independent professional services that
improve the quality of information, or its context, for decision makers
, Assurance Examples - CORRECT ANSWER - XBRL Reporting, customer satisfaction
surveys, internal audit outsourcing, cyber risk assessment & assurance, fraud
prevention/deterrence
Audit, Attestation, & Assurance Relationshpi - CORRECT ANSWER - Assurance →
Attestation → Finc Audit (General to specific)
Sox and Financial Statements with CEO & CFO - CORRECT ANSWER - 1) They sign
saying they read the financial statements
2) They sign saying they aren't aware of any false/misleading statements
3) They believe that the financial statements present an accurate picture of the company's
financial position
Existence/Occurence - CORRECT ANSWER - Assets and liabilities included in the
accounts exist and recorded transactions are valid and have actually occurred
Completeness - CORRECT ANSWER - All balances and transactions have been recorded
in the financial statements
Valuation/Allocation - CORRECT ANSWER - Assets, liabilities and recorded transactions
have been valued in accordance with GAAP
Rights/Obligations - CORRECT ANSWER - Entity has a legal claim on all assets and
revenues reported and has a legal responsibility for all liabilities and expenses
Presentation/Disclosure - CORRECT ANSWER - All accounts are presented in the
appropriate place and all information required has been disclosed in the statements and footnotes
Professional Skepticism - CORRECT ANSWER - Refers to an auditor's questioning
mindset towards representations made by management and evidential matter gathered
