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Audit Manual – Chapter 7 (2025/2026) – 35 Exam Questions & Answers on Level One, Level Two & Executive Review, Quality Control & AU-C Standards

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This document contains 35 verified exam questions and answers for Audit Manual Chapter 7, aligned with 2025/2026 auditing procedures and AU-C standards. It covers the full review process—Level One, Level Two, and Executive Review—and explains the APA quality control requirements under GAO 5.02 and AU-C 220.03. The guide defines the purpose of a Level One Review, preparation steps, required documentation, and reviewer responsibilities, including the “Experienced Auditor Rule” from AU-C 230.08. It details reviewer and reviewee best practices, timelines, and procedural expectations, emphasizing that Level One Reviews verify compliance with professional standards without re-performing audit work. The document also outlines the scope and focus of Level Two Reviews and the final Executive Review process, which involves senior audit leadership and ensures the final report meets all legal and professional requirements. This resource is essential for auditors, CPA candidates, internal audit managers, quality control reviewers, and audit trainees seeking a complete understanding of the audit review process from initial fieldwork checks to final executive sign-off. It also serves as a practical reference for audit organizations aiming to strengthen their compliance and review frameworks. Keywords: Level One Review, Level Two Review, Executive Review, quality control, AU-C 220, AU-C 230, GAO 5.02, audit review process, experienced auditor rule, APA policy, reviewer tips, reviewee tips

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Audit Manual Chapter 7 2025/2026 Exam
Questions and Answers | 100% Solved



What is the purpose of the level one review? - 🧠 ANSWER ✔✔To provide

verification that the audit work meets the APA policy and is in compliance with

professional standards. The checklist will be completed at the conclusion of each

audit to document the reviewer's confirmation that the items have been reviewed

and adhere to the appropriate policy and standard.

Each audit organization performing audits in accordance with GAGAS must: - 🧠

ANSWER ✔✔Establish and maintain a system of quality control that is designed

to provide the audit organization with reasonable assurance that they organization

and its personnel comply with professional standards and applicable legal and

regulatory requirements (GAO 5.02).

, According to AU-C 220.03, the firm has - 🧠 ANSWER ✔✔An obligation to

establish and maintain a system of quality control and to provide it with reasonable

assurance that:

a. The firm and its personnel comply with professional standards and applicable

legal and regulatory requirements; and

b. Reports issued by the firm are appropriate in the circumstances.

Level One Reviews are a __________ ____________ mechanism put in place by

the APA to meet professional standards and applicable legal and regulatory

requirements. - 🧠 ANSWER ✔✔Quality Control


The Level One review is to be a detailed review of __________ working papers to

ensure the work has been performed in accordance with professional standards and

applicable legal and regulatory requirements. - 🧠 ANSWER ✔✔All


Per AU-C 220.A16, a review consists of consideration of whether (including but

not limited to): - 🧠 ANSWER ✔✔1. The work has been performed in accordance

with professional standards and applicable legal and regulatory requirements.

2. Significant findings or issues have been raised for further consideration.

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