Audit Theory and Practice - Chapter 1: Questions
With Correct Solutions
1. Which the following is not a reason for a public company to receive an
audit?
a.
Potential bias in providing information.
b.
Closeness between a user and the organization.
c.
Complexity of the processing systems.
d.
Remoteness between a user and the organization. Correct Answer -
Closeness between a user and the organization
2. What is the term used to describe a systematic process of objectively
obtaining evidence regarding assertions about economic actions and events to
ascertain the degree of correspondence between those assertions and
established criteria and communicating the results to interested users?
a.
Internal audit.
b.
Financial audit.
c.
External audit.
d.
Integrated audit Correct Answer - External Audit
3. An Integrated Audit Report provides opinion(s) on which of the following?
a.
The financial statements.
b.
Internal controls.
c.
Both financial statements and internal controls.
d.
, Neither financial statements or internal controls. Correct Answer - Both
financial statements and internal controls.
Which one of the following is not a key attribute needed to perform an audit?
Cant say I know the actual answer but almost positive its not B because they
talk about independence being one of the most important aspects. I thought so
too, but after further thinking, the question doesn't state an external audit, an
internal company could perform an audit without indpependence. Good Call
a.
Subject matter knowledge.
b.
Independence.
c.
Established criteria or standards.
d.
Accounting skills. Correct Answer - Accounting skills
5. What should internal controls be design to do?
a.
Detect errors.
b.
Detect and prevent errors.
c.
Prevent errors.
d.
Eliminate the possibility of fraud. Correct Answer - Detect and prevent
errors.
6. Which one of the following is not an example of an independence violation?
a.
Audit partner's spouse is the CFO at a client.
b.
Audit firm accepts money for conducting the audit.
c.
Auditors owning a small amount of stock in a client.
d.
Providing investment tips to friends about clients. Correct Answer -
Audit firm accepts money for conducting the audit.
With Correct Solutions
1. Which the following is not a reason for a public company to receive an
audit?
a.
Potential bias in providing information.
b.
Closeness between a user and the organization.
c.
Complexity of the processing systems.
d.
Remoteness between a user and the organization. Correct Answer -
Closeness between a user and the organization
2. What is the term used to describe a systematic process of objectively
obtaining evidence regarding assertions about economic actions and events to
ascertain the degree of correspondence between those assertions and
established criteria and communicating the results to interested users?
a.
Internal audit.
b.
Financial audit.
c.
External audit.
d.
Integrated audit Correct Answer - External Audit
3. An Integrated Audit Report provides opinion(s) on which of the following?
a.
The financial statements.
b.
Internal controls.
c.
Both financial statements and internal controls.
d.
, Neither financial statements or internal controls. Correct Answer - Both
financial statements and internal controls.
Which one of the following is not a key attribute needed to perform an audit?
Cant say I know the actual answer but almost positive its not B because they
talk about independence being one of the most important aspects. I thought so
too, but after further thinking, the question doesn't state an external audit, an
internal company could perform an audit without indpependence. Good Call
a.
Subject matter knowledge.
b.
Independence.
c.
Established criteria or standards.
d.
Accounting skills. Correct Answer - Accounting skills
5. What should internal controls be design to do?
a.
Detect errors.
b.
Detect and prevent errors.
c.
Prevent errors.
d.
Eliminate the possibility of fraud. Correct Answer - Detect and prevent
errors.
6. Which one of the following is not an example of an independence violation?
a.
Audit partner's spouse is the CFO at a client.
b.
Audit firm accepts money for conducting the audit.
c.
Auditors owning a small amount of stock in a client.
d.
Providing investment tips to friends about clients. Correct Answer -
Audit firm accepts money for conducting the audit.
