Multiple Choice Questions:

1. One assessment of acceptable audit risk is made for which of these?

a. Entire audit.

b. Each audit segment.

c. High risk segments.

d. None of the above.

2. Risks affect which of the following?

a. Timing of testing.

b. Extent of testing.

c. Both the timing and the extent of testing.

d. None of the above.

3. Acceptable detection risk depends on which of these?

a. Inherent risk and control risk.

b. Inherent risk and acceptable audit risk and control risk.

c. Inherent risk, acceptable audit risk, and control risk.

d. None of the above.

4. Which of the following is a list of the different types of opinions expressed in audit reports?

a. Standard, unqualified, qualified, negative and disclaimer.

b. Standard unqualified, unqualified with modified wording, qualified, adverse, and disclaimer.

c. Standard unqualified, modified, qualified, adverse, and disclaimer.

d. None of the above.

5. If the client has changed accounting principles during the current year, the auditor is required to do which of these?

a. Add a paragraph that draws the audit report reader’s attention to this change.

If the client changed accounting principles during the current year, the auditor is required to add a paragraph that draws the reader’s attention to this change. A change that must be reported in this fashion is one that has a material effect on the financial statements in the current year and is from one generally acceptable principle to another generally acceptable principle. If the client makes a change from one accounting principle that is not generally accepted to another that is generally accepted, this change is considered the correction of an error, not a change in accounting principle.

The additional paragraph, which is required only as long as the year of change is shown, is placed after the opinion paragraph before the paragraph that addresses internal controls over financial reporting

b. Issue a qualified report and add a paragraph pointing out the change.

c. Issue an adverse report.

d. Issue a disclaimer report.