1. Identify the type of evidence that is being used for the following situation: "Compare inventory turnover ratio and gross profit percentage of the current period to prior periods".

A) Observation

B) Reperformace

C) Recalculation

D) Analytical procedure

2.An auditor discovers that the company is not following accounting principles in the accounting for their leases. The amount is material however, not pervasive. They find that everything else in the statements is in accordance with accounting principles. The auditor should give which type of report?

A)Unmodified report with an emphasis of matter paragraph

B)Adverse opinion

C)Qualified report

D)Disclaimer

3. Which of the following audit risk model statements is the correct one?

A) IR = AR x CR x PDR

B) PDR = IR x CR / AR

C) AR = IR x PDR / CR

D) CR = AR / IR x PDR

4. The _____ certify or guarantee that the financial statements are correct.

A) auditor tries to

B) board of governors

C) management

D) auditor does not

5. IFAC is an abbreviation for

A) International Federation of Auditors

B) International Federation of Accountants

C) International Framework for Accounting Concepts

D) International Framework for Auditing Concepts

6. The primary responsibility for the adequacy of disclosure in the financial statements of a publicly held company rests with the

A) Partner assigned to the audit engagement.

B) Management of the company.

C) Auditor in charge of the fieldwork.

D) Securities and Exchange Commission

7. Falsification of accounts is undertaken by

A) Auditors

B) Clerks

C) Management

D) Responsible officials

8. Why doauditors concentrate their efforts on material items in accounts?

A) Because they are easier to audit

B) Because the risk to the accounts of their being incorrectly stated is greater

C) Because the directors have asked for it

9. International auditing standards are issued by the:

A) International Accounting Standards Board

B) Financial Accounting Standards Board

C) International Auditing and Assurance Standards Board

D) Auditing Practices Board

10. Control risk is___________related to planned detection risk and_________related to the amount of audit evidence.

A) directly, inversely

B) inversely, inversely

C) inversely, directly

D) directly, directly

11.If the balance sheet of a company is dated December 31, 2018, the audit report is dated February 20, 2019, and both are released on February 27, 2019, this indicates that the auditor has searched for events that occurred up to:

A) February 20, 2019.

B) February 27, 2019.

C)December 31, 2018.

D) none of these.

12. Audit Risk means the risk that the auditor gives inappropriate audit opinion when -

A) Financial statements are affected by material facts

B) Financial statements are materially misstated

C) Financial statements do not give true and fair view

D) Financial statements do not present fairly

13. Which of the following services provides the lowest level of assurance about a company's financial statements?

A) Review of financial statements.

B) Audit of financial statements.

C) Tax services.

14. Compliance with the standards of auditing is the responsibility of

A) Management

B) Those charged with governance

C)Audit committee

D) Auditor

15. When using the work of a specialist, the auditor may identify and refer to the specialist

in the auditor's report if the

A) auditor expresses a qualified opinion as a result of the specialist's findings.

B) specialist is not independent of the client.

C) auditor wishes to indicate a division of responsibility.

D) specialist's work provides the auditor greater assurance of reliability.

16. Auditor's report is the expert's opinion expressed by the auditor as to the fairness of_________

A) Financial position

B) General position

C) Balance sheet and profit and loss account

D) Financial statements

17. Which of the following is not external audit evidence?

A) Bank Statements

B) External Confirmation

C) Salaries Sheet

18. If planned detection risk is reduced, the amount of evidence the auditor accumulated will:

A) remain unchanged

B) can't be determined

C) increase

D) decrease

19. An auditor decides to use the blank form of positive accounts receivable confirmation. The auditor should be aware that the blank form may be ineffective because

A) Few responses may occur because more effort is required of recipients.

B) All accounts do not have an equal opportunity to be selected for confirmation.

C) Accounts actually confirmed may not be representative of the population.

20. Process of collecting and preparing working papers is known as __________.

A) Audit evidence

B) Planning an audit

C) Policies and procedures

D) Documentation