Audit 1 review
Auditl Review Question 1 (1 point) The performing stage of the audit involves: 0 testing of controls (if planning reliance), detailed tests of transactions throughout the year, and detailed substantive tests of year-end balances. O calculating final materiality, testing of controls, and tests of transactions and balances. 0 testing of controls, detailed tests of transactions, and detailed substantive tests of year-end balances. O calculating planning materiality, testing of controls, and tests of transactions and balances. Question 10 [1 point) Based on the evidence gathered, if an auditor concludes all noted misstatements in the nancial statements to be immaterial, individually and collectively, then the auditor would 0 resign from the engagement 0 issue an unqualified opinion 0 issue a qualified opinion 0 emphasize the errors in the audit report Question 2 (1 point) The audit expectation gap occurs when: 0 user beliefs do not align with what an auditor has actually done. 0 auditors perform their duties appropriately and satisfy users' demands. 0 peer reviews of audits ensure that auditing standards have been applied correctly and the standards are at the level that satisfies users' demands. 0 the public is well educated about auditing. Question 3 (1 point) A "clean\" audit report is issued when: 0 the audit opinion is unqualified and the auditor includes a paragraph in the audit report to emphasize something important. 0 the users cannot rely on the financial statements. 0 the audit opinion is unqualified and unmodified. O the auditor has no independence issues. Question 4 (1 point] The auditor is required to maintain "professional skepticism" when assessing fraud risk. Which of the following is not an example of professional skepticism? Q When supporting documents are missing for several small office purchases, the auditor accepts that client explanation that these items are insignificant. 0 While waiting in the reception area before a meeting, the auditor observes how the incoming mail is handled. 0 After determining that the company procedures manual states that at least two quotations must be obtained for all large purchases, the auditor confirms this procedure with the purchasing clerk. O The company has just announced staff layoffs dues to poor financial results, but the auditor notices that the company president has just purchased a new luxury automobile. Question 5 (1 point) Fraudulent financial reporting is one form of fraud. Which of the following statements is FALSE? 0 Fraudulent financial reporting may include overstated sales forecasts or projections. Fraudulent financial reporting is a type of fraud more likely to be committed by junior staff that senior management. 0 Fraudulent financial reporting is an intentional act to defraud investors or shareholders. O Fraudulent financial reporting is a type of fraud more likely to be committed by senior management than junior staff. Question 6 (1 point) When a client operates in an industry subject to changing trends: 0 the risk of product obsolescence is reduced. 0 the reputational risk of the client is decreased. 0 the risk of fraud is increased. 0 the risk of material misstatement is increased. Question 7 (1 point) If inherent risk and control risk are low, the auditor can set detection risk as high. Question 8 (1 point) The audit strategy for a client with high inherent risk and high control risk will include 0 increased testing of controls. 0 increased reliance on substantive tests. 0 increased reliance on controls. 0 no or very limited tests of controls. Question 9 (1 point) Which of the following does NOT describe audit risk? 0 Auditor indicates the financial statements are not materially misstated when in fact they are 0 Auditor indicates the financial statements are materially misstated when in fact they are not Q Auditor expresses an inappropriate opinion on the financial statements 0 Auditor expresses an appropriate opinion on the financial statements
