multiple choice
Overview of Risk-Based Audit Process 2 10. Which of the following factors does not create a demand for external audit services? a. Potential bias by management in providing information. b. Requirement of PICPA. . Complexity of the accounting processing systems. d. Remoteness between a user and the organization. 11. Which of the following expectations can users of the audit report reasonably expect with regards to the audited financial statements? a. The financial statements include all financial disclosures desired by users. b. The financial statements are presented fairly according to the substance of PFRS. C. The financial statements are free from all errors. d. All of the above are reasonable expectations. 12. Which of the following parties are involved in preparing and auditing financial statements? a. Management b. Audit committee c. Internal audit function d. External auditor 13. Which of the following are the responsibilities of the external auditor in auditing financial statements? a. Maintaining internal controls and preparing financial reports b. Providing internal assurance on internal control and financial reports c. Providing internal oversight of the reporting process d. None of the above. 14. In terms of technical knowledge and expertise, which of the following should external auditors do? a. Understand accounting and auditing authoritative literature. b. Develop industry and client-specific knowledge. c. Develop and apply computer skills. d. All of the above. DeptoncePhilippines214 Chapter 8 5. Which management assertion addresses whether the components of the financial statements are properly classified, described, and disclos disclosed? a. Completeness c. Rights and obligations b. Existence d. Presentation and disclosure 6. Which of the following is a true statement regarding audit evidence and audit procedures? a. The auditor has a responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence. . Inquiry is a type of audit procedure that typically does not require corroborating evidence. C. The audit procedures that are performed during an audit are summarized in a document referred to as an audit engagement letter, d. Reperformance involves checking the mathematical accuracy of.a document or record, such as an inventory count sheet. 7. Which of the following items should be included in audit documentation? a. Procedures performed b. Audit evidence examined c. Conclusions reached with respect to relevant financial statement assertions d. All of the above should be included 8. Which of the following statements is a false statement regarding audit documentation? a. An audit program is an example of audit documentation. b. The only purpose of audit documentation is to provide evidence that the audit was planned and performed in accordance with auditing standards. c. Audit documentation helps facilitate internal and external inspections of completed audits. d. All of the above statements are true. 9. Which of the following procedures is least likely to be performed during the final phase of the audit opinion formulation process? a. Assessment of misstatements detected during the performance of substantive procedures and tests of controls. b. Performance of preliminary analytical review procedures. c. Performance of an engagement quality review. d. Determination of the appropriate audit opinion(s) to issue.Overview of Risk-Based Audit Process 213 Multiple Choice Questions 1. Which of the following is included as part of the principles governing an audit? . Auditors need to obtain a high level of assurance that the financial statements are free of all misstatements. b. An audit has inherent limitations such that auditor cannot provide absolute assurance about whether the financial statements are free of misstatement. c. Auditors need to maintain professional skepticism only on audits where there is a high risk of material misstatement. d. All of the above are included as part of the principles governing an audit. 2. Which of the following statements is true about the audit opinion formulation process? a. The audit opinion formulation process is significantly different for the financial statement only audit and the integrated audit. b. The audit opinion formulation process is based on the premise that management has responsibility to prepare the financial statements and maintain internal control over financial reporting. . The audit opinion formulation process is comprised of seven phases. d. All of the above are true statements regarding the audit opinion formulation process. 3. Which of the following activities is not part of the activities within the audit opinion formulation process? a. The auditor develops a common understanding of the audit engagement with the client. b. The auditor determines the appropriate nonaudit consulting services to provide to the client. c. The auditor identifies and assess risks of material misstatements and then responds to those identified risks. d. The auditor determines the appropriate audit opinion(s) to issue. 4. Which of the following is not one of the management assertions? a. Completeness b. Existence C. Rights and obligations d. They are all management assertions. the Philippines
