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Multiple Choice Quiz
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1
Which of the following is not done during the client acceptance and retention phase of planning?
A)Obtain an understanding of the internal control system.
B)Obtain and review preliminary financial statement information.
C)Consider the need for specialized skills on the engagement.
D)Ensure that the firm has sufficient resources to complete the engagement in a timely manner.
2
Which of the following is not included in the engagement letter?
A)Objectives of the audit engagement.
B)Representations that the financial statements were prepared in accordance with generally accepted accounting principles.
C)Management's responsibilities.
D)A clear explanation of the services to be performed on the engagement.
3
In deciding whether to use the work of internal auditors, external auditors must evaluate the internal auditors'
A)Objectivity and competence.
B)Independence and professionalism.
C)Education and certification.
D)Age and gender.
4
Which of the following is not true regarding audit planning in an electronic environment?
A)The definition of auditing is not changed.
B)The purpose of auditing is not changed
C)The procedures used are not changed.
D)Management's assertions are not changed.
5
For which of the following judgments may an independent external auditor share responsibility with an entity's internal auditor who already has been assessed to be both competent and objective?
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A)a.
B)b.
C)c.
D)d.
6
In testing the existence assertion for an asset, an auditor ordinarily works from the
A)Financial statements to the potentially unrecorded items.
B)Potentially unrecorded items to the financial statements.
C)Accounting records to the supporting evidence.
D)Supporting evidence to the accounting records.
7
In the preparation of an audit program, which of the following items is not essential?
A)A review of material from prior audits.
B)The preparation of a detailed time budget identifying the costs of resources needed.
C)An understanding of the internal control activities established by management.
D)Assessment of inherent risk for the financial statement assertions to be tested.
8
The benefits of using CAATs include all of the following except:
A)Improved audit quality
B)Reduced need for professional judgment.
C)Increased productivity
D)Reduced sampling risk because 100% of the population can be tested in certain situations.
9
Inspection of tangible assets provides evidence for which financial statement assertion?
A)Existence.
B)Completeness.
C)Rights and obligations.
D)Occurrence.
10
In testing the completeness assertion for a liability, an auditor ordinarily works from the
A)Financial statements to the supporting evidence.
B)Potentially unrecorded items to the financial statements.
C)Accounting records to the supporting evidence.
D)Financial statements to the potentially unrecorded items





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