Auditing Quiz PART 1
Relevance is enhanced by an effective
Introduction to Auditing
_________1. The primary goal of the CPA in
performing the attest function is to
a. Assure the consistent application of
correct accounting procedures
b. Detect fraud
c. Determine whether the client’s
assertions are fairly stated
d. Examine individual transactions so that
the auditor may certify as to their
validity
_________2. Recording, classifying, and
summarizing economic events in a logical
manner for the purpose of providing financial
information for decision making is commonly
called
a. Finance
b. Auditing
c. Accounting
d. Economics
_________3. Any service that requires a CPA firm
to issue a report about the reliability of an
assertion that is made by another party is a(n):
a. Accounting and bookkeeping service
b. Attestation service
c. Assurance services
d. Tax service
_________4. The auditor’s judgment concerning
the overall fairness of the presentation of
financial position results of operations, and
changes in financial position is applied within
the framework of
a. Generally Accepted Accounting
Principles
b. Generally Accepted Auditing Standards
c. Information Systems Control
d. Internal Control
_________5. Which of the following statements
is not true regarding the competence of audit
evidence?
a. Validity is related to the quality of the
client’s information system
b. To be competent, evidence must be
both valid & relevant
c. Relevance must always relate to audit
objectives
d.
information system
_________6. A secondary objective of the
auditor’s study and evaluation of internal
control is that the study and evaluation provide
a. A basis for reducing the auditor’s
assessed level of control risk below the
maximum level
b. A basis for determination of the
resultant extent of the tests to which
auditing procedures are to be
restricted
c. A basis for constructive suggestions
concerning improvement in internal
control
d. An assurance that the records and
documents have been maintained in
accordance with existing company
policies and procedures
_________7. To become a CPA, an individual
must pass the Uniform CPA Exam and
a. Become a member of the PICPA
b. Comply with government education and
experience requirements
c. Demonstrate his or her independence
d. Obtain employment with a public
accounting firm
_________8. Statements of Audit Standards
a. Are intended to limit the degree of
auditor judgment needed to fulfil the
attest function
b. Describe procedures to be applied in
specific areas of audit activity to
eliminate inconsistencies in audit
practice
c. Interpret standards that provide
guidelines or measures of quality for an
independent audit
d. Requires filing requirement and
enforcement activities of the SEC
_________9. Which of the following types of
audits are most similar?
a. Compliance audits and independent
financial statement audits
b. Independent financial statement audits
and operational audits
c. Internal audits and independent
financial statement audits
 d. Operational audits and compliance
audits
_________10. The definition of auditing contained
within A Statement of Basic Auditing Concepts
recognizes that auditing includes both a(an)
a. Documentation processes and a
reporting process
b. Documentation processes and a
evaluation process
c. Evaluation processes and a reporting
process
d. investigative processes and a reporting
process
_________11. Three common types of attestation
services are:
a. Audits, reviews, and “other” attestation
services
b. Audits, verifications, and “other”
attestation services
c. Reviews, verifications, and “other”
attestation services
d. Audits, reviews, and verifications
_________12. An audit of historical financial
statements is most often performed to
determine whether:
a. Organization is operating efficiently and
effectively.
b. Entity is following specific procedures or
rules set down by some higher
authority
c. Management team is fulfilling its
fiduciary responsibilities to
shareholders
d. None of the choices
_________13. To present fairly in conformity with
generally accepted accounting principles, the
financial statements must:
a. Be considered preferable to the users of
those financial statements
b. Be consistently applied
c. Inform users of all matters that could
materially affect a decision
d. Reflect transactions and events within a
range of reasonable limits
_________14. An audit performed in accordance
with generally accepted auditing standards
generally should:
a. Be expected to provide not absolute
assurance that illegal acts will be
detected where internal control is
effective
b. Not be relied upon to provide absolute
assurance that all illegal acts will be
detected
c. Encompass a plan to actively search for
all illegalities which relate to operating
suspects
d. Be relied upon to disclose violations of
truth in lending laws
_________15. Which of the following is not
required by the generally accepted auditing
standard that states that due professional care
is to be exercised in the performance of the
audit?
a. Critical review of the audit work
performed at every level of supervision
b. Observance of the standards of field
work and reporting
c. Responsibility for losses because of
errors of judgment
d. Degree of skill commonly possessed by
others in the profession
_________16. Which of the following statements
best describes the primary purpose of
Statements of Auditing Standards?
a. They are authoritative statements,
enforced through the Code of
Professional Conduct
b. They are guides intended to set forth
auditing procedures which are
applicable to a variety of situations
c. They are interpretations which may be
useful guidance to auditors
d. They are procedural outlines which are
intended to narrow the areas of
inconsistency and divergence of auditor
opinion
_________17. Within the context of quality
control, the primary purpose of continuing
professional education and training activities is
to enable a CPA firm to provide personnel
within the firm with:
a. Knowledge required in order to perform
a peer review
b. Knowledge required to fulfill assigned
responsibilities and to progress within
the firm
 c. Professional education that is required
in order to perform with due
professional care
d. Technical training that assures
proficiency as an auditor
_________18. Which of the following services
provides the lowest level of assurance on a
financial statement?
a. A review
b. An audit
c. Neither service provides assurance on
financial statements
d. Each service provides the same level of
assurance on financial statements
_________19. Which of the following is not
included in a review engagement of a non-
public entity?
a. A study and evaluation of internal
control
b. Any procedures designed to identify
relationships among data that appear to
be unusual
c. Inquiries of management
d. Inquiries regarding events subsequent
to the balance sheet date
_________20. Auditing is based on the assumption
that financial data and statements are
a. Consistently applied
b. In conformity with an acceptable
financial reporting frameworks such as
PSA/PFRS
c. Presented fairly
d. Verifiable
_________21. Which of the following is not an
example of an error?
a. Client personnel alter accounting
records from which financial statements
are prepared
b. Client personnel make mistakes in
gathering or processing accounting
from which financial statements are
prepared
c. Client personnel make mistakes in the
application of accounting principles
d. Client personnel overlook or
misinterpret facts, causing accounting
estimates to be incorrect
_________22. Which statement is/are correct
regarding the pronouncements of AASC?
I. The exposure period allowed for
each exposure draft of a
standard or statement to be
considered by the organizations
and persons to whom it is sent
for comment is generally 90
days
II. Each final standard,
interpretation and statement
shall be submitted to the PCR
through the BOA for approval
after which the
pronouncements become
operative from the effective
date stated therein
III. Practice Statements will have the
same authority as the
Engagement Standards
a. I and II only
b. II and III only
c. I and III only
d. I, II and III
_________23. Which statement is/are correct
regarding the pronouncements of AASC?
I. In exceptional circumstances,
an auditor may judge it
necessary to depart from PSA in
order to more effectively
achieve the objective of an
audit. When such situation
arises, the auditor is required to
justify the departure
II. PSAs contain basic principles
and essential procedures
(identified in bold type black
lettering) together with related
guidance in the form of
explanatory and other material
III. PSAs need only t be applied to
material matters
a. I and II only
b. II and III only
c. I and III only
d. I, II, and III
 _________24. The auditor’s opinion
a. Certifies the correctness of the financial
statements
b. Guarantees the credibility of the
financial statements
c. Is an assurance as to the future viability
of the entity
d. Is not an assurance as to the efficiency
and effectiveness with which
management has conducted the affairs
of the entity
_________25. The auditor shall not represent
compliance with PSAs unless the auditor has
complied with majority of the PSAs relevant to
the audit.
The auditor shall plan and perform
an audit with an attitude of professional scepticism
recognizing that circumstances may exist that cause the
financial statements to be materially misstated.
a. T, T
b. F, F
c. F, T
d. T, F
_________26. The overall objectives of the auditor
in conducting an audit of financial statements
are
I. To detect all misstatements, whether
due to fraud or error
II. To obtain conclusive rather than
persuasive evidence
III. To obtain reasonable assurance about
whether the financial misstatements,
whether caused by fraud or error
IV. To report on the financial statements
a. I and II only
b. III and IV only
c. I, II, and III only
d. I, II, III, and IV
_________27. Which of the following is correct
concerning an auditor’s responsibilities
regarding financial statements?
a. An auditor may draft an entity’s
financial statements based on the
information from management’s
accounting system
b. An auditor’s responsibilities for audited
financial statements are not confined to
the expression of the auditor’s opinion
c. Making suggestions that are adopted
about the form and content of an
entity’s financial statements impairs an
auditor’s independence
d. The fair presentation of audited
financial statements in conformity with
GAAP is an implicit part of the auditor’s
responsibilities
_________28. Which of the ff. is a conceptual
difference between the attestation standards
and generally accepted auditing standards?
a. The attestation stds do not apply to
audits of historical financial statements,
while the generally accepted auditing
standards do
b. The requirement that the practitioner
be independent in mental attitude is
omitted from the attestation standards
c. The attestation stds do not permit an
attest engagement to be part of a
business acquisition study or a
feasibility study
d. None of the standards of fieldwork in
generally accepted auditing standards
are included in the attestation stds
_________29. Which of the following is not an
attestation standard?
a. A sufficient understanding of internal
control shall be obtained to plan
engagement
b. Sufficient evidence shall be obtained to
provide a reasonable basis for the
conclusion that is expressed in the
report
c. The report shall identify the subject
matter on the assertion being reported
on and state the character of the
engagement
d. The work shall be adequately planned
and assistants, if any, shall be properly
supervised
_________30. The third general standard states
tat due care is to be exercised in the
performance of an audit. This standard is
ordinarily interpreted to require
 a. Critical review of the judgment
exercised at every level of supervision
b. Limited review of the indications of
employee fraud and illegal acts
c. Objective review of the adequacy of the
technical training and proficiency of
firm personnel
d. Thorough review of the existing
safeguards over access to assets and
records
PART 2
_________1. Internal auditing often extends
beyond examinations leading to the expression
of an opinion on the fairness of financial
presentation and includes audits of efficiency,
effectiveness, and
a. Accuracy
b. Compliance
c. Evaluation
d. Internal control
_________2. Which of the following is not a
distinguishing feature of risk-based auditing?
a. Analysis of internal control
b. Collecting and evaluating evidence
c. Concentrating audit resources in those
areas presenting the highest risk of
financial statement errors
d. Identify areas posing the highest risk of
financial statement errors
_________3. Which of the following statements
is not a distinction between independent
auditing and internal auditing?
a. Although independent auditors strive fr
both validity and relevance of evidence,
internal auditors re concerned almost
exclusively with validity
b. Independent auditors represent third
party users external to the auditee
entity, whereas internal auditors report
directly to management
c. Internal auditors are employees of the
auditee, whereas independent auditors
are independent contractors
d. The auditor’s span of coverage goes
beyond financial auditing to encompass
operational and performance auditing
_________4. An attestation engagement:
a. Has as its primary source of standards
the assurance standards
b. Includes a report on subject matter, or
on an assertion about subject matter
c. Includes search and verification
procedures for all major accounts
d. Is ordinarily an examination, review or
compilation engagement
_________5. Which of the following is
considered an interpretative publication in the
GAAS Hierarchy?
a. Appendices to Statements on Auditing
Standards
b. Auditing articles explaining Statements
on Auditing Standards in the Journal of
Accountancy
c. Interpretations of FASB Standards
d. Statements on Auditing Standards
_________6. The generally accepted auditing
standards adopted by the PICPA include a
requirement that the CPAs
a. Assume responsibility for any losses to
the client from fraud which existed
during the audit but was not detected
by the auditors
b. Exercise due professional care in the
performance of the examination and
the preparation of the report
c. Follow accounting principles adopted by
the SEC
d. Not accept as audit clients companies
which compete directly with one
another
_________7. When a Statement Auditing
Standards uses the word “should” relating to a
requirement, it means that the auditor
a. May choose to change responsibilities
relating to various professional
standards that remain under
consideration
b. Must comply with requirements unless
the auditor demonstrates and
documents that alternative actions
were sufficient to achieve the objectives
of the standards
c. Must fulfill the responsibilities under all
circumstances
d. Should consider whether to follow the
advice based on the exercise of
 professional judgment in the
circumstances
_________8. The primary purpose of an
independent financial statement audit is to
a. Assure management that the financial
statements are unbiased and free from
material error
b. Comply with state and federal
regulatory requirements
c. Provide a basis for assessing
management’s performance
d. Provide users with an unbiased opinion
about the fairness of information
reported in the financial statements
_________9. Which of the following incorrectly
matches the authoritative body with its
authoritative pronouncements?
a. Accounting and Review Services
Committee: “Statements on Standards
for Accounting and Services”
b. Auditing Standards Board: “Statements
on Auditing Standards”
c. Auditing Standards Executive
Committee: “Statements on Auditing
Procedures”
d. Securities and Exchange Commission:
“Financial Reporting Releases”
_________10. The audit process is
a. A special application of the scientific
method of inquiry
b. Performed only by CPAs
c. Regulated by the PICPA
d. The only service a CPA is allowed to
perform by law
_________11. Competence as a CPA includes all of
the ff. except
a. Consulting others if additional technical
information is needed
b. Having the technical qualifications to
perform an engagement
c. Possessing the ability to supervise and
evaluate the quality of staff work
d. Warranting the infallibility of the work
performed
_________12. Which of the following is
mandatory if the auditor is to comply with
generally accepted auditing standards?
a. Confirmation by the auditor of material
accounts receivable baances
b. Possession by the auditor of adequate
technical training
c. Use of analytical review on audit
engagements
d. Use of statistical sampling whenever
feasible on an audit engagement
_________13. Which of the following best
describes what is really meant by generally
accepted auditing standards?
a. Measures of the quality of the auditor’s
performance
b. Procedures to be used to gather
evidence to support FS
c. Pronouncements issued by the Auditing
Standards Board
d. Rules acknowledged by the accounting
profession because of their universal
compliance
_________14. An auditor who accepts an audit
engagement and does not possess the industry
expertise of the business entity, should
a. Engage financial experts familiar with
the nature of the business entity
b. First inform management that an
unqualified opinion cannot be issued
c. Obtain a knowledge of matters that
relate to the nature of the entity’s
business
d. Refer a substantial portion of the audit
to another CPA who will act as the
principal auditor
_________15. The standard of the due audit care
requires the auditor to
a. Make perfect judgment decisions in all
cases
b. Ensure that the financial statements are
free from error
c. Apply judgement in a conscientious
manner, carefully weighing the relevant
factors before reaching a decision
d. Possess skills clearly above the average
for the profession
_________16. In determining estimates of fees, an
auditor may take into account each of the
following, except the
a. Attainment of specific findings
b. Degree of responsibility assumed by
undertaking the engagement
c. Skills required to perform the service
 d. Value of the service to the client b. PFRSs are the principles for
_________17. A CPA, while performing an audit, presentation of FS and underlying
strives to achieve independence in appearance transactions, while PSAs are the
in order to standards that the auditors should
a. Become independent in fact follow when conducting an audit
b. Comply with the generally accepted c. PFRSs are the stds that the auditors
standards of field work should follow when conducting an audit
c. Maintain public confidence in the while PSAs are the principles for
profession presentation of FS and underlying
d. Reduce risk and liability transactions
_________18. According to PSAs, because there d. When PFRSs are violated, sufficiently
are inherent limitations in an audit that affect strong PSAs may make up for most
the auditor’s ability to detect material PFRSs deficiencies
misstatements, the auditor is _________22. The standards of the
a. A guarantor but not an insurer of the FS
b. An insurer but not a guarantor of the FS
c. Both a guarantor and an insurer of the
FS
d. Neither a guarantor nor an insurer of
the FS
_________19. The independent auditor’s opinion
helps establish the credibility of the FS; the
independent auditor’s opinion is (not an
absolute) assurance as to the efficiency or
effectiveness with which the management has
conducted the affairs of the entity.
a. F, F
b. F, T
c. T, F
d. T, T
_________20. Which of the following statements
about theoretical framework of auditing is (are)
incorrect?
i. An benefits the public
ii. Auditors act on behalf of mngt
iii. Long-term conflicts may exist
between managers who
prepare the data and auditors
who examine the data
iv. The date to be audited can be
verified
a. II and III only
b. II, III, and IV only
c. II only
d. III only
_________21. PFRSs are distinguished from PSAs
in that
a. PFRSs are promulgated by the SEC while
PSAs are promulgated by FRSC