Chapter 1

Question 1

Audit is based on using _____ and _______ skills

Answer 1

analytical, logical

Question 2

What are the two types of assurances?

Answer 2

account, transaction

Question 3

What transaction assertion describes transactions have been recorded or disclosed, and those transactions pertain to the entity?

Answer 3

occurence

Question 4

What transaction assertion describes that all transactions should have been recorded and all related disclosures have been included in the financial statements

Answer 4

completeness

Question 5

What transaction assertion describes that all transactions have been properly authorized

Answer 5

authorization

Question 6

What transaction assertion describes that amounts and other data related to recording transactions have been recorded appropriately

Answer 6

accuracy

Question 7

What transaction assertion describes that all transactions have been recorded in the correct accounting period

Answer 7

cut off

Question 8

What transaction assertion describes that transactions are recorded in the proper accounts

Answer 8

classification

Question 9

What transaction assertion transactions and events are appropriately
aggregated or disaggregated and clearly described, and related
disclosures are relevant and understandable in the context of
the requirements of the applicable financial reporting framework.

Answer 9

presentation

Question 10

Which assertion describes that assets, liabilities, and equity interests exist?

Answer 10

existence

Question 11

Which assertion describes that the entity hold or controls the rights to assets and liabilities are obligations of the entity?

Answer 11

rights and obligations

Question 12

Which assertion describes that All assets, liabilities, and equity interests that
should have been recorded have been recorded, and all related
disclosures that should have been included in the financial
statements have been included.

Answer 12

completeness

Question 13

Which assertion describes that assets, liabilities, and equity
interests are included in the financial statements at appropriate
amounts and any resulting valuation or allocation adjustments
are appropriately recorded.

Answer 13

valuation and allocation

Question 14

Which assertion describes that Assets, liabilities, and
equity interests have been included in the financial statements
at appropriate amounts, and any resulting valuation or allocation
adjustments have been appropriately recorded, and related
disclosures have been appropriately measured and described

Answer 14

accuracy, valuation, and allocation

Question 15

Which assertion describes that Assets, liabilities, and equity interests have
been recorded in the proper accounts.

Answer 15

classification

Question 16

Which assertion describes that Assets, liabilities, and equity interests are
appropriately aggregated or disaggregated and clearly
described, and related disclosures are relevant and
understandable in the context of the requirements of theapplicable financial reporting framework.

Answer 16

presentation

Question 17

What are the three fundamental concepts in conducting an audit?

Answer 17

materiality, risk, evidence

Question 18

What is the magnitude of an omission or misstatement of
accounting information that, in light of surrounding
circumstances, makes it probable that the judgment of a
reasonable person relying on the information would have
been changed or influenced by the omission or
misstatement.

Answer 18

materiality

Question 19

What is the risk that the auditor expresses an
inappropriate audit opinion when the financial
statements are materially misstated.

Answer 19

audit risk

Question 20

What is the highest level of clearance an auditor can give an audit

Answer 20

reasonable assurance

Question 21

What is relevance in an audit?

Answer 21

is evidence related to the specific assertion being tested

Question 22

What is reliability in an audit?

Answer 22

can the evidence be relied upon to signal the true state of the specific assertion being tested

Question 23

What are the types of audit reports?

Answer 23

unqualified, qualified, adverse, disclaimer

Question 24

What is a “clean” audit report called?

Answer 24

unqualified

Question 25

What does a qualified audit report entail?

Answer 25

It is mainly good, but he/she finds it necessary to qualify that their is a misstatement identified by the author

Question 26

What is an adverse report?

Answer 26

a statement saying the financial statements are not presented fairly and should not be relied upon

Question 27

What is a disclaimer report?

Answer 27

a statement saying it is not possible to express an opinion on the fairness of the financial statements

Question 28

Which source of information is the most cost effective, and most indirect to collect as an auditor?

Answer 28

the company's internal controls

Question 29

As a general rule, if the misstatements of a company's total income exceed ____ %, this will cause financial statements to be materially misstated

Answer 29

5

Question 30

If a small difference is unlikely to affect an investor's decisions in any significant way, the auditor will likely consider the difference to be _________

Answer 30

immaterial

Question 31

If UNA is required to obtain an audit to prove that rules and regulations in regards to student loans are being followed, what type of audit should they have?

Answer 31

Compliance

Question 32

What is the highest level of assurance that can be offered to managers?

Answer 32

audits

Question 33

Which is not a result of Sarbanes Oxley?

Answer 33

required publicly traded entities financial statements to be audited, required that private companies have their financial statements audited at least every other year

Question 34

What type of auditor is responsible for auditing the annual financial statements of publicly traded companies?

Answer 34

external auditors

Question 35

Which of the following is an example of a principle?

Answer 35

absentee owners

Question 36

Based on the evidence provided and fraud characteristics, an auditor is able to obtain assurance that is ________ and __________

Answer 36

reasonable, not absolute

Question 37

what are the types of auditors?

Answer 37

external, internal, fraud, government

Question 38

When was Sarbanes Oxley passed?

Answer 38

2002

Question 39

Who is in charge of guidelines for nonpublic companies?

Answer 39

auditing standards board

Question 40

who is in charge of the guidelines for public companies

Answer 40

PCAOB

Question 41

The risk that information circulated by a company's management could be false or misleading

Answer 41

information risk

Question 42

the concept that the manager has more information about the true financial position and results of operation of the entity than the absentee owner does

Answer 42

information asymmetry