Auditing MCQs

a) Completeness
b) Valuation and allocation
c) Existence and occurrence
d) Transparency and disclosure
Answer: d) Transparency and disclosure

a) Unqualified
b) Adverse
c) Disclaimer
d) Qualified with a scope limitation
Answer: d) Qualified with a scope limitation.

a) Management turnover
b) Lack of segregation of duties
c) Ineffective internal control
d) High degree of judgment involved in accounting estimates
Answer: b) Lack of segregation of duties

a) Operational audit
b) Compliance audit
c) Financial statement audit
d) Management audit
Answer: c) Financial statement audit

a) To evaluate the effectiveness of internal control
b) To identify potential areas of risk
c) To document the auditor’s work
d) To provide consulting services
Answer: a) To evaluate the effectiveness of internal control

a) Risk assessment
b) Monitoring
c) Financial reporting
d) Control activities
Answer: c) Financial reporting

a) To provide an opinion on the financial statements at the end of the fiscal year
b) To identify potential issues early in the fiscal year
c) To evaluate the effectiveness of internal control at the midpoint of the fiscal year
d) To provide consulting services during the fiscal year
Answer: b) To identify potential issues early in the fiscal year

a) A financial statement audit provides assurance on the financial statements, while a review engagement provides limited assurance.
b) A financial statement audit is more comprehensive than a review engagement.
c) A financial statement audit requires more documentation than a review engagement.
d) A financial statement audit is only required for public companies, while a review engagement is required for all companies.
Answer: a) A financial statement audit provides assurance on the financial statements, while a review engagement provides limited assurance.

a) A financial statement audit evaluates the effectiveness of internal control, while a compliance audit evaluates compliance with laws and regulations.
b) A financial statement audit evaluates compliance with laws and regulations, while a compliance audit evaluates the accuracy of financial statements.
c) A financial statement audit focuses on financial reporting, while a compliance audit focuses on operational processes.
d) A financial statement audit is performed by an external auditor, while a compliance audit is performed by internal auditors.
Answer: a) A financial statement audit evaluates the effectiveness of internal control, while a compliance audit evaluates compliance with laws and regulations.

a) To establish the terms of the engagement
b) To document management’s responsibilities for the financial statements
c) To provide evidence of the accuracy of financial statements
d) To confirm that the auditor has performed the audit in accordance with auditing standards
Answer: a) To establish the terms of the engagement