Accounting Online Program Auditing and Internal Controls 1

Question 1

The primary purpose of an external audit is to:

Accepted Answer

Express an opinion on whether financial statements are fairly presented

Answer

External auditors issue an independent opinion on whether financial statements are presented fairly in accordance with GAAP, providing assurance to investors and creditors.

Question 2

Which organization sets auditing standards for public company auditors in the US?

Accepted Answer

PCAOB

Answer

The Public Company Accounting Oversight Board (PCAOB) was established by the Sarbanes-Oxley Act to set auditing standards for auditors of US public companies.

Question 3

What is the concept of 'audit risk'?

Accepted Answer

The risk that auditors will issue an incorrect opinion on materially misstated statements

Answer

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

Question 4

Internal controls are designed primarily to:

Accepted Answer

Safeguard assets, ensure accurate reporting, and promote operational efficiency

Answer

Internal controls are policies and procedures designed to safeguard company assets, ensure reliable financial reporting, and promote compliance with laws and regulations.

Question 5

Which Sarbanes-Oxley Act section requires management to assess and report on internal control over financial reporting?

Accepted Answer

Section 404

Answer

SOX Section 404 requires management of public companies to assess the effectiveness of internal controls over financial reporting and requires auditors to attest to that assessment.

Accounting Online Program Practice Test

Accounting Online Program Practice Test

Accounting Online Program Auditing and Internal Controls 1