Auditing and Assurance Training Auditing and Assurance Training MCQ 5

Question 1

Which element of the fraud triangle refers to the perceived opportunity to commit fraud without detection?

Accepted Answer

Opportunity

Answer

The fraud triangle consists of pressure, rationalization, and opportunity—opportunity refers to the perceived chance to commit and conceal fraud.

Question 2

What is 'audit documentation' (working papers) primarily used for?

Accepted Answer

To record audit evidence supporting the auditor's conclusions and opinion

Answer

Audit documentation provides the principal record of the basis for the auditor's conclusions and evidence that the audit was conducted in accordance with standards.

Question 3

Under PCAOB standards, how long must audit firms retain audit documentation for public company audits?

Accepted Answer

7 years

Answer

PCAOB standards require audit firms to retain audit documentation for public companies for a minimum of 7 years.

Question 4

Which of the following best describes 'cut-off' as an audit assertion?

Accepted Answer

Transactions are recorded in the correct accounting period

Answer

The cut-off assertion ensures that transactions are recorded in the period in which they occurred, not in a prior or subsequent period.

Question 5

When assessing the design of an internal control, an auditor is evaluating whether the control:

Accepted Answer

Is capable of preventing or detecting material misstatements if it operates as intended

Answer

Evaluating design involves determining whether a control, if it operates as intended, would effectively prevent or detect and correct material misstatements.

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Auditing and Assurance Training MCQ 5