Auditing and Assurance Training Trivia 4

Question 1

Under GAAS, which standard requires the auditor to plan and supervise the audit adequately?

Accepted Answer

Standards of Fieldwork

Answer

The Standards of Fieldwork include adequate planning, understanding of internal control, and sufficient appropriate audit evidence — with planning and supervision being the first fieldwork standard.

Question 2

What is a 'walkthrough' in auditing?

Accepted Answer

Tracing a transaction from initiation through the financial statements to understand the flow of transactions

Answer

A walkthrough traces one or a few transactions through each step of the process, helping the auditor understand and confirm the design and implementation of controls.

Question 3

Which type of confirmation asks the recipient to respond only if they disagree with the information provided?

Accepted Answer

Negative confirmation

Answer

Negative confirmations request a response only when the recipient disagrees with the stated information, providing less reliable evidence than positive confirmations.

Question 4

The PCAOB was established as a result of which legislation?

Accepted Answer

Sarbanes-Oxley Act of 2002

Answer

The Public Company Accounting Oversight Board was created by the Sarbanes-Oxley Act of 2002 in response to major corporate accounting scandals like Enron and WorldCom.

Question 5

What is the purpose of a 'representation letter' (also called a management representation letter)?

Accepted Answer

To obtain written acknowledgment from management of its responsibilities and confirmation of representations made to the auditor

Answer

A management representation letter is signed by senior management and confirms key representations made during the audit, such as the completeness of information provided.

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Trivia 4