B. Acy Bachelor of Accountancy Bachelor of Science in Accountancy: Audit 2

Question 1

Which component of the audit risk model represents the risk that a material misstatement will not be prevented or detected by the client's internal controls?

Accepted Answer

Control risk

Answer

Control risk is the risk that a material misstatement will not be prevented or detected on a timely basis by internal controls.

Question 2

Under PCAOB standards, an auditor of a public company must issue a separate opinion on the company's:

Accepted Answer

Internal control over financial reporting

Answer

PCAOB AS 2201 requires auditors of public companies to issue an integrated audit opinion that includes a separate opinion on ICFR.

Question 3

A predecessor auditor receives a request from a successor auditor to provide information about the client. The predecessor auditor should:

Accepted Answer

Obtain client permission before communicating with the successor

Answer

Professional standards require the predecessor to obtain the client's permission before disclosing confidential information to the successor auditor.

Question 4

The concept of 'professional skepticism' in auditing primarily means the auditor should:

Accepted Answer

Maintain a questioning mind and critically assess audit evidence

Answer

Professional skepticism means maintaining a questioning mind and making a critical assessment of evidence, neither assuming honesty nor dishonesty.

Question 5

Which audit procedure is MOST effective for verifying the existence of accounts receivable?

Accepted Answer

Sending positive confirmation requests to customers

Answer

Positive confirmations require customers to respond whether or not they agree, providing direct external evidence of the existence of receivables.

B. Acy Bachelor of Accountancy Practice Test

B. Acy Bachelor of Accountancy Practice Test

B. Acy Bachelor of Accountancy Bachelor of Science in Accountancy: Audit 2