CA Auditing Standards 2

Question 1

Under AS 2201, what is the auditor's primary objective when auditing internal control over financial reporting?

Accepted Answer

To express an opinion on the effectiveness of ICFR

Answer

AS 2201 requires the auditor to express an opinion on whether ICFR is effective based on identified control criteria.

Question 2

Which risk assessment procedure involves the auditor physically examining assets, documents, or records?

Accepted Answer

Inspection

Answer

Inspection involves physically examining records, documents, or tangible assets to gather audit evidence.

Question 3

The concept of 'professional skepticism' in auditing requires the auditor to:

Accepted Answer

Maintain a questioning mind and critically assess evidence

Answer

Professional skepticism means maintaining a questioning mind and critically evaluating evidence without assuming either honesty or dishonesty.

Question 4

Which of the following best describes 'audit risk'?

Accepted Answer

The risk that the financial statements contain a material misstatement that the auditor fails to detect

Answer

Audit risk is the risk that the auditor issues an unmodified opinion on materially misstated financial statements.

Question 5

When an auditor identifies a significant deficiency in internal controls, the auditor is required to:

Accepted Answer

Communicate the deficiency in writing to management and those charged with governance

Answer

AU-C Section 265 requires written communication of significant deficiencies to management and those charged with governance.

(CA) Certified Accountant Practice Test