CA Auditing Standards 4

Question 1

Under GAAS, which party is responsible for the preparation and fair presentation of the financial statements?

Accepted Answer

Management

Answer

Management is responsible for preparing financial statements in accordance with the applicable financial reporting framework.

Question 2

Which of the following is NOT a component of the COSO Internal Control — Integrated Framework?

Accepted Answer

Audit sampling

Answer

The five COSO components are control environment, risk assessment, control activities, information and communication, and monitoring activities — audit sampling is not one of them.

Question 3

An auditor who discovers an illegal act by the client that is not material to the financial statements should:

Accepted Answer

Communicate the matter to the appropriate level of management

Answer

AU-C 250 requires the auditor to inform the appropriate level of management about an illegal act, even if immaterial.

Question 4

Which assertion is the auditor testing when verifying that all sales transactions occurring during the period have been recorded?

Accepted Answer

Completeness

Answer

Completeness addresses whether all transactions and events that should have been recorded actually have been recorded.

Question 5

The 'expectation gap' in auditing refers to:

Accepted Answer

The difference between what users expect from an audit and what auditors actually do

Answer

The expectation gap is the difference between users' beliefs about an audit's scope and assurance level and the actual scope and responsibilities under auditing standards.

(CA) Certified Accountant Practice Test

(CA) Certified Accountant Practice Test

CA Auditing Standards 4