Compliance and Auditing Audit Planning and Execution 3

Question 1

What is the purpose of an audit work program?

Accepted Answer

To document the sequence of audit procedures to be performed

Answer

To communicate findings to management

Answer

To calculate audit fees

Answer

To train new audit staff

Question 2

Which audit report section describes the specific procedures performed and evidence obtained?

Accepted Answer

Scope paragraph

Answer

Introductory paragraph

Answer

Management's responsibility paragraph

Answer

Opinion paragraph

Question 3

What is a 'control deficiency' in the context of SOX compliance?

Accepted Answer

A weakness in the design or operation of internal controls

Answer

A missing financial transaction

Answer

An error in the audit report

Answer

A violation of accounting standards

Question 4

What does a 'material weakness' in internal controls indicate under SOX?

Accepted Answer

A reasonable possibility of material misstatement not being prevented or detected

Answer

A minor error in financial statements

Answer

A significant deficiency that has been corrected

Answer

An auditor's disagreement with management

Question 5

What is the primary difference between a Type I and Type II SOC report?

Accepted Answer

Type I covers design of controls at a point in time; Type II covers design and operating effectiveness over a period

Answer

Type I covers security only; Type II covers all trust criteria

Answer

Type I is for small companies; Type II is for large companies

Answer

Type I is internal; Type II is for external users

Question 6

Which auditing standard requires auditors to maintain professional skepticism throughout an engagement?

Accepted Answer

Generally Accepted Auditing Standards (GAAS)

Answer

GAAP

Answer

IRS Revenue Rulings

Answer

FASB Codification