Compliance and Auditing Audit Planning and Execution 2

Question 1

Which type of audit evidence is generally considered most reliable?

Accepted Answer

Evidence obtained directly by the auditor from external sources

Answer

Evidence obtained directly by the auditor from independent external sources (such as confirmations from banks or third parties) is considered the most reliable form of audit evidence.

Question 2

What does 'audit risk' consist of in the audit risk model?

Accepted Answer

Inherent risk, control risk, and detection risk

Answer

The audit risk model defines audit risk as the product of inherent risk (susceptibility to misstatement), control risk (failure of internal controls), and detection risk (failure of auditors to detect misstatements).

Question 3

What is the role of the audit committee in a publicly traded US company?

Accepted Answer

Oversee financial reporting, internal controls, and the external audit

Answer

The audit committee of the board of directors oversees financial reporting integrity, internal control systems, and the relationship with external and internal auditors.

Question 4

Which standard governs the conduct of internal auditors in the United States?

Accepted Answer

IIA International Standards for the Professional Practice of Internal Auditing

Answer

The Institute of Internal Auditors (IIA) International Standards for the Professional Practice of Internal Auditing define the requirements for performing and promoting internal audit activities.

Question 5

What is 'audit trail' in the context of compliance auditing?

Accepted Answer

A chronological record of system activities that allows reconstruction of events

Answer

An audit trail is a chronological record of system activities, user actions, or transactions that enables reconstruction and examination of events related to operations and security.

Compliance and Auditing Practice Test

Compliance and Auditing Practice Test

Compliance and Auditing Audit Planning and Execution 2