Auditing & Attestation Mini Exam 20 — AUD — Auditing & Attestation Mini Exams

Questions in this quiz (10)

1. Which of the following types of audit evidence is generally considered the most reliable?

   • A copy of an internally generated report
   • A written confirmation from an independent third party
   • An email from the client’s controller
   • A verbal explanation from management

2. During an audit, the auditor decides to confirm inventory held at a third-party warehouse. What is the primary purpose of this procedure?

   • To test the valuation of inventory
   • To verify the existence of inventory
   • To assess internal control effectiveness
   • To evaluate inventory turnover ratios

3. Which of the following is NOT a requirement for audit documentation under AICPA standards?

   • It must be sufficient for an experienced auditor to understand the work performed
   • It must include all significant findings and conclusions
   • It must include the auditor’s personal opinions unrelated to the audit
   • It must be prepared on a timely basis

4. An auditor is observing a client’s physical inventory count. Which assertion is primarily being tested through this procedure?

   • Completeness
   • Existence
   • Valuation
   • Accuracy

5. When evaluating the appropriateness of audit evidence, the auditor should consider:

   • The cost of obtaining the evidence
   • The relevance and reliability of the evidence
   • The client’s willingness to cooperate
   • The auditor’s prior experience with the client

6. Which of the following is an example of audit evidence obtained through recalculation?

   • Confirming receivables with customers
   • Observing inventory counts
   • Recomputing payroll expenses
   • Reviewing purchase orders

7. An auditor receives a confirmation indicating a significant legal contingency. What should the auditor do next?

   • Immediately issue a qualified opinion
   • Ignore the response if not material
   • Investigate the impact on financial statement disclosures
   • Conclude the liability is certain

8. Which of the following is a key requirement for audit workpapers?

   • They must include detailed client forecasts
   • They must be cross-referenced to supporting documentation
   • They must be approved by client management
   • They must be retained indefinitely

9. During an inventory observation the auditor notices discrepancies between counted and recorded quantities. What should the auditor do?

   • Ignore the differences if small
   • Investigate the discrepancies and perform additional procedures
   • Assume the records are correct
   • Immediately adjust the financial statements

10. Which of the following best describes the purpose of audit documentation?

    • To reduce audit costs
    • To provide a basis for the auditor’s conclusions and opinion
    • To replace audit procedures
    • To satisfy client requirements only