The Overview of the Audit Process

What is audit?

The process of meeting the ethical requirements regarding the client
The expression of the independent opinion on the fairness presentation of the financial statements, prepared by the management of the company
The expression of the dependent opinion on the fairness presentation of the internal reports, prepared by the management of the company
The process of checking the accounting system reliability of the company by state bodies

Which of the following questions is not included in the public expectations from audit results?

Is the company free of fraud?
Can an "unfortunate mistake” bring this company to crush?
Is the company a going concern?
Is the company profitable?

The auditors state that in their opinion the financial statements:

Give a true and fair view
Show high level of profitability
Include information about internal controls
Show low level of operational risk

Who is responsible for the preparation of the financial statements?

The auditors
The legal department of the company
The management of the company
The risk department of the company

Which of the followings is not a phase of the audit process?

Client acceptance (pre-planning)
Planning and design of an audit approach
Trial Balance Preparation
Tests for evidence

During which phase of the audit process the auditors decide the type and number of staff required?

Planning and design of an audit approach
Client acceptance (pre-planning)
Tests for evidence
Completion of the audit and issuance of an audit report

Which of the followings is not a procedure of client acceptance (pre-planning) by auditors?

Evaluation of the client’s background and reasons for the audit
Communication with predecessor auditor
Preparation of client proposal
Tests of controls

Which of the followings is not a determinant of audit fees?

The size of the auditee
The level of consulting services
The type of fee contract
The level of profitability of the auditee

Which of the followings is a procedure of audit planning?

The determination of materiality
The preparation of client proposal
The preparation of Audit report
The evaluation of governance evidence

What type of evidence the auditor should obtain?

Limited and effective
Independent and transparent
Sufficient and appropriate
Informative and pervasive

Which of the followings is not a procedure of testing and evidence?

Substantive tests of transactions
Analytical procedures
Assessment of the risks of material misstatements
Search for unrecorded liabilities

What is the objective of evaluation and reporting in the audit process?

To test for evidence supporting internal controls
To complete the audit procedures and issue an audit opinion
To determine the audit fee amount
To develop the audit plan

Which of the followings is not a source of evidence to verify that the amount of cash in the Balance Sheet is true and valid?

Bank statement
Cash count
Bank confirmation
Inventory valuation

Why do auditors use risk-based approach when gathering evidence?

Practically it is difficult to look at every single peace of evidence
Audit fees are not high enough to look at every single peace of evidence
Auditors are not allowed to look at every single peace of evidence
Auditors pay little attention to the process of gathering evidence

Which of the followings is not a component of internal control?

Identification of subsequent events
Risk assessment
Information and communication
Monitoring

The Overview of the Audit Process

The Overview of the Audit Process

icarus July 9, 2024

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