Question 1

What happens when an auditor is not able to apply 'audit procedures' on a particularly selected item?&#10;A)No effect on the item&#10;B)The item is deemed not to be containing any misstatement&#10;C)The item is deemed as a deviation/misstatement&#10;D)None of these

Accepted Answer

When an auditor selects a sample size, then audit procedures are to be performed on all the sample items. If such procedures are unable to be performed on an item, then such item is deemed as a misstatement.

Question 2

What does an 'anomaly' refer to in auditing terms?&#10;A)Another name for the statement of financial position&#10;B)Another name for the notes to the financial statements&#10;C)An individual misstatement that is not representative of the population misstatement&#10;D)An 'audit test' related to the statement of comprehensive income

Accepted Answer

An anomaly is a misstatement that is not representative of the deviations in a population. It is a misstatement that cannot be traced back to a population.

Question 3

When are audit performed?&#10;A)Anytime during the financial year&#10;B)Close to the financial mid-year&#10;C)After the financial year-end&#10;D)During the last financial quarter

Accepted Answer

Complete financial statements are prepared at the year-end. Drafts are made throughout the financial year. An audit cannot be performed unless the financial statements are prepared and available. Therefore, an audit is performed after the financial year-end. However, on-field inspections and similar audit procedures may start during the latter part of the financial year of an entity. This is to obtain a better understanding of the entity and the internal controls in place. However, a full-fledge audit always starts after the financial year-end.

Question 4

What does an auditor look for?&#10;A)Reasonable assurance about the financial information being true and fair&#10;B)Absolute assurance about authenticity of financial statements&#10;C)Relative assurance&#10;D)None of these

Accepted Answer

An auditor looks to ensure reasonable assurance that the financial statements are prepared, in every material aspect, as per the required guidelines. Truthfulness and fairness are two parameters that are investigated.

Question 5

What does a 'qualified audit opinion' refer to?&#10;A)Auditor is 100% sure about the authenticity of the financial statements&#10;B)Financial statements are not prepared as per the required financial standards&#10;C)Auditor will give the opinion later&#10;D)One or more areas of the financial statements do not adhere to auditing standards

Accepted Answer

Qualified audit opinions are typically given due to a limitation of scope in which the auditor was unable to gather sufficient evidence.

Deck 1: Auditing: Procedures, Anomalies, and Opinions