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IX. Performing Substantive Tests, Audit Evidence and Audit Documentations

Quiz by BASILLE YSABELLE LISTA

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30 questions
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  • Q1

    What is the primary purpose of PSA 320?

    To provide guidance on financial statement preparation

    To guide auditors on applying materiality in planning and performing audits

    To set mandatory materiality thresholds for audits

    To establish requirements for auditing complex entities

    30s
  • Q2

    How is 'materiality' best defined in an audit context?

    The level at which misstatements could affect user decisions

    The total assets of the company

    The potential errors in a company's financial statements

    The number of misstatements in the financial statements

    30s
  • Q3

    What is the primary objective of PSA 500?

    To guide auditors on obtaining sufficient appropriate audit evidence

    To ensure that all errors in financial statements are corrected

    To set specific procedures for documenting audit work

    To provide instructions on determining materiality levels

    30s
  • Q4

    Which of the following is considered the most reliable source of audit evidence?

    Evidence obtained directly by the auditor from an external source

    Evidence obtained from the client’s management

    Evidence gathered from internal company reports

    Evidence collected from company press releases

    30s
  • Q5

    PSA 500 requires audit evidence to be sufficient and appropriate. What does “appropriate” refer to?

    The relevance and reliability of evidence

    The amount of evidence collected

    The documentation quality

    The client’s confirmation of accuracy

    30s
  • Q6

    Which of the following items requires specific audit considerations under PSA 501?

    Inventory, property plant and equipment, and cash flows

    Inventory, litigation claims, and segment information

    Accounts receivable, prepaid expenses, and income taxes

    Segment information, accounts payable, and depreciation

    30s
  • Q7

    For auditing inventory, PSA 501 requires auditors to attend the inventory count if:

    The inventory is material to the financial statements and feasible for the auditor to attend

    Inventory is immaterial to the financial statements

    The inventory is located in multiple warehouses

    Inventory includes only finished goods

    30s
  • Q8

    According to PSA 510, what should an auditor do if they cannot obtain sufficient appropriate audit evidence regarding opening balances?

    Issue an unqualified opinion

    Issue a disclaimer of opinion or qualified opinion

    Modify the opinion only if requested by the client

    Issue an adverse opinion automatically

    30s
  • Q9

    When auditing opening balances, PSA 510 requires the auditor to consider the accounting policies. Which of the following must be evaluated?

    Whether policies align with industry standards

    Whether policies reflect the company’s management preferences

    Whether policies have been consistently applied or appropriately changed

    Whether policies are disclosed in the notes to the financial statements

    30s
  • Q10

    If a misstatement in opening balances is identified in an initial audit engagement, what should the auditor do according to PSA 510?

    Ignore the misstatement if it is from a previous period

    Assess the impact on the current period’s financial statements and modify the opinion if necessary

    Report it to management and request them to disclose it in future statements

    Note it in the working papers without any further action

    30s
  • Q11

    Who is responsible for the overall quality of each audit engagement to which they are assigned, emphasizing the importance of audit quality and its essential role in performing audit engagements?

    Engagement Partner

    Senior Auditor

    Audit Manager

    Audit Team Member

    30s
  • Q12

    What term refers to the record of audit procedures performed, relevant audit evidence obtained, and the conclusions reached by the auditor, also known as "working papers" or "work papers"?

    Engagement Letter

    Internal Controls

    Audit Documentation

    Audit Report

    30s
  • Q13

    What is the difference between a Type 1 report and a Type 2 report?

    A Type 2 report provides a service auditor’s opinion on the design of controls as of a specific date.

    A Type 1 report describes the system and controls at a specific date, without an assessment of effectiveness.

    A Type 1 report includes an assessment of the operating effectiveness of controls over a period.

    A Type 2 report includes a description of the service organization's controls and their operating effectiveness over a period.

    30s
  • Q14

    If the auditor needs to modify or add to the audit documentation after the final audit file is completed, they must document the specific reasons for these changes, as well as when the modifications or additions were made and by whom. This ensures (blank) and (blank) in any post-assembly adjustments to the audit file.

    accuracy and completeness

    transparency and accountability

    reliability and objectivity

    consistency and fairness

    30s
  • Q15

    Which PSA deals with specific responsibilities of the auditor regarding quality control procedures for an audit of financial statements?

    PSA 500: AUDIT EVIDENCE

    PSA 610: USING THE WORK OF INTERNAL AUDITORS

    PSA 220: QUALITY CONTROL FOR AN AUDIT OF FINANCIAL STATEMENTS

    PSA 402: AUDIT CONSIDERATIONS RELATING TO AN ENTITY USING A SERVICE ORGANIZATION

    30s

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