IX. Performing Substantive Tests, Audit Evidence and Audit Documentations
Quiz by BASILLE YSABELLE LISTA
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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