SG 4100 Exam 1 – Complete Study Guide
with Practice Questions & Detailed
Answers|| LATEST UPDATE
Because of the risk of material misstatement, an audit of financial statements in
accordance with generally accepted auditing standards should be planned and
performed with an attitude of:
a. Objective judgement
b. Independent integrity
c. Professional skepticism
d. Impartial conservatism -CORRECTANSWER c. (Professional skepticism)
Which of the following is not an example of the application of professional skepticism?
a. Designing additional auditing procedures to obtain more reliable evidence in support
of a particular financial statement assertion.
b. Obtaining corroboration of management's explanations through consultation with a
specialist.
c. Inquiring of prior year engagement personnel regarding their assessment of
management's honesty and integrity.
,d. Using third-party confirmations to provide support for management's representations.
-CORRECTANSWER c. (Inquiring of prior year engagement personnel regarding their
assessment of management's honesty and integrity)
In certain audit engagements, the auditor may be required to comply with auditing
requirements in addition to GAAS. The auditor may conduct the audit in accordance
with:
a. Both GAAS and government auditing standards (GAGAS).
b. Either GAAS as issued by the AICPA or PCAOB Standards, but not both.
c. Only GAAS or PCAOB, but not auditing standards of another jurisdiction or country.
d. International Standards on Auditing, but only if the audit is being conducted in
another country outside the U.S.A. -CORRECTANSWER a. (Both GAAS and
government auditing standards (GAGAS))
In order to express an opinion, the auditor obtains a level of assurance about whether
the financial statements are free from material misstatement, whether due to error or
fraud. Which of the following is required of the auditor in obtaining this level of
assurance?
a. Plan the work and properly supervise any assistants.
b. Obtain absolute assurance that the financial statements are not misstated due to
fraud on the part of management.
,c. Determine the applicable financial reporting framework and prepare an adequate
description of the framework for inclusion in the financial statements.
d. Exercise his or her specific legal powers and authority in investigating suspicious
activities of the entity's employees, including management. -CORRECTANSWER a.
(Plan the work and properly supervise any assistants.)
The responsibilities of an auditor include all of the following except which one?
a. Appropriate competence and capabilities to perform the audit.
b. A minimum amount of technical knowledge of and experience in the industry in which
the audit client operates.
c. Complying with relevant ethical requirements.
d. Maintaining professional skepticism and exercising professional judgement
throughout the planning and performance of the audit. -CORRECTANSWER b. (A
minimum amount of technical knowledge of and experience in the industry in which the
audit client operates.)
To obtain reasonable assurance, an auditor should:
a. Plan the work and properly supervise any assistants.
b. Examine all available corroborating evidence supporting management's assertions.
c. Design the audit to detect all instances of illegal acts.
, d. Ensure that management does not conceal any fraudulent activities on the part of
employees. -CORRECTANSWER a. (Plan the work and properly supervise any
assistants.)
An auditor of a nonissuer exercising professional skepticism with respect to the risks of
material misstatement due to fraud will most appropriately:
a. Adopt an attitude of acceptance unless evidence indicates otherwise.
b. Authenticate documents used as audit evidence.
c. Consider the reliability of information to be used as audit evidence.
d. Assess the entity's document-retention controls before using documents as audit
evidence. -CORRECTANSWER c. (Consider the reliability of information to be used as
audit evidence.)
Which of the following statements is correct concerning an auditor's responsibilities
regarding financial statements?
a. An auditor may not draft an entity's financial statement based on information from
management's accounting system.
b. The adoption of sound accounting policies is an implicit part of an auditor's
responsibilities.
c. An auditor's responsibilities for audited financial statements are confined to the
expression of the auditor's opinion.
with Practice Questions & Detailed
Answers|| LATEST UPDATE
Because of the risk of material misstatement, an audit of financial statements in
accordance with generally accepted auditing standards should be planned and
performed with an attitude of:
a. Objective judgement
b. Independent integrity
c. Professional skepticism
d. Impartial conservatism -CORRECTANSWER c. (Professional skepticism)
Which of the following is not an example of the application of professional skepticism?
a. Designing additional auditing procedures to obtain more reliable evidence in support
of a particular financial statement assertion.
b. Obtaining corroboration of management's explanations through consultation with a
specialist.
c. Inquiring of prior year engagement personnel regarding their assessment of
management's honesty and integrity.
,d. Using third-party confirmations to provide support for management's representations.
-CORRECTANSWER c. (Inquiring of prior year engagement personnel regarding their
assessment of management's honesty and integrity)
In certain audit engagements, the auditor may be required to comply with auditing
requirements in addition to GAAS. The auditor may conduct the audit in accordance
with:
a. Both GAAS and government auditing standards (GAGAS).
b. Either GAAS as issued by the AICPA or PCAOB Standards, but not both.
c. Only GAAS or PCAOB, but not auditing standards of another jurisdiction or country.
d. International Standards on Auditing, but only if the audit is being conducted in
another country outside the U.S.A. -CORRECTANSWER a. (Both GAAS and
government auditing standards (GAGAS))
In order to express an opinion, the auditor obtains a level of assurance about whether
the financial statements are free from material misstatement, whether due to error or
fraud. Which of the following is required of the auditor in obtaining this level of
assurance?
a. Plan the work and properly supervise any assistants.
b. Obtain absolute assurance that the financial statements are not misstated due to
fraud on the part of management.
,c. Determine the applicable financial reporting framework and prepare an adequate
description of the framework for inclusion in the financial statements.
d. Exercise his or her specific legal powers and authority in investigating suspicious
activities of the entity's employees, including management. -CORRECTANSWER a.
(Plan the work and properly supervise any assistants.)
The responsibilities of an auditor include all of the following except which one?
a. Appropriate competence and capabilities to perform the audit.
b. A minimum amount of technical knowledge of and experience in the industry in which
the audit client operates.
c. Complying with relevant ethical requirements.
d. Maintaining professional skepticism and exercising professional judgement
throughout the planning and performance of the audit. -CORRECTANSWER b. (A
minimum amount of technical knowledge of and experience in the industry in which the
audit client operates.)
To obtain reasonable assurance, an auditor should:
a. Plan the work and properly supervise any assistants.
b. Examine all available corroborating evidence supporting management's assertions.
c. Design the audit to detect all instances of illegal acts.
, d. Ensure that management does not conceal any fraudulent activities on the part of
employees. -CORRECTANSWER a. (Plan the work and properly supervise any
assistants.)
An auditor of a nonissuer exercising professional skepticism with respect to the risks of
material misstatement due to fraud will most appropriately:
a. Adopt an attitude of acceptance unless evidence indicates otherwise.
b. Authenticate documents used as audit evidence.
c. Consider the reliability of information to be used as audit evidence.
d. Assess the entity's document-retention controls before using documents as audit
evidence. -CORRECTANSWER c. (Consider the reliability of information to be used as
audit evidence.)
Which of the following statements is correct concerning an auditor's responsibilities
regarding financial statements?
a. An auditor may not draft an entity's financial statement based on information from
management's accounting system.
b. The adoption of sound accounting policies is an implicit part of an auditor's
responsibilities.
c. An auditor's responsibilities for audited financial statements are confined to the
expression of the auditor's opinion.
