Audit Final Exam Review Questions with Complete
Reliable Solutions
An unqualified (unmodified) audit opinion is a negative opinion regarding the financial statements
indicating that the financial statements are not fairly stated.
True/False - Answer False
The auditor's report on internal control quality can express which of the following opinions regarding
the quality of internal control?
Qualified or Adverse only
Unqualified, Qualified, or Adverse
Unqualified or Adverse only
Unqualified or Qualified only - Answer Unqualified or Adverse only
The standards of independence, proficiency and training, and due professional care are included in the:
General standards
Standards of independence
Standards of reporting
Standards of fieldwork - Answer General standards
Which of the following is NOT a type of audit documentation that auditors should include in their files?
The audit program
The engagement letter
Copies of the client's financial statements
Each of the above is a type of audit documentation that the auditor should include in the file - Answer
Each of the above is a type of audit documentation that the auditor should include in the file
,If the auditor fails to obtain a management representation letter, she can still issue an unqualified audit
opinion without modifications if she obtains adequate evidence through other sources.
T/F - Answer False
Audit partners in the U.S. can serve a particular "Public Company" client for no more than _____ years
consecutively.
3 years
5 years
7 years
There is no limit on the length of time an audit partner can consecutively serve an audit client as long as
she is independent from the client. - Answer 5 Years
Sampling risk exists when the auditor doesn't follow proscribed sampling procedures.
T/F - Answer False
An audit partner of ACE Auditors who practices in the Salt Lake City, Utah office of the firm performs the
audit of TCE Co. Partner B practices in the Boise, Idaho office of the firm. She is not in an oversight role
in the firm, but provides around 5-7 hours of tax-related services per year to TCE Co. Is Partner B
considered a 'Covered Member' under AICPA rules?
Yes, partner B is considered a covered member
There is not enough information to answer this question
No, partner B is not considered a covered member - Answer No, partner B is not considered a covered
member
The Auditing Standards (AS's) are issued by which standard setter?
Auditing Standards Board
IAASB
SEC
, PCAOB - Answer PCAOB
Audits of financial statements provide absolute assurance that the financial statements are free of
material misstatements.
True/False - Answer False
The Securities Exchange Act of 1934 requires that the AICPA set rigorous auditing standards.
True/False - Answer False
Which of the following is true regarding the relationship of assurance, attest, and audit services?
Audit and assurance services are a subset of attest services
Audit and attest services are a subset of assurance services
Assurance and attest services are a subset of audit services
Assurance and audit services are a subset of attest services - Answer Audit and attest services are a
subset of assurance services
The term 'sampling unit' refers to the items that make up a population
True/False - Answer True
When issuing a modified opinion, the auditor adds an explanatory paragraph AFTER the opinion
paragraph in the audit report.
True/False - Answer False
The Control Environment component of internal control relates to client integrity, proper board
oversight and reporting channels, commitment to hiring competent employees, and proper
accountability for internal control related actions.
True/False - Answer True
Which of the following describes what is meant by the term 'covered member'?
Reliable Solutions
An unqualified (unmodified) audit opinion is a negative opinion regarding the financial statements
indicating that the financial statements are not fairly stated.
True/False - Answer False
The auditor's report on internal control quality can express which of the following opinions regarding
the quality of internal control?
Qualified or Adverse only
Unqualified, Qualified, or Adverse
Unqualified or Adverse only
Unqualified or Qualified only - Answer Unqualified or Adverse only
The standards of independence, proficiency and training, and due professional care are included in the:
General standards
Standards of independence
Standards of reporting
Standards of fieldwork - Answer General standards
Which of the following is NOT a type of audit documentation that auditors should include in their files?
The audit program
The engagement letter
Copies of the client's financial statements
Each of the above is a type of audit documentation that the auditor should include in the file - Answer
Each of the above is a type of audit documentation that the auditor should include in the file
,If the auditor fails to obtain a management representation letter, she can still issue an unqualified audit
opinion without modifications if she obtains adequate evidence through other sources.
T/F - Answer False
Audit partners in the U.S. can serve a particular "Public Company" client for no more than _____ years
consecutively.
3 years
5 years
7 years
There is no limit on the length of time an audit partner can consecutively serve an audit client as long as
she is independent from the client. - Answer 5 Years
Sampling risk exists when the auditor doesn't follow proscribed sampling procedures.
T/F - Answer False
An audit partner of ACE Auditors who practices in the Salt Lake City, Utah office of the firm performs the
audit of TCE Co. Partner B practices in the Boise, Idaho office of the firm. She is not in an oversight role
in the firm, but provides around 5-7 hours of tax-related services per year to TCE Co. Is Partner B
considered a 'Covered Member' under AICPA rules?
Yes, partner B is considered a covered member
There is not enough information to answer this question
No, partner B is not considered a covered member - Answer No, partner B is not considered a covered
member
The Auditing Standards (AS's) are issued by which standard setter?
Auditing Standards Board
IAASB
SEC
, PCAOB - Answer PCAOB
Audits of financial statements provide absolute assurance that the financial statements are free of
material misstatements.
True/False - Answer False
The Securities Exchange Act of 1934 requires that the AICPA set rigorous auditing standards.
True/False - Answer False
Which of the following is true regarding the relationship of assurance, attest, and audit services?
Audit and assurance services are a subset of attest services
Audit and attest services are a subset of assurance services
Assurance and attest services are a subset of audit services
Assurance and audit services are a subset of attest services - Answer Audit and attest services are a
subset of assurance services
The term 'sampling unit' refers to the items that make up a population
True/False - Answer True
When issuing a modified opinion, the auditor adds an explanatory paragraph AFTER the opinion
paragraph in the audit report.
True/False - Answer False
The Control Environment component of internal control relates to client integrity, proper board
oversight and reporting channels, commitment to hiring competent employees, and proper
accountability for internal control related actions.
True/False - Answer True
Which of the following describes what is meant by the term 'covered member'?
