Chapter 2

Question 1

What type of activities do internal auditors conduct?

Answer 1

Financial, internal control, compliance, operational, and forensic audits withing their organization

Question 2

What is the name of an audit that determines the extent to which rules, policies, laws, covenants, or government regulations are followed.

Answer 2

Compliance Audit

Question 3

What is an integrates audit

Answer 3

audit of internal controls and financial statements

Question 4

What is the name of an audit that evaluates whether resources are used effectively and efficiently

Answer 4

Operational Audit

Question 5

What are two other names for operation audits

Answer 5

Performance or Management audit

Question 6

What is the purpose of a Forensic Audit

Answer 6

To detect or deter fraudulent activity

Question 7

What is the typical structure of a large accounting firm?

Answer 7

LLC or LLP

Question 8

What percentage of publicly traded firm do the big 4 audit?

Answer 8

80%

Question 9

What is the order of authority for an audit team?

Answer 9

Partner, Manager, Senior, Staff members

Question 10

How often must firms rotate audit partners when auditing public firms?

Answer 10

5 years

Question 11

Due professional care requires that the auditor exercise what?

Answer 11

Professional Skepticism

Question 12

The people, processes, and activities in place to help ensure proper stewardship over an entity’s assets is referred to as what?

Answer 12

Corporate Governance

Question 13

What are the 5 business processes?

Answer 13

Financing, Purchasing, HR, Inventory Management, Revenue

Question 14

What do financial statements measure?

Answer 14

Performance of business processes

Question 15

Name the 3 general topics of auditing standards for issued by the PCAOB

Answer 15

General
Field Work
Reporting

Question 16

Name the 10 auditing standards issued by the PCAOB

Answer 16

Training
Independence
Due professional Care
Planning and Supervision
Internal controls testing
Evidence is appropriate
GAAP?
Consistency
Disclosures
Opinion

Question 17

Name the 4 broad categories for GAAS

Answer 17

Purpose/Premise
Responsibilities
Performance
Reporting