Chapter 2: Practice Questions

Question 1

Which of the following aspects of an audit examination is not related to the performance principle?

Answer 1

Conducting the audit using due care.

• The requirement to conduct the audit using due care is related to the responsibilities principle, not the performance principle.

Question 2

A list of procedures auditors need to perform to obtain evidence is called an

Answer 2

Audit plan.

Question 3

To be appropriate, evidence must be all of the following except:

Answer 3

Sufficient.

• Sufficiency relates to the quantity of evidence, not the quality (or appropriateness) of evidence.

Question 4

An audit opinion that concludes the financial statements are presented according to GAAP is a(n):

Answer 4

Unmodified opinion.

Question 5

Which of the following is not true with respect to the performance principle?

Answer 5

The risk of material misstatement is affected by both the susceptibility of the account balance to misstatement as well as the effectiveness of the auditor’s procedures in detecting misstatements.

• While the risk of material misstatement is affected by the susceptibility of the account balance to misstatement (inherent risk), it is not affected by the effectiveness of the auditor’s procedures (detection risk).

Question 6

Management’s responsibility for the financial statements is

Answer 6

Explicitly expressed in the Basis for Opinion Section of the auditors’ standard report.

Question 7

The auditors’ standard report refers to PCAOB Standards and GAAP in which section(s)? (Opinion = Opinion on the Financial Statements, Basis = Basis for Opinion)

Answer 7

PCAOB Standards - Opinion and Basis
GAAP - Opinion

The auditors’ standard report refers to PCAOB Standards in both the Opinion Section and Basis Section and GAAP in the Opinion Section.

Question 8

Ordinarily, what source of evidence should least affect audit conclusions?

Answer 8

Responses to inquiries received from the client’s management.