Question

1. One of the initial steps in the audit process is to obtain a _______ that is used as an agreement between a CPA firm and a client for the conduct of an audit and related services.

a)10-Q filed with the SEC

b)Assessment report

c)Audit and risk report

d)Engagement letter

2. An auditor must consider both acceptable audit risk and inherent risk when planning an audit. These two types of risk affect the:

a)Amount of evidence that needs to be gathered and staffing

b)Amount the auditor pays to the client's attorney and reporting

c)Cost and the amount of the client's staff that can be employed by the auditor

d)Types of auditing standards the auditor chooses to use

3. One of the instruments an auditor may use during the audit process is an internal control questionnaire. The purpose of an internal control questionnaire is

a)To determine if management has written internal control procedures

b)To determine if the company has answered all of the SEC questions during their 10-K audit

c)To show that the auditor has followed generally accepted auditing standards during the course of the audit

d)To uncover aspects of internal control that may be inadequate

4. An auditor selects the type of tests to perform, when planning an audit. The type of test represented by a calculation of a current ratio for the client would be:

a)Analytical procedures

b)Test of internal controls

c)Substantive tests of transactions

d)Test of details of balances

Answer 1

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1. One of the initial steps in the audit process is to obtain a _______ that is used as an agreement between a CPA firm and a client for the conduct of an audit and related services.
d)Engagement letter
2. An auditor must consider both acceptable audit risk and inherent risk when planning an audit. These two types of risk affect the:
a)Amount of evidence that needs to be gathered and staffing
3. One of the instruments an auditor may use during the audit process is an internal control questionnaire. The purpose of an internal control questionnaire is
d)To uncover aspects of internal control that may be inadequate
4. An auditor selects the type of tests to perform, when planning an audit. The type of test represented by a calculation of a current ratio for the client would be:
a)Analytical procedures