Auditing and Attestation Exam Overview

A risk that an auditor will fail to detect a material misstatement despite performing appropriate audit procedures.

The susceptibility of an account balance or class of transactions to a material misstatement, assuming no related internal controls.

The risk that a material misstatement will not be prevented or detected by the client’s internal control.

The risk that an auditor might not detect material misstatements in the financial statements.

The relationship between control risk and detection risk is generally inverse.

A factor that often has been observed in circumstances where frauds have occurred.

An intentional misstatement of financial reporting, typically to make the company appear more profitable than it actually is.

A misstatement in the financial statements due to fraud.

A misstatement in the financial statements due to an error.

The auditor must assess the risk of misstatement due to fraud in all audits.

The auditor needs to obtain a clear understanding of the client’s business and industry.

The auditor must establish an understanding with the client about the services to be performed.

An auditor should consider all potential illegal acts that could have a material effect on the financial statements.

When the auditor discovers a material misstatement due to fraud, they should report it to the audit committee.

Professional skepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence.

An auditor's understanding of the client’s business and its industry is important for identifying potential risks.

Before accepting a new audit engagement, the auditor should make inquiries of the predecessor auditor.

The audit program cannot be finalized until the auditor has completed the consideration of internal control.

An auditor’s responsibility for audited financial statements is not limited to expressing an opinion.

Due professional care requires the auditor to exercise a high level of professional judgment.

Analytical procedures can help auditors to identify unusual transactions and events.

An engagement letter should include information on the objectives of the engagement and the responsibilities of both the auditor and the client.

An auditor should be aware of the possibility of fraud, but management is ultimately responsible for detecting fraud.

The auditor's consideration of fraud is focused on acts that could cause a material misstatement of the financial statements.

The auditor should perform procedures designed to detect illegal acts that could have a direct effect on the financial statements.

An auditor should consider the implications for other aspects of the audit if fraud is discovered, but the effect is not material.

Attestation standards are a set of rules that govern the conduct of attestation engagements.

An auditor should obtain sufficient evidence to provide a reasonable basis for the conclusions expressed in an audit report.

Audit reports should identify the subject matter on which the assertion being reported on.

An auditor should obtain a sufficient understanding of internal control to plan the engagement.

The most difficult type of misstatement to detect is fraud based on the nonrecording of transactions.

An auditor's responsibility for detecting misstatements due to errors and fraud is to provide reasonable assurance of detecting misstatements that are material to the financial statements.