20 Questions
True or false: The planning process starts once the engagement letter has been signed?
True
True or false: General controls and application controls are reviewed during the audit planning process?
True
True or false: The auditor may assess control risk at the maximum level for all assertions?
False
True or false: The maximum control risk refers to the lowest probability of a material misstatement being prevented or detected by the entity's internal control structure?
False
True or false: Test of Controls focuses on both the design and operation aspects of the internal control structure?
True
True or false: Test of Control is performed to determine whether a control is working?
True
True or false: Inquiries of client personnel is one of the procedures in Test of Control?
True
True or false: The auditor does not evaluate the test results during the Test of Control phase?
False
True or false: The degree of reliance on controls is determined during the Test of Control phase?
True
True or false: Test of Control procedures involve the inspection of documents and records?
True
True or false: The TOC result is the Control Risk (CR) assessment.
True
True or false: The auditor should perform TOC if the CR preliminary assessment is below the maximum level.
True
True or false: The auditor is not required to perform TOC if the CR preliminary assessment is at the maximum level.
True
True or false: Substantive Testing Phase is the most expensive phase of the audit.
True
True or false: In Substantive Testing Phase, the auditor aims to substantiate management's assertion regarding existence or occurrence of specific assets and liabilities.
True
True or false: The NTE (Nature, Timing, and Extent) of Substantive Testing depends on the auditor's assessed level of control risk.
True
True or false: If the control risk is at the minimum level, the auditor can have a higher acceptable detection risk.
True
True or false: If the control risk is at the maximum level, the auditor should have a lower acceptable detection risk.
True
True or false: A disclaimer of opinion means that the auditor is unable to reach an opinion.
True
True or false: An unqualified opinion means that the auditor believes that no material losses or account misstatements have occurred.
True
Test your knowledge on audit planning steps and the importance of reviewing an organization's policies, procedures, and structure. This quiz covers topics such as conducting preliminary arrangements with clients, engagement letters, and management control. Challenge yourself and see how well you understand the planning process in auditing.
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