TBE#3

1. Which of the following types of audit uses as its criteria laws and regulations?
a. Operational audit c. Financial statement audit
b. Compliance audit d. Financial audit

2. An operational audit is designed to

a. Assess the efficiency and effectiveness of management’s operating procedures
b. Assess the presentation of management’s financial statements in accordance
with generally accepted accounting principles
c. Determine whether management has complied with applicable laws and
regulations
d. Determine whether the audit committee of the board of directors is effectively
discharging its responsibility to oversee management’s operations

3. A review of any part of an organization’s procedures and methods for the purpose of
evaluating efficiency and effectiveness is classified as a (n)
a. Audit of financial statements c. Operational audit
b. Compliance audit d. Production audit

4. Which one of the following is more difficult to evaluate objectively?

a. Efficiency and effectiveness of operations.
b. Compliance with government regulations.
c. Presentation of financial statements in accordance with generally accepted
accounting principles.
d. All three of the above are equally difficult.

5. Independent auditing can best be described as a

a. Branch of accounting
b. Discipline that attests to the results of accounting and other operations and data
c. Professional activity that measures and communicates financial and business
data
d. Regulatory function that prevents the issuance of improper financial
information

6. A financial statement audit:

a. Confirms that financial statement assertion is accurate.
b. Lends credibility to the financial statements.
c. Guarantees that financial statements are presented fairly.
d. Assures that fraud had been detected.

7. Which of the following best describes the objective of an audit of financial statements?
a. To express an opinion whether the financial statements are prepared in
accordance with prescribed criteria.
 b. To express an assurance as to the future viability of the entity whose financial
statements are being audited.
c. To express an assurance about the management’s efficiency or effectiveness in
conducting the operations of entity.
d. To express an opinion whether the financial statements are prepared, in all
material respect, in accordance with an identified financial reporting framework.

8. The main way(s) to reduce information risk is to have

a. The user verify the information
b. The user share the information risk with management
c. Audited financial statements provided
d. All of the above

9. Which of the following is an appraisal activity established within an entity as a service to

the entity?
a. External auditing c. Financial auditing
b. Internal auditing d. Compliance auditing

10. Because an examination in accordance with generally accepted auditing standards is

influenced by the possibility of material errors, the auditor should conduct the examination
with an attitude of
a. Professional responsiveness c. Objective judgment
b. Conservative advocacy d. Professional skepticism

11. An audit designed to determine the extent to which the desired results of an activity
established by the legislative or other authorizing body are being achieved is a (an)
a. Economy audit c. Program audit
b. Efficiency audit d. Financial related audit

ANSWERS:

1.B
2.A
3.C
4.A
5.B
6.B
7.D
8.D
9.B
10.D
11.C