RIFT VALLEY UNIVERSITY ABICHU CAMPUS

COLLEGE OF BUSINESS AND ECONOMICS, DEPARTMENT OF

ACCOUNTING & FINANCE
MID-EXAMINATIONS FOR THE COURSE OF AUDITING PRINCIPLE &
PRACTICE-I
MARK POINT (20%) (TIME ALLOWED: 50 MIN)
Inst. Megersa H. (MSc)

Name__________________________________section.___________IDNO________

Part-I: Choose the Correct answer from the given alternatives (10%)
1. Which type of auditor is typically employed by a company to assess its internal controls and
financial reporting processes?
A. External Auditor C. Internal Auditor
B. Government Auditor D. Forensic Auditor
2. What does the "due professional care" standard require auditors to do?
A. Complete the audit as quickly as possible to save time and resources
B. Perform the audit with the highest level of professional skepticism
C. Exercise professional judgment and skepticism, and apply the necessary skills and
knowledge
D. Rely solely on the client's management for audit evidence
3. Which of the following is not one of the main types of audits?
A. Financial Audit C. Marketing Audit
B. Operational Audit D. Compliance Audit
4. What is the primary objective of an audit?
A. Ensure true and fair view of business and its transaction
B. Independent judgment and opinion about the reliability of account
C. detection and prevent of fraud
D. All of the above
5. What is the primary objective of an operational audit?
A. To evaluate the effectiveness and efficiency of organizational activities
B. To examine financial statements for accuracy
C. To detect instances of fraud and financial misconduct
D. To ensure compliance with tax laws
6. Which of the following is a fundamental requirement under the standards of field work?
A. The auditor must have financial expertise in the client's industry
B. The auditor must obtain sufficient and appropriate audit evidence.
C. The auditor must always rely on the client's management for all audit evidence.
D. The auditor must complete the audit within a specified timeframe.
7. What is one of the fundamental principles of professional ethics that auditors should adhere
to?
A. Maximizing shareholder wealth C. Promoting the client's business interests
B. Objectivity and independence D. Providing financial advice to clients
8. What is the key difference between accounting and auditing?
A. Accounting focuses on preparing financial statements, while auditing involves evaluating
the accuracy of those statements.
B. Auditing involves preparing financial statements, while accounting focuses on internal
controls.
C. Accounting is primarily concerned with marketing, while auditing deals with financial
planning.
D. Accounting and auditing are interchangeable terms and have no distinct differences.
9. A certified public accountant (CPA) who examines financial statements for a publicly traded
company is an example of::
A. Government Auditor C. External Auditor
B. Internal Auditor D. Compliance Auditor
10. Which of the following is a key component of the general standards of auditing?

A. Adequate technical training and proficiency

B. Adequate planning and supervision
C. Adequacy of informative disclosures
D. Expression of opinion on financial statements
Part-II: Answer the following question correctly (10%)
1) Why do organizations request an audit?
2) What is the primary objective of a financial audit?
3) List some of the key professional ethics that auditors should follow?
4) What is the key distinction between external auditors and internal auditors?
5) List and explain the three categories of Generally Accepted Auditing Standards (GAAS)?