Audit Revision Quiz

A manufacturing company recorded a large sale in March, even though the goods were only shipped in April of the following financial year. The auditor wants to verify whether this transaction was recorded in the correct period. Which assertion is being tested?

• Accuracy

• Cutoff

• Classification

• Occurrence

During an audit of payroll expenses, the auditor finds that several employees listed on the payroll do not actually work for the company. The company may be violating which assertion?

• Completeness

• Occurrence

• Accuracy

• Classification

An auditor is reviewing a company's expense records and notices that some large cash payments made to suppliers are missing from the financial statements. The auditor is most concerned with which assertion?

• Completeness

• Accuracy

• Cutoff

• Classification

A company reports that it has $5 million in accounts receivable, but the auditor discovers that some of these receivables are from customers who have gone out of business. Which assertion is most relevant?

• Existence

• Valuation and Allocation

• Completeness

• Rights and Obligations

An auditor is reviewing a company’s inventory and finds that some items recorded in the books are missing from the warehouse. Which assertion is being tested?

• Rights and Obligations

• Completeness

• Valuation and Allocation

• Existence

A company includes a property worth $2 million in its financial statements. However, upon review, the auditor finds that the property is actually owned by a related party, not the company itself. This relates to which assertion?

• Completeness

• Rights and Obligations

• Valuation and Allocation

• Existence

Which of the following situations would most likely result in a modified audit opinion?

• The financial statements are free from material misstatement.

• The auditor identifies material misstatements that are not pervasive.

• The financial statements comply fully with accounting standards.

• The audit report contains an unqualified opinion.

An unqualified audit opinion is issued when:

• The auditor finds minor misstatements that are immaterial.

• There is a material misstatement in the financial statements.

• The auditor is unable to obtain sufficient audit evidence.

• The auditor is restricted from performing key audit procedures.

Which of the following is NOT an essential element of an assurance engagement?

• Three-party relationship

• Subject matter

• Auditor's independence

• Modified audit opinion

The key parties in an assurance engagement include:

• Management, shareholders, and regulators

• The responsible party, intended users, and the practitioner

• The auditor, company directors, and the tax authority

• The company’s CEO, CFO, and external stakeholders