,1. Which of the following is a primary objective of forensic
auditing?
a) To assess the accuracy of financial statements
b) To detect and deter fraud
c) To evaluate internal controls
d) To provide tax consulting services
Answer: b)
Rationale: Forensic auditing specifically targets fraud
detection and prevention through detailed examination of
financial records.
2. What is the primary purpose of an internal audit
function?
a) To provide assurance on financial statements
b) To evaluate the effectiveness of risk management
processes
c) To enhance the organization's profitability
d) To facilitate tax compliance
Answer: b)
Rationale: Internal audits primarily assess the
effectiveness of the organization's risk management,
control, and governance processes.
, Answer: c)
Rationale: ISA 315 requires auditors to identify and
assess the risks of material misstatement and respond
appropriately during the audit.
4. The concept of materiality is defined as:
a) Any information that affects value
b) Any information that could influence economic
decisions
c) Information that is large enough to influence the audit
opinion
d) All of the above
Answer: d)
Rationale: Materiality encompasses all aspects that could
mislead users' economic decisions.
### Fill-in-the-Blank Questions
5. A __________ audit focuses on the examination of
digital information, involving data recovery and analysis to
uncover fraud.
Answer: forensic
Rationale: Forensic audits deal with digital evidence,
crucial in fraud detection.
6. The ethical framework that guides the behavior of
auditors is known as the __________ code of ethics.
Answer: professional
Rationale: Auditors adhere to a professional code
developed by relevant accounting bodies for ethical
conduct.
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