,1. Which of the following is NOT a key component of risk
assessment in auditing?
- A. Inherent Risk
- B. Control Risk
- C. Detection Risk
- D. Market Risk
- Answer: D
- Rationale: Market risk pertains to the financial markets and is
not a direct component of audit risk assessment, which includes
inherent, control, and detection risks.
2. What is the primary purpose of substantive testing in auditing?
- A. To identify internal control deficiencies.
- B. To evaluate the financial health of the company.
- C. To detect material misstatements in financial statements.
- D. To audit IT systems.
- Answer: C
, - Rationale: Substantive testing aims to provide evidence
regarding the completeness, accuracy, and validity of the data in the
financial statements.
3. Which of the following controls is designed to prevent errors
or fraud before they occur?
- A. Detective Controls
- B. Corrective Controls
- C. Preventive Controls
- D. Compensating Controls
- Answer: C
- Rationale: Preventive controls are implemented to avoid
errors or fraud before they occur.
4. Which principle underlies the concept of professional
skepticism in auditing?
- A. Integrity in all transactions
- B. Trust in the client's internal control system
- C. A questioning mind and a critical assessment of audit
evidence
- D. Consistency in procedures and documentation
- Answer: C
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