Practice exam Advanced Auditing based upon the book (Knechel & Salterio), slides, discussionboard (Canvas) and papers. Please pay attention that this practice exam is studentmade and could not be a fair presentation of the real exam.
Practice exam Advanced Auditing
60 exam questions: Book – Slides – Canvas – Papers
1. If a listed firm has internal auditor, you could state that an external audit is based upon:
A. Only endogenous demand
B. Only exogenous demand
C. Both endogenous as exogeneous demand.
D. Internal demand.
2. Which of the following claims is amenable to attestation?
A. A’s products are the best in the business.
B. A’s net income for the second quarter of 2019 rose 10 percent compared to the same
quarter last year.
C. A’s market share in computers as of the end of 2018 stands at 17 percent.
D. We, country A, are substantially in compliance with the terms of the anti-ballistic
missile treaty.”
3. An audit to reduce agency costs is an example of:?
A. Monitoring expenditures made by principal
B. Bonding expenditures made by agent
C. Opportunity wealth loss caused by the impact of debt
D. Bankruptcy & reorganization costs
4. In which case is the auditor most independent of the client?
A. The son of the auditor has a major share of stocks of the client.
B. A close relative of the auditor is currently employed with the client.
C. The auditor-client relationships lasts for 15 years, but it is a voluntary audit.
D. It is not crucial that an auditor is independent to accept a client.
5. Company X decides to not purchasing a virus scanner. Which statement is true?
A. Company X avoids the risk.
B. Company X accepts the risk.
C. Company X shares the risk.
D. Company X reduces the risk.
6. Significant conditions, events, circumstances or actions that could adversely affect the entity’s
ability to achieve its objectives and execute its strategies create:
A. Control risks.
B. Detection risks.
C. Business risks.
D. Management risks.
, 7. The risk that an auditor does not discover existing misstatements is referred to as:
A. Inherent risk
B. Control risk
C. Detection risk
D. Audit risk
8. Which statement is based upon the paper of Kim-Yew Low NOT true?
A. Industry matched auditors better discern audit risks of higher risk engagement
and a lower risk engagement.
B. Industry experience affects modification of audit procedures.
C. Industry experienced based modifications have higher quality.
D. All of the above are true.
9. Company X has a building on the balance sheet. It values it based upon a taxation report out of
2013, before the building crisis. Which management assertion is wrong?
A. Occurrence
B. Completeness
C. Classification
D. Accuracy and Valuation
10. The auditor has set the overall materiality for Group A at 5 Million euros, the component
materiality for Company X at 1 Million euros, the performance materiality at 3 Million euros and the
clearly trivial level at 100,000 euros. During your test at Company X you find a deviation of 115,000
euros in R&D expenses. Is this deviation material?
A. No, since the deviation is smaller than the overall materiality.
B. No, since the deviation is smaller than the component materiality.
C. No, since the deviation is smaller than the performance materiality.
D. Yes, since the deviation is larger than the clearly trivial level.
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