CHAPTER 2: QUIZ

IDENTIFICATION:

1. Auditing standards that identify necessary qualifications and characteristics of auditors and
guide the conduct of the audit examination. GAAS
2. The particular and specialized actions that auditors take to obtain evidence in a specific audit
engagement. AUDIT PROCEDURES
3. Quality guides to the audit that apply to all audits. AUDITING STANDARDS
4. A state of mind that is characterized by appropriate questioning and a critical assessment of
audit evidence. PROFESSIONAL SKEPTICISM
5. The application of relevant training, knowledge, and experience in making informed decisions
about appropriate courses of action during the audit engagement. PROFESSIONAL JUDGEMENT
6. The concept of REASONABLE ASSURANCE recognizes that a GAAS audit may not detect all
material misstatements and auditors are not “insurers” or “guarantors” regarding the fairness of
the entity’s financial statements.
7. A list of the audit procedures that auditors need to perform to gather sufficient appropriate
evidence on which to base their opinion on the financial statements. AUDIT PLAN
8. identify the risks of material misstatement at both the financial statement and the management
assertion levels. ENGAGEMENT PLANNING
9. The policies and procedures implemented by an entity to prevent or detect material accounting
frauds or errors and provide for their correction on a timely basis. INTERNAL CONTROL
10. Set of criteria used to determine the measurement, recognition, presentation, and disclosure of
material items in the financial statements. FINANCIAL REPORTING FRAMEWORK

TRUE/FALSE: (T/F) WRITE THE CORRECT ANSWER IF FALSE 

AICPA is also charged with monitoring the quality of work performed by firms auditing public entities
and bringing appropriate action against those firms if substandard work is identified. FALSE. PCAOB

PCAOB goal is to ensure that audit quality is not compromised and that auditor performance continues
to meet public expectations. TRUE

GAAS are auditing standards that identify necessary qualifications and characteristics of auditors and
guide the conduct of the audit examination. TRUE

An Audit Procedure is a quality guides to the audit that apply to all audits. FALSE. AUDITING
STANDARDS

Risk Assessment is the first in stage of an audit. FALSE. OBTAIN ENGAGEMENT.

Professional Skepticism is a state of mind that is characterized by appropriate questioning and a critical
assessment of audit evidence. TRUE

The concept of Risk Assessment recognizes that auditors should focus on matters that are important
to financial statement users. FALSE. MATERIALITY
The concept of Reasonable Assurance recognizes that a GAAS audit may not detect all material
misstatements and auditors are not “insurers” or “guarantors” regarding the fairness of the entity’s
financial statements. TRUE

ENUMERATION: 

Five Elements of Performance Principle:

REASONABLE ASSURANCE RISK ASSESSMENT

PLANNING & SUPERVISON AUDIT EVIDENCE

MATERIALITY

Risks of Material Misstatements:

Inherent Risk

Control Risk