Question

Question 9  

• Who is responsible for engaging the external audit firm to audit the financial statements and for giving final approval for the issuance of the financial statements?

a	The audit committee of the board of directors
b	The Securities and Exchange Commission
c	Management of the issuing company
d	The shareholders

Question 20  

• The application of an audit procedure to less than 100% of the population of items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance or class.

a	Audit sampling
b	Statistical sampling.
c	Substantive audit procedure
d	Test of controls
e	Both a & b

Question 27  

• The risk that the auditor expresses an unqualified audit report on financial statements that are materially misstated.

a	Audit risk
b	Audit failure
c	Detection risk
d	Inherent risk

Answer 1

Answer 9:

Correct answer is:

a. The audit committee of the board of directors

Explanation:

Audit committee is responsible for engaging the external audit firm to audit the financial statements and for giving final approval for the issuance of the financial statements.

Hence option a is correct and other options b, c and d are incorrect.

Answer 20:

Correct answer is:

a. Audit sampling

Explanation:

The application of an audit procedure to less than 100% of the population of items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance or class is called audit sampling.

Hence option a is correct and other options b, c and d are incorrect.

Answer 27:

Correct answer is:

a. Audit Risk

Explanation:

Audit risk is risk that the auditor expresses an an inappropriate audit opinion on financial statements that are materially misstated.

Audit failure is state not a risk.

Detection risk is the risk that  an auditor will fail to find material misstatements that exist in an entity's financial statements.

Inherent risk is the risk that there could be material misstatement in financial statements given the business risk of client's like complex nature of transactions.

Hence option a is correct and other options b, c and d are incorrect.