Audit - Quiz

1. What is the Latin origin of the word audit?

A) auditorium
B) audiens
C) auditus
D) audire

2. What does the Latin word 'audire' mean?

A) To count
B) To hear
C) To record
D) To speak

3. According to the text, what is the primary goal of an audit report?

A) To rewrite the company's financial books
B) To manage the entity's daily operations
C) To express an opinion on the entity's financial information
D) To guarantee total immunity from fraud

4. Who coined the term 'Audit Society'?

A) Michael Power
B) The Public Company Accounting Oversight Board
C) Chatfield
D) Moyer

5. In medieval times, what did British auditors do to verify accounts?

A) They reviewed computer logs
B) They heard accounts read out to them
C) They conducted digital forensic analysis
D) They performed statistical sampling

6. What is the primary focus of an Information Technology audit?

A) Physical building security
B) Management controls within an IT infrastructure
C) Employee payroll calculations
D) Marketing strategies

7. What does an IT audit determine regarding organizational goals?

A) If the IT staff is paid above market rate
B) If the hardware is aesthetically pleasing
C) If the company should switch to a different software provider
D) If systems are operating effectively to achieve goals

8. Why is an audit typically required for many entities?

A) To automate bookkeeping tasks
B) Due to incentives to misstate financial information
C) To increase the company's stock price
D) To reduce electricity consumption

9. What kind of assurance do audits provide?

A) Government-mandated tax clearance
B) First-party assurance
C) Third-party assurance
D) Absolute internal assurance

10. What is a statutory audit?

A) A voluntary energy conservation audit
B) A project management evaluation
C) An optional internal assessment
D) A legally required review of financial statements

11. What is the purpose of statistical sampling in audits?

A) To verify every single transaction without exception
B) To eliminate the need for an auditor
C) To address constraints and provide reasonable assurance
D) To make the audit faster but less reliable

12. What does 'cost audit' verify?

A) Human resource policies
B) Cost accounts and records
C) Tax returns and legal compliance
D) Public relations efforts

13. According to Moyer in 1951, what was the most important duty of the auditor?

A) To assess project management risks
B) To verify bookkeeping detail
C) To advise on management strategy
D) To detect fraud

14. What does a 'true and fair' set of financial statements indicate?

A) They reflect only quantitative factors
B) They have been approved by the government
C) They contain no mistakes of any kind
D) They are free of material misstatements

15. Which field considers auditing as a costly activity in economic theory?

A) Public administration
B) Optimal auditing
C) Statistical physics
D) Forensic accounting

16. Which organization governs audits of publicly traded companies in the US?

A) Public Company Accounting Oversight Board (PCAOB)
B) Financial Accounting Standards Board (FASB)
C) Securities and Exchange Commission (SEC)
D) American Institute of Certified Public Accountants (AICPA)

17. Which section of the Sarbanes–Oxley Act of 2002 established the PCAOB?

A) Section 501
B) Section 302
C) Section 404
D) Section 201

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