Advanced Accounting and Auditing Quiz

Read each multiple-choice question and select the best answer.

Question 1

In performing the risk assessment required by Statement on Quality Management Standards No. 1, which of the following is NOT a key step in the initial risk identification process?

	Conducting a thorough brainstorming session with relevant stakeholders.
	Implementing immediate corrective actions based on preliminary risk findings.
	Analyzing historical data to identify recurring issues.

Question 2

Should a material gain/loss from the sale of fixed assets be included in operating or other income?

	Regardless of whether income from operations is presented, the gain/loss must be presented in other income, given that the sale of fixed assets is not directly related to primary operations.
	If income from operations is presented, the gain/loss must be presented as part of that subtotal. If income from operations is not presented, presenting the gain/loss within other income is acceptable.
	Authoritative guidance does not specify the presentation and therefore the gain/loss is presented based on industry practice.

Question 3

Which following statement is true regarding the documentation of inherent risk assessments?

	Inherent risk is assessed after consideration of control risk design and effectiveness
	It is sufficient to assess inherent risks as high, moderate or low
	Inherent risk is separately assessed and documented under AU-C 315