Question 1

Because of conservatism considerations,auditors should allow a client to overestimate its reserve for restructuring.

Accepted Answer

A) True 
 B)False

Question 2

Internal auditors can perform both consulting services and assurance services.

Accepted Answer

A) True 
 B)False

Question 3

Impairment is measured by the difference between market value of the operating segment and which of the following?

Accepted Answer

A) Carrying value of net assets. 
B) Fair market value of net assets. 
C) Book value of total assets. 
D) Book value of current assets. 
A) Carrying value of net assets. 
B) Fair market value of net assets. 
C) Book value of total assets. 
D) Book value of current assets.

Question 4

Which one of the following general factors would not be considered when assessing identified internal control deficiencies?

Accepted Answer

A) Control environment. 
B) Audit evidence from a poorly controlled system. 
C) Repeatability of a process. 
D) Complexity and subjectivity of the account balance affected by the deficiency. 
A) Control environment. 
B) Audit evidence from a poorly controlled system. 
C) Repeatability of a process. 
D) Complexity and subjectivity of the account balance affected by the deficiency.

Question 5

The auditor need not inform the audit committee about adjustments arising from the audit that were considered to be material.

Accepted Answer

A) True 
 B)False

Question 6

Auditors may consider only quantitative effects and not qualitative effects in making materiality judgments.

Accepted Answer

A) True 
 B)False

Question 7

The FASB has set a hierarchy of inputs to consider in assessing fair value.Price taken from a recent trade on the NIKKEI of an index stock would fall under which level?

Accepted Answer

A) Level 0. 
B) Level 1. 
C) Level 2. 
D) Level 3. 
A) Level 0. 
B) Level 1. 
C) Level 2. 
D) Level 3.

Question 8

Effect of Internal Audit's Work on the External Audit Provide examples of audit judgments made by the external auditor which would not typically be delegated to the internal auditor.

Accepted Answer

Because the auditor has the ultimate res

Question 9

Which of the following will the auditor will not consider when making a materiality determination?

Accepted Answer

A) Potential default on loan covenants. 
B) Changes in segment earnings or trends in earnings. 
C) Factors that would affect the market's perception of future growth and cash flow for the company. 
D) All of these insights would be considered. 
A) Potential default on loan covenants. 
B) Changes in segment earnings or trends in earnings. 
C) Factors that would affect the market's perception of future growth and cash flow for the company. 
D) All of these insights would be considered.

Question 10

Which of the following is the IIA's stated position regarding the internal auditing activity?

Accepted Answer

A) All responsibilities for internal auditing activity can be outsourced. 
B) An in-house liaison,such as an executive or senior management member,should be assigned the responsibility for internally managing the internal auditing activity. 
C) All internal auditors involved in the internal auditing activity must be CIAs. 
D) Internal auditors for the internal auditing activity should be supervised by CPAs. 
A) All responsibilities for internal auditing activity can be outsourced. 
B) An in-house liaison,such as an executive or senior management member,should be assigned the responsibility for internally managing the internal auditing activity. 
C) All internal auditors involved in the internal auditing activity must be CIAs. 
D) Internal auditors for the internal auditing activity should be supervised by CPAs.

Question 11

Which of the following statements best describe an issue related to inventory?

Accepted Answer

A) Impairment testing based on most likely sale or disposal price. 
B) Subject to allowance for noncollectibility. 
C) Lower of cost or market impairments,including an allowance for obsolescence. 
D) Subject to estimates made regarding the expected life of the assets and the appropriateness of the depreciation method. 
A) Impairment testing based on most likely sale or disposal price. 
B) Subject to allowance for noncollectibility. 
C) Lower of cost or market impairments,including an allowance for obsolescence. 
D) Subject to estimates made regarding the expected life of the assets and the appropriateness of the depreciation method.

Question 12

A materiality level where the auditor believes that the errors below that level would not,even when aggregated with all other misstatements,be material to the financial statements is often based on whether something is considered clearly trivial.

Accepted Answer

A) True 
 B)False

Question 13

Auditors request the client to book all known misstatements,even if the recording cost is very high so that there are no carryovers from year to year.

Accepted Answer

A) True 
 B)False

Question 14

A best practice is to have an oversight of the internal audit function as a responsibility of which of the following?

Accepted Answer

A) Management. 
B) Internal auditors. 
C) Audit committee. 
D) External auditors. 
A) Management. 
B) Internal auditors. 
C) Audit committee. 
D) External auditors.

Question 15

Which of the following is not an audit challenge relevant to fair value estimation of Level 1,2,and 3 assets?

Accepted Answer

A) Determining identical assets and active markets. 
B) Assessing client methodology and cash flows to originally estimate value. 
C) Determining appropriate model and inputs expected cash flows. 
D) Determining similar assets and relevant markets. 
A) Determining identical assets and active markets. 
B) Assessing client methodology and cash flows to originally estimate value. 
C) Determining appropriate model and inputs expected cash flows. 
D) Determining similar assets and relevant markets.

Question 16

Planning materiality helps the auditor determine the extent of audit evidence needed in order to provide an opinion on the financial statements.

Accepted Answer

A) True 
 B)False

Question 17

Misstatements detected during the audit that were initially deemed to be immaterial need not be summarized to determine their aggregate effects.

Accepted Answer

A) True 
 B)False

Question 18

If a company's net income varies significantly from year to year,the auditor might consider using an average of the net income from the prior three to five years as the materiality benchmark.

Accepted Answer

A) True 
 B)False

Question 19

Level 1 assets is a broad category of assets and applies to financial instruments,property,or lower of cost or market considerations for inventory,loans,or receivables.

Accepted Answer

A) True 
 B)False

Question 20

Complex audit judgments and decisions often involve accounts that require subjective estimates by management.

Accepted Answer

A) True 
 B)False

Because of conservatism considerations,auditors should allow a client to overestimate its reserve for restructuring.

Internal auditors can perform both consulting services and assurance services.

Impairment is measured by the difference between market value of the operating segment and which of the following?

Which one of the following general factors would not be considered when assessing identified internal control deficiencies?

The auditor need not inform the audit committee about adjustments arising from the audit that were considered to be material.

Auditors may consider only quantitative effects and not qualitative effects in making materiality judgments.

The FASB has set a hierarchy of inputs to consider in assessing fair value.Price taken from a recent trade on the NIKKEI of an index stock would fall under which level?

Effect of Internal Audit's Work on the External Audit Provide examples of audit judgments made by the external auditor which would not typically be delegated to the internal auditor.

Which of the following will the auditor will not consider when making a materiality determination?

Which of the following is the IIA's stated position regarding the internal auditing activity?

Which of the following statements best describe an issue related to inventory?

A materiality level where the auditor believes that the errors below that level would not,even when aggregated with all other misstatements,be material to the financial statements is often based on whether something is considered clearly trivial.

Auditors request the client to book all known misstatements,even if the recording cost is very high so that there are no carryovers from year to year.

A best practice is to have an oversight of the internal audit function as a responsibility of which of the following?

Which of the following is not an audit challenge relevant to fair value estimation of Level 1,2,and 3 assets?

Planning materiality helps the auditor determine the extent of audit evidence needed in order to provide an opinion on the financial statements.

Misstatements detected during the audit that were initially deemed to be immaterial need not be summarized to determine their aggregate effects.

If a company's net income varies significantly from year to year,the auditor might consider using an average of the net income from the prior three to five years as the materiality benchmark.

Level 1 assets is a broad category of assets and applies to financial instruments,property,or lower of cost or market considerations for inventory,loans,or receivables.

Complex audit judgments and decisions often involve accounts that require subjective estimates by management.

Auditing: Integral to the Economy

The Risk of Fraud and Mechanisms to Address Fraud: Regulation,corporate Governance,and Audit Quality

Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

Professional Liability and the Need for Quality Auditor Judgments and Ethical Decisions

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, use, impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Other Services Provided by Audit Firms

Filters

Exam 16: Advanced Topics Concerning Complex Auditing Judgments

Because of conservatism considerations,auditors should allow a client to overestimate its reserve for restructuring.

Internal auditors can perform both consulting services and assurance services.

Impairment is measured by the difference between market value of the operating segment and which of the following?

Which one of the following general factors would not be considered when assessing identified internal control deficiencies?

The auditor need not inform the audit committee about adjustments arising from the audit that were considered to be material.

Auditors may consider only quantitative effects and not qualitative effects in making materiality judgments.

The FASB has set a hierarchy of inputs to consider in assessing fair value.Price taken from a recent trade on the NIKKEI of an index stock would fall under which level?

Effect of Internal Audit's Work on the External Audit Provide examples of audit judgments made by the external auditor which would not typically be delegated to the internal auditor.

Which of the following will the auditor will not consider when making a materiality determination?

Which of the following is the IIA's stated position regarding the internal auditing activity?

Which of the following statements best describe an issue related to inventory?

A materiality level where the auditor believes that the errors below that level would not,even when aggregated with all other misstatements,be material to the financial statements is often based on whether something is considered clearly trivial.

Auditors request the client to book all known misstatements,even if the recording cost is very high so that there are no carryovers from year to year.

A best practice is to have an oversight of the internal audit function as a responsibility of which of the following?

Which of the following is not an audit challenge relevant to fair value estimation of Level 1,2,and 3 assets?

Planning materiality helps the auditor determine the extent of audit evidence needed in order to provide an opinion on the financial statements.

Misstatements detected during the audit that were initially deemed to be immaterial need not be summarized to determine their aggregate effects.

If a company's net income varies significantly from year to year,the auditor might consider using an average of the net income from the prior three to five years as the materiality benchmark.

Level 1 assets is a broad category of assets and applies to financial instruments,property,or lower of cost or market considerations for inventory,loans,or receivables.

Complex audit judgments and decisions often involve accounts that require subjective estimates by management.

Auditing: Integral to the Economy

The Risk of Fraud and Mechanisms to Address Fraud: Regulation,corporate Governance,and Audit Quality

Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

Professional Liability and the Need for Quality Auditor Judgments and Ethical Decisions

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, use, impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Other Services Provided by Audit Firms

Filters