Exam 6: Audit Planning and Documentation

A thorough understanding of the client entity, its business and its environment, and knowledge of the company's business and industry are essential for doing an adequate audit. ASA 315 provides an overview of five components to this understanding. Identify and discuss each of these five components.

Assessing acceptable audit risk and inherent risk is an important part of audit planning, because:

Which one of the following is an inherent risk that is common to all clients in certain industries?

One of the first things that the auditor will do after accepting a new client is:

As inherent risk decreases, audit expertise should normally increase.

ACL is commercial audit software which can:

Identify the three factors an auditor should evaluate before relying on the work of an outside specialist.

Investigation of new clients and re- evaluation of existing ones is an essential part of deciding:

What is the purpose of performing preliminary analytical procedures? Provide an example of an analytical procedure used.

Transactions with related parties are important to auditors because:

Permanent files contain all the data:

Which one of the following is NOT one of the major types of supporting schedule working papers?

Which one of the following items would NOT normally be included, in whole or in part, in the auditor's permanent file on a client?

Reclassification entries are recorded in the:

Under ASA 210, the engagement letter should state:

Audit firms will refuse engagements because:

The current audit files include all audit documentation applicable to the year under audit, including:

One purpose of performing preliminary analytical procedures in the planning phase of an audit is to help the auditor make a preliminary assessment of control risk.

The permanent section of the auditor's working papers generally should include:

When considering the desirability of staff continuity on an engagement, an audit partner must always: