Question 1

A listing of all the things which the auditor will do to gather sufficient, competent evidence is the:

Accepted Answer

A)  audit program. 
B)  audit procedure. 
C)  audit plan. 
D)  audit risk model. 
A)  audit program. 
B)  audit procedure. 
C)  audit plan. 
D)  audit risk model. A

Question 2

When designing an audit program for tests of details of balances, the auditor should make assumptions about inherent risk and control risk and predictions concerning the outcome of tests of controls, substantive tests of transactions and analytical procedures.

Accepted Answer

A) True 
 B)False  True

Question 3

After finishing the review phase of the study and evaluation of internal control in an audit engagement, the auditor should perform tests of controls on:

Accepted Answer

A)  those controls in which significant deficiencies were identified. 
B)  a random sample of the controls that were reviewed. 
C)  those controls that the auditor plans to rely upon. 
D)  those controls that have a material effect upon the financial statement balances. 
A)  those controls in which significant deficiencies were identified. 
B)  a random sample of the controls that were reviewed. 
C)  those controls that the auditor plans to rely upon. 
D)  those controls that have a material effect upon the financial statement balances. C

Question 4

Auditors follow a four- step approach to reduce assessed control risk. Which order do these four steps go in? 1. Identify key controls that should reduce control risk for each transaction- related audit objective.
2) Apply the transaction- related objectives to the class of transactions being tested.
3) Develop appropriate tests of controls for all internal controls that are used to reduce the preliminary assessment of control risk below maximum (key controls).
4) For potential types of misstatements related to each transaction- related audit objective, design appropriate substantive tests of transactions.

Accepted Answer

A)  4, 1, 2, 3 
B)  1, 3, 2, 4 
C)  2, 1, 3, 4 
D)  1, 2, 3, 4 
A)  4, 1, 2, 3 
B)  1, 3, 2, 4 
C)  2, 1, 3, 4 
D)  1, 2, 3, 4

Question 5

Performing substantive tests of balances before the year- end is only advisable if the internal controls have already been assessed as ineffective.

Accepted Answer

A) True 
 B)False

Question 6

If inherent risk is increased from low to medium, tests of details of balances can be reduced.

Accepted Answer

A) True 
 B)False

Question 7

The type of audit report issued depends on the evidence accumulated and the audit findings.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT a type of audit test?

Accepted Answer

A)  Analytical procedures 
B)  Substantive tests of transactions 
C)  Tests of controls 
D)  Authorisation of transactions 
A)  Analytical procedures 
B)  Substantive tests of transactions 
C)  Tests of controls 
D)  Authorisation of transactions

Question 9

Only when testing details of balances will audit procedures include confirmation and physical examination.

Accepted Answer

A) True 
 B)False

Question 10

Auditing standards require that tests of controls be performed on every audit engagement.

Accepted Answer

A) True 
 B)False

Question 11

The tests of controls and substantive tests of transactions section of the audit program normally includes a descriptive section documenting the understanding obtained about internal control.

Accepted Answer

A) True 
 B)False

Question 12

An exception that is uncovered in a test of control is:

Accepted Answer

A)  evidence that the financial statements are materially misstated. 
B)  justification for issuing the qualified opinion. 
C)  a financial statement misstatement. 
D)  an indication of the likelihood of misstatements in the financial statements. 
A)  evidence that the financial statements are materially misstated. 
B)  justification for issuing the qualified opinion. 
C)  a financial statement misstatement. 
D)  an indication of the likelihood of misstatements in the financial statements.

Question 13

Tests of controls and substantive tests of transactions are often conducted simultaneously on the same transactions.

Accepted Answer

A) True 
 B)False

Question 14

The timing of phase III audit procedures are typically:

Accepted Answer

A)  before the balance sheet date. 
B)  on or after the balance sheet date. 
C)  anytime. 
D)  at the end of fieldwork. 
A)  before the balance sheet date. 
B)  on or after the balance sheet date. 
C)  anytime. 
D)  at the end of fieldwork.

Question 15

Audit procedures regarding presentation and disclosure are performed:

Accepted Answer

A)  at balance sheet date. 
B)  shortly before the audit report is issued. 
C)  throughout the audit. 
D)  on the last day of fieldwork. 
A)  at balance sheet date. 
B)  shortly before the audit report is issued. 
C)  throughout the audit. 
D)  on the last day of fieldwork.

Question 16

The highest cost audit will be incurred when the auditor expected that the internal control system would:

Accepted Answer

A)  have few effective controls, but client's personnel were well- trained and knowledgeable. 
B)  be effective, but the auditor found extensive control test deviations and significant errors during tests of transactions. 
C)  have few effective controls, and tests of balances found many errors. 
D)  be very sophisticated, and the tests of controls confirmed this. 
A)  have few effective controls, but client's personnel were well- trained and knowledgeable. 
B)  be effective, but the auditor found extensive control test deviations and significant errors during tests of transactions. 
C)  have few effective controls, and tests of balances found many errors. 
D)  be very sophisticated, and the tests of controls confirmed this.

Question 17

Material dollar misstatements are more likely to exist in the financial statements when control test deviations are considered to be insignificant deficiencies.

Accepted Answer

A) True 
 B)False

Question 18

Substantive tests of transactions affect the auditor's assessments of:

Accepted Answer

A)  both control risk and planned detection risk. 
B)  both acceptable audit risk and control risk. 
C)  both inherent risk and control risk. 
D)  both inherent risk and planned detection risk. 
A)  both control risk and planned detection risk. 
B)  both acceptable audit risk and control risk. 
C)  both inherent risk and control risk. 
D)  both inherent risk and planned detection risk.

Question 19

Audit programs are never computerised as they are unique to each client.

Accepted Answer

A) True 
 B)False

Question 20

Contrast the circumstances in which the auditor would choose not to test controls with those in which he or she would perform tests of controls.

Accepted Answer

If the auditor believes that controls ha

A listing of all the things which the auditor will do to gather sufficient, competent evidence is the:

When designing an audit program for tests of details of balances, the auditor should make assumptions about inherent risk and control risk and predictions concerning the outcome of tests of controls, substantive tests of transactions and analytical procedures.

After finishing the review phase of the study and evaluation of internal control in an audit engagement, the auditor should perform tests of controls on:

Performing substantive tests of balances before the year- end is only advisable if the internal controls have already been assessed as ineffective.

If inherent risk is increased from low to medium, tests of details of balances can be reduced.

The type of audit report issued depends on the evidence accumulated and the audit findings.

Which of the following is NOT a type of audit test?

Only when testing details of balances will audit procedures include confirmation and physical examination.

Auditing standards require that tests of controls be performed on every audit engagement.

The tests of controls and substantive tests of transactions section of the audit program normally includes a descriptive section documenting the understanding obtained about internal control.

An exception that is uncovered in a test of control is:

Tests of controls and substantive tests of transactions are often conducted simultaneously on the same transactions.

The timing of phase III audit procedures are typically:

Audit procedures regarding presentation and disclosure are performed:

The highest cost audit will be incurred when the auditor expected that the internal control system would:

Material dollar misstatements are more likely to exist in the financial statements when control test deviations are considered to be insignificant deficiencies.

Substantive tests of transactions affect the auditor's assessments of:

Audit programs are never computerised as they are unique to each client.

Contrast the circumstances in which the auditor would choose not to test controls with those in which he or she would perform tests of controls.

Demand for Audit and Assurance Services

Auditors Legal Environment

Audit Quality and Ethics

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Documentation

Materiality and Risk

Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Completing Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling

Audit of Transaction Cycles and Financial Statement Balances I

Audit of Transaction Cycles and Financial Statement Balances II

Completing the Audit

Audit Reporting

Other Auditing and Assurance Engagements

Filters

Exam 11: Overall Audit Plan and Audit Program

A listing of all the things which the auditor will do to gather sufficient, competent evidence is the:

When designing an audit program for tests of details of balances, the auditor should make assumptions about inherent risk and control risk and predictions concerning the outcome of tests of controls, substantive tests of transactions and analytical procedures.

After finishing the review phase of the study and evaluation of internal control in an audit engagement, the auditor should perform tests of controls on:

Performing substantive tests of balances before the year- end is only advisable if the internal controls have already been assessed as ineffective.

If inherent risk is increased from low to medium, tests of details of balances can be reduced.

The type of audit report issued depends on the evidence accumulated and the audit findings.

Which of the following is NOT a type of audit test?

Only when testing details of balances will audit procedures include confirmation and physical examination.

Auditing standards require that tests of controls be performed on every audit engagement.

The tests of controls and substantive tests of transactions section of the audit program normally includes a descriptive section documenting the understanding obtained about internal control.

An exception that is uncovered in a test of control is:

Tests of controls and substantive tests of transactions are often conducted simultaneously on the same transactions.

The timing of phase III audit procedures are typically:

Audit procedures regarding presentation and disclosure are performed:

The highest cost audit will be incurred when the auditor expected that the internal control system would:

Material dollar misstatements are more likely to exist in the financial statements when control test deviations are considered to be insignificant deficiencies.

Substantive tests of transactions affect the auditor's assessments of:

Audit programs are never computerised as they are unique to each client.

Contrast the circumstances in which the auditor would choose not to test controls with those in which he or she would perform tests of controls.

Demand for Audit and Assurance Services

Auditors Legal Environment

Audit Quality and Ethics

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Documentation

Materiality and Risk

Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Completing Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling

Audit of Transaction Cycles and Financial Statement Balances I

Audit of Transaction Cycles and Financial Statement Balances II

Completing the Audit

Audit Reporting

Other Auditing and Assurance Engagements

Filters