Question 1

Which three of the following categories focus on identifying the appropriate substantive tests for relevant assertions in the purchases process?

Accepted Answer

A) Tests of details of transactions 
B) Analytical procedures as a substantive test 
C) Data analytics 
D) Audit tests for electronic systems 
A) Tests of details of transactions 
B) Analytical procedures as a substantive test 
C) Data analytics 
D) Audit tests for electronic systems

Question 2

A Cash Disbursements Journal is a daily report showing checks written or electric funds transferred to vendors and amounts paid.

Accepted Answer

A) True 
 B)False

Question 3

Besides occurrence and completeness, _______ is the most common assertion in key purchasing cycle assertions.
[[ accuracy ]] | allocation | valuation | existence

Accepted Answer

Besides occurrence and complet

Question 4

Relevant assertions relating to purchases of materials or goods are _______.

Accepted Answer

A) occurrence, completeness, accuracy, cutoff, classification 
B) going concern, completeness, accuracy, cutoff, classification 
C) occurrence, completeness, accuracy, cutoff, verifiability 
D) occurrence, completeness, accuracy, comparability 
A) occurrence, completeness, accuracy, cutoff, classification 
B) going concern, completeness, accuracy, cutoff, classification 
C) occurrence, completeness, accuracy, cutoff, verifiability 
D) occurrence, completeness, accuracy, comparability

Question 5

The expenditure process is particularly prone to a risk of employee fraud through unauthorized disbursements of cash

Accepted Answer

A) True 
 B)False

Question 6

Purchasing goods and services and making payments are NOT considered core purchase transactions.

Accepted Answer

A) True 
 B)False

Question 7

Every business has _______.

Accepted Answer

A) different market forces that place differing demands on the company's cash flow 
B) identical market forces that place differing demands on the company's cash flow 
C) different market forces that place identical demands on the company's cash flow 
D) identical market forces that place similar demands on the company's cash flow 
A) different market forces that place differing demands on the company's cash flow 
B) identical market forces that place differing demands on the company's cash flow 
C) different market forces that place identical demands on the company's cash flow 
D) identical market forces that place similar demands on the company's cash flow

Question 8

The risk of misappropriation of assets and procurement fraud is particularly prevalent in the purchasing process.Contrast two different types of frauds commonly perpetrated in the purchases process.

Accepted Answer

Student answers will vary.
Procurement f

Question 9

Assume you are involved in an audit and your expectations regarding effective controls are not confirmed.In this situation, you will need to take all of the following steps, EXCEPT _______.

Accepted Answer

A) determining if the client has a compensating control 
B) evaluating the significance of the weaknesses 
C) communicating the control weaknesses to management and those charged with governance 
D) All of the answer choices are correct. 
A) determining if the client has a compensating control 
B) evaluating the significance of the weaknesses 
C) communicating the control weaknesses to management and those charged with governance 
D) All of the answer choices are correct.

Question 10

An entity's purchasing process consists of activities related to the acquisition of, and payment for, goods and services.

Accepted Answer

A) True 
 B)False

Question 11

The purchase cutoff test involves determining that purchase transactions occurring near the balance sheet date are recorded in the proper period.

Accepted Answer

A) True 
 B)False

Question 12

A shipping report is one of the important documents and records used in processing purchase adjustments in traditional or Evaluated Receipts Settlement (ERS) systems.

Accepted Answer

A) True 
 B)False

Question 13

If a client relies on information technology (IT) controls and the auditor plans to assess control risk as low for payroll assertions, the auditor will usually do all of the following, EXCEPT _______.

Accepted Answer

A) test the effectiveness of manual controls 
B) use computer-assisted audit techniques (CAATs) to evaluate the effectiveness of IT application controls 
C) test the effectiveness of manual procedures to follow up on exceptions 
D) All of the answer choices are correct. 
A) test the effectiveness of manual controls 
B) use computer-assisted audit techniques (CAATs) to evaluate the effectiveness of IT application controls 
C) test the effectiveness of manual procedures to follow up on exceptions 
D) All of the answer choices are correct.

Question 14

Why does the client prepare independent bank reconciliation?

Accepted Answer

A) To check for the completeness, existence, and valuation of cash balances 
B) To check accounts payable 
C) To record purchase returns and allowances 
D) To validate purchase returns 
A) To check for the completeness, existence, and valuation of cash balances 
B) To check accounts payable 
C) To record purchase returns and allowances 
D) To validate purchase returns

Question 15

The client should receive both a bank statement from the bank and a statement from vendors on a _______.

Accepted Answer

A) weekly basis 
B) quarterly basis 
C) monthly basis 
D) yearly basis 
A) weekly basis 
B) quarterly basis 
C) monthly basis 
D) yearly basis

Question 16

The accuracy of purchases can be verified by which of the following processes?

Accepted Answer

A) A computer starts with the population of daily vouchers and compares quantities with the underlying receiving report, compares prices to the underlying purchase order, and checks the mathematical accuracy of the voucher. 
B) A computer starts with the population of daily receiving reports and develops a one for one match with vouchers to ensure that each receiving report results in a voucher (the recording of a payable). 
C) A computer starts with the population of daily vouchers and compares the date on the voucher with the date on the underlying receiving report. 
D) Identifying what can go wrong (WCGW) from initiating the transaction to recording it in the general ledger. 
A) A computer starts with the population of daily vouchers and compares quantities with the underlying receiving report, compares prices to the underlying purchase order, and checks the mathematical accuracy of the voucher. 
B) A computer starts with the population of daily receiving reports and develops a one for one match with vouchers to ensure that each receiving report results in a voucher (the recording of a payable). 
C) A computer starts with the population of daily vouchers and compares the date on the voucher with the date on the underlying receiving report. 
D) Identifying what can go wrong (WCGW) from initiating the transaction to recording it in the general ledger.

Question 17

The transaction flow in a typical purchases process for a client purchasing goods includes approving purchases, shipping goods, recording purchases and recording accounts payable

Accepted Answer

A) True 
 B)False

Question 18

An approved vendor master file is a computer file containing pertinent information on vendors and suppliers that have been approved to purchase services from and make payments to.

Accepted Answer

A) True 
 B)False

Question 19

When testing the effectiveness of information technology (IT) general controls in payroll, the auditor may do any of the following, EXCEPT _______.

Accepted Answer

A) collect supporting evidence regarding employee awareness of IT security issues 
B) determine how program access is controlled and monitored 
C) pay attention to the effectiveness of password controls 
D) All of the answer choices are correct. 
A) collect supporting evidence regarding employee awareness of IT security issues 
B) determine how program access is controlled and monitored 
C) pay attention to the effectiveness of password controls 
D) All of the answer choices are correct.

Question 20

Which of the following risks are included in procurement fraud risks?

Accepted Answer

A) Kickbacks and bid rigging 
B) Account fraud risks 
C) Purchase fraud risks 
D) Purchase returns fraud risks 
A) Kickbacks and bid rigging 
B) Account fraud risks 
C) Purchase fraud risks 
D) Purchase returns fraud risks

Which three of the following categories focus on identifying the appropriate substantive tests for relevant assertions in the purchases process?

A Cash Disbursements Journal is a daily report showing checks written or electric funds transferred to vendors and amounts paid.

Besides occurrence and completeness, _______ is the most common assertion in key purchasing cycle assertions. [[ accuracy ]] | allocation | valuation | existence

Relevant assertions relating to purchases of materials or goods are _______.

The expenditure process is particularly prone to a risk of employee fraud through unauthorized disbursements of cash

Purchasing goods and services and making payments are NOT considered core purchase transactions.

Every business has _______.

The risk of misappropriation of assets and procurement fraud is particularly prevalent in the purchasing process.Contrast two different types of frauds commonly perpetrated in the purchases process.

Assume you are involved in an audit and your expectations regarding effective controls are not confirmed.In this situation, you will need to take all of the following steps, EXCEPT _______.

An entity's purchasing process consists of activities related to the acquisition of, and payment for, goods and services.

The purchase cutoff test involves determining that purchase transactions occurring near the balance sheet date are recorded in the proper period.

A shipping report is one of the important documents and records used in processing purchase adjustments in traditional or Evaluated Receipts Settlement (ERS) systems.

If a client relies on information technology (IT) controls and the auditor plans to assess control risk as low for payroll assertions, the auditor will usually do all of the following, EXCEPT _______.

Why does the client prepare independent bank reconciliation?

The client should receive both a bank statement from the bank and a statement from vendors on a _______.

The accuracy of purchases can be verified by which of the following processes?

The transaction flow in a typical purchases process for a client purchasing goods includes approving purchases, shipping goods, recording purchases and recording accounts payable

An approved vendor master file is a computer file containing pertinent information on vendors and suppliers that have been approved to purchase services from and make payments to.

When testing the effectiveness of information technology (IT) general controls in payroll, the auditor may do any of the following, EXCEPT _______.

Which of the following risks are included in procurement fraud risks?

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

Exam 12: Auditing the Purchases Cycle and Payroll Cycle

Which three of the following categories focus on identifying the appropriate substantive tests for relevant assertions in the purchases process?

A Cash Disbursements Journal is a daily report showing checks written or electric funds transferred to vendors and amounts paid.

Besides occurrence and completeness, _______ is the most common assertion in key purchasing cycle assertions. [[ accuracy ]] | allocation | valuation | existence

Relevant assertions relating to purchases of materials or goods are _______.

The expenditure process is particularly prone to a risk of employee fraud through unauthorized disbursements of cash

Purchasing goods and services and making payments are NOT considered core purchase transactions.

Every business has _______.

The risk of misappropriation of assets and procurement fraud is particularly prevalent in the purchasing process.Contrast two different types of frauds commonly perpetrated in the purchases process.

Assume you are involved in an audit and your expectations regarding effective controls are not confirmed.In this situation, you will need to take all of the following steps, EXCEPT _______.

An entity's purchasing process consists of activities related to the acquisition of, and payment for, goods and services.

The purchase cutoff test involves determining that purchase transactions occurring near the balance sheet date are recorded in the proper period.

A shipping report is one of the important documents and records used in processing purchase adjustments in traditional or Evaluated Receipts Settlement (ERS) systems.

If a client relies on information technology (IT) controls and the auditor plans to assess control risk as low for payroll assertions, the auditor will usually do all of the following, EXCEPT _______.

Why does the client prepare independent bank reconciliation?

The client should receive both a bank statement from the bank and a statement from vendors on a _______.

The accuracy of purchases can be verified by which of the following processes?

The transaction flow in a typical purchases process for a client purchasing goods includes approving purchases, shipping goods, recording purchases and recording accounts payable

An approved vendor master file is a computer file containing pertinent information on vendors and suppliers that have been approved to purchase services from and make payments to.

When testing the effectiveness of information technology (IT) general controls in payroll, the auditor may do any of the following, EXCEPT _______.

Which of the following risks are included in procurement fraud risks?

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters