Question 1

Which of the following factors impact the effectiveness and efficiency of using a substantive analytical procedure to respond to risk?

Accepted Answer

A) Nature of the assertion 
B) Assessed risk of the material misstatement 
C) Control over the data 
D) Persuasiveness of the evidence 
A) Nature of the assertion 
B) Assessed risk of the material misstatement 
C) Control over the data 
D) Persuasiveness of the evidence A

Question 2

Finding an appropriate combination of audit procedures to minimize an engagement's audit risk _______.

Accepted Answer

A) can be challenging 
B) is generally fairly straightforward 
C) is the responsibility of the internal audit function 
D) is the responsibility of management 
A) can be challenging 
B) is generally fairly straightforward 
C) is the responsibility of the internal audit function 
D) is the responsibility of management A

Question 3

The auditor's tests supported by reliable and relevant data in electronic form make the choice of _______ an efficient approach.

Accepted Answer

Audit data analytics (ADA)

Question 4

A significant risk is _______.

Accepted Answer

A) a risk that the auditor should not attempt to address 
B) an identified and assessed risk of immaterial misstatement that, in the auditor's judgment, requires special audit consideration 
C) an identified and assessed risk of material misstatement that, in the auditor's judgment, requires special audit consideration 
D) a risk for which the auditor should immediately notify the SEC 
A) a risk that the auditor should not attempt to address 
B) an identified and assessed risk of immaterial misstatement that, in the auditor's judgment, requires special audit consideration 
C) an identified and assessed risk of material misstatement that, in the auditor's judgment, requires special audit consideration 
D) a risk for which the auditor should immediately notify the SEC

Question 5

The nature of an audit procedure refers to _______.

Accepted Answer

A) its purpose (test of controls or substantive procedure) and its type 
B) its extent (test of controls or substantive procedure) and its type 
C) its timing (test of controls or substantive procedure) and its type 
D) its timing (test of controls only) and its type 
A) its purpose (test of controls or substantive procedure) and its type 
B) its extent (test of controls or substantive procedure) and its type 
C) its timing (test of controls or substantive procedure) and its type 
D) its timing (test of controls only) and its type

Question 6

The extent of substantive procedures refers to _______.

Accepted Answer

A) how much testing will be performed outside of a class of transactions or account balance 
B) how much testing will be performed within a class of transactions or account balance 
C) the extent of the cost associated with performing a particular audit procedure 
D) the extent to which management agree with the procedures performed 
A) how much testing will be performed outside of a class of transactions or account balance 
B) how much testing will be performed within a class of transactions or account balance 
C) the extent of the cost associated with performing a particular audit procedure 
D) the extent to which management agree with the procedures performed

Question 7

AU-C 330 Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained and AS 2301 The Auditor's Responses to the Risks of Material Misstatement provide which of the following examples of responding to risk at the financial statement level?

Accepted Answer

A) Emphasize that audit team members should not attempt to maintain professional skepticism 
B) Assign less experienced staff to areas of higher risk of material misstatement 
C) Provide less supervision 
D) Include more elements of unpredictability in the selection of audit procedures 
A) Emphasize that audit team members should not attempt to maintain professional skepticism 
B) Assign less experienced staff to areas of higher risk of material misstatement 
C) Provide less supervision 
D) Include more elements of unpredictability in the selection of audit procedures

Question 8

Briefly discuss the two factors that affect the auditor's risk response at the financial statement level.

Accepted Answer

Risk response at the financial

Question 9

Accounting estimates, by their nature _______.

Accepted Answer

A) involve objective decision making on the part of management 
B) involve subjective decision making on the part of management 
C) should cause little or no variance at the end of the period 
D) should not be estimated by management, but rather by the auditor at the end of the period 
A) involve objective decision making on the part of management 
B) involve subjective decision making on the part of management 
C) should cause little or no variance at the end of the period 
D) should not be estimated by management, but rather by the auditor at the end of the period

Question 10

Substantive tests of details to test the _______ assertion for sales transactions are performed at year-end.

Accepted Answer

The answer of Substantive tests of details to test the...

Question 11

Assertions about account balances at year-end typically include _______.

Accepted Answer

A) existence, completeness, and allocation 
B) existence, completeness, and rights and obligations 
C) existence, occurrence, and cutoff 
D) accuracy, valuation, and occurrence 
A) existence, completeness, and allocation 
B) existence, completeness, and rights and obligations 
C) existence, occurrence, and cutoff 
D) accuracy, valuation, and occurrence

Question 12

One method of selecting specific items from a population when testing for overstatement is to _______.

Accepted Answer

A) select items that are over a certain dollar amount 
B) select items that are identical dollar amounts 
C) allow the internal auditors to select them 
D) allow management to select them 
A) select items that are over a certain dollar amount 
B) select items that are identical dollar amounts 
C) allow the internal auditors to select them 
D) allow management to select them

Question 13

The use of analytical procedures _______.

Accepted Answer

A) is optional during risk assessment 
B) is prohibited during risk assessment 
C) is required during risk assessment 
D) is most effective as part of the testing of the system of internal control 
A) is optional during risk assessment 
B) is prohibited during risk assessment 
C) is required during risk assessment 
D) is most effective as part of the testing of the system of internal control

Question 14

An auditor mailing positive confirmations is an example of _______.

Accepted Answer

A) a compilation engagement 
B) a review engagement 
C) a substantive procedure 
D) a test of internal control 
A) a compilation engagement 
B) a review engagement 
C) a substantive procedure 
D) a test of internal control

Question 15

The term "substantive" comes from _______.

Accepted Answer

A) "substantiate," which means auditors gather evidence to verify the transactions, account balances, and disclosures provided by management in the financial statements 
B) "insubstantial," which means auditors gather evidence to support the transactions, account balances, and disclosures provided by management in the financial statements 
C) "insubstantial," which means auditors gather evidence to support only insubstantial transactions, account balances, and disclosures provided by management in the financial statements 
D) the fact that the audit report is designed to assist stockholders with substantial stock holdings in the client 
A) "substantiate," which means auditors gather evidence to verify the transactions, account balances, and disclosures provided by management in the financial statements 
B) "insubstantial," which means auditors gather evidence to support the transactions, account balances, and disclosures provided by management in the financial statements 
C) "insubstantial," which means auditors gather evidence to support only insubstantial transactions, account balances, and disclosures provided by management in the financial statements 
D) the fact that the audit report is designed to assist stockholders with substantial stock holdings in the client

Question 16

When the risk of material misstatement for an assertion is high, the auditors_______.

Accepted Answer

A) must gather less reliable and persuasive evidence 
B) must gather more reliable and persuasive evidence 
C) should not attempt to audit this assertion 
D) should consider allowing the internal audit function to audit this assertion 
A) must gather less reliable and persuasive evidence 
B) must gather more reliable and persuasive evidence 
C) should not attempt to audit this assertion 
D) should consider allowing the internal audit function to audit this assertion

Question 17

In general, accounting estimates with a high degree of estimation _______.

Accepted Answer

A) uncertainty pose a greater risk of material misstatement 
B) uncertainty pose a smaller risk of material misstatement 
C) uncertainty pose no risk of material misstatement 
D) serve to lower inherent risk 
A) uncertainty pose a greater risk of material misstatement 
B) uncertainty pose a smaller risk of material misstatement 
C) uncertainty pose no risk of material misstatement 
D) serve to lower inherent risk

Question 18

The amount of estimation uncertainty is affected by the nature of which of the following?

Accepted Answer

A) Accounting estimate 
B) Auditing estimate 
C) Management bias 
D) Accounting disclosure 
A) Accounting estimate 
B) Auditing estimate 
C) Management bias 
D) Accounting disclosure

Question 19

AU-C Section 450 Evaluation of Misstatements Identiﬁed During the Audit describes misstatements as _______.

Accepted Answer

A) Factual misstatements 
B) Judgmental misstatements 
C) Projected misstatements 
D) All of these answer choices are correct. 
A) Factual misstatements 
B) Judgmental misstatements 
C) Projected misstatements 
D) All of these answer choices are correct.

Question 20

An audit strategy is developed _______.

Accepted Answer

A) in response to the risk assessment for each significant account and assertion using the formula for audit risk 
B) in response to the risk assessment for each insignificant account and assertion using the formula for audit risk 
C) by the auditor, but must be reviewed and approved by management 
D) by the auditor, but must be reviewed and approved by the internal audit function 
A) in response to the risk assessment for each significant account and assertion using the formula for audit risk 
B) in response to the risk assessment for each insignificant account and assertion using the formula for audit risk 
C) by the auditor, but must be reviewed and approved by management 
D) by the auditor, but must be reviewed and approved by the internal audit function

Which of the following factors impact the effectiveness and efficiency of using a substantive analytical procedure to respond to risk?

Finding an appropriate combination of audit procedures to minimize an engagement's audit risk _______.

The auditor's tests supported by reliable and relevant data in electronic form make the choice of _______ an efficient approach.

A significant risk is _______.

The nature of an audit procedure refers to _______.

The extent of substantive procedures refers to _______.

AU-C 330 Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained and AS 2301 The Auditor's Responses to the Risks of Material Misstatement provide which of the following examples of responding to risk at the financial statement level?

Briefly discuss the two factors that affect the auditor's risk response at the financial statement level.

Accounting estimates, by their nature _______.

Substantive tests of details to test the _______ assertion for sales transactions are performed at year-end.

Assertions about account balances at year-end typically include _______.

One method of selecting specific items from a population when testing for overstatement is to _______.

The use of analytical procedures _______.

An auditor mailing positive confirmations is an example of _______.

The term "substantive" comes from _______.

When the risk of material misstatement for an assertion is high, the auditors_______.

In general, accounting estimates with a high degree of estimation _______.

The amount of estimation uncertainty is affected by the nature of which of the following?

AU-C Section 450 Evaluation of Misstatements Identiﬁed During the Audit describes misstatements as _______.

An audit strategy is developed _______.

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 Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

Exam 9: Risk Responseperforming Substantive Procedures

Which of the following factors impact the effectiveness and efficiency of using a substantive analytical procedure to respond to risk?

Finding an appropriate combination of audit procedures to minimize an engagement's audit risk _______.

The auditor's tests supported by reliable and relevant data in electronic form make the choice of _______ an efficient approach.

A significant risk is _______.

The nature of an audit procedure refers to _______.

The extent of substantive procedures refers to _______.

AU-C 330 Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained and AS 2301 The Auditor's Responses to the Risks of Material Misstatement provide which of the following examples of responding to risk at the financial statement level?

Briefly discuss the two factors that affect the auditor's risk response at the financial statement level.

Accounting estimates, by their nature _______.

Substantive tests of details to test the _______ assertion for sales transactions are performed at year-end.

Assertions about account balances at year-end typically include _______.

One method of selecting specific items from a population when testing for overstatement is to _______.

The use of analytical procedures _______.

An auditor mailing positive confirmations is an example of _______.

The term "substantive" comes from _______.

When the risk of material misstatement for an assertion is high, the auditors_______.

In general, accounting estimates with a high degree of estimation _______.

The amount of estimation uncertainty is affected by the nature of which of the following?

AU-C Section 450 Evaluation of Misstatements Identiﬁed During the Audit describes misstatements as _______.

An audit strategy is developed _______.

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 Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters