Question 1

A factor that auditors consider when determining the type of substantive procedure to use is _______.

Accepted Answer

A) the assessed level of risk for the assertion 
B) the assessed level of risk for the control 
C) the cost of the procedure, and if management will be able to afford it 
D) the recommendations of management 
A) the assessed level of risk for the assertion 
B) the assessed level of risk for the control 
C) the cost of the procedure, and if management will be able to afford it 
D) the recommendations of management

Question 2

Auditors performing audit procedures related to accounts, assertions, or disclosures that they normally would not test because they are immaterial or considered low risk is an example of an _______.

Accepted Answer

element of

Question 3

Every audit will involve _______.

Accepted Answer

A) conflicts with management pertaining to estimates 
B) relying on the internal audit function for production of evidentiary matter 
C) some amount of substantive testing because audit standards require it for relevant assertions 
D) no substantive testing because audit standards require it not to be conducted for relevant assertions 
A) conflicts with management pertaining to estimates 
B) relying on the internal audit function for production of evidentiary matter 
C) some amount of substantive testing because audit standards require it for relevant assertions 
D) no substantive testing because audit standards require it not to be conducted for relevant assertions

Question 4

Determining fair value of a transaction or financial statement item for inclusion in the financial statements is a type of accounting estimate.

Accepted Answer

A) True 
 B)False

Question 5

A client currently being audited has an inventory with a historical cost of $1,450,000 and an NRV (net realizable value) of $1,200,000.What is the correct value of the inventory, and why?

Accepted Answer

The correct value of the inventory based

Question 6

An audit strategy can take _______.

Accepted Answer

A) a reliance on procedures approach, a substantive approach, or a combination of both 
B) a reliance on controls approach, a substantive approach, or a combination of both 
C) neither a reliance on controls approach, nor a substantive approach 
D) an approach whereby only internal control is audited 
A) a reliance on procedures approach, a substantive approach, or a combination of both 
B) a reliance on controls approach, a substantive approach, or a combination of both 
C) neither a reliance on controls approach, nor a substantive approach 
D) an approach whereby only internal control is audited

Question 7

In general, an auditor is more likely to use audit data analytics (ADA) when which of the following conditions exist?

Accepted Answer

A) Evidence to support the audit test is available in electronic form. 
B) Relevant data is reliable and internal controls over the reliability of data are strong. 
C) Relevant data is clean or can be cleaned up easily. 
D) All of these answer choices are correct. 
A) Evidence to support the audit test is available in electronic form. 
B) Relevant data is reliable and internal controls over the reliability of data are strong. 
C) Relevant data is clean or can be cleaned up easily. 
D) All of these answer choices are correct.

Question 8

A dual-purpose test _______.

Accepted Answer

A) involves the auditors designing a test of controls and a substantive test of details to be performed at the same time on different transactions 
B) involves the auditors designing a test of controls and a substantive test of details to be performed at the same time on the same transaction 
C) involves satisfying informational requests from management and the client's legal counsel simultaneously 
D) involves the auditor being able to bill the client for two tests when only one was performed 
A) involves the auditors designing a test of controls and a substantive test of details to be performed at the same time on different transactions 
B) involves the auditors designing a test of controls and a substantive test of details to be performed at the same time on the same transaction 
C) involves satisfying informational requests from management and the client's legal counsel simultaneously 
D) involves the auditor being able to bill the client for two tests when only one was performed

Question 9

If the control environment is assessed to be weak, _______.

Accepted Answer

A) auditors may respond by altering the audit plan to include more audit procedures and expanding the scope of the audit to include more of the client's locations 
B) auditors may respond by altering the audit plan to include less audit procedures and expanding the scope of the audit to include more of the client's locations 
C) the auditor will likely consider withdrawing from the engagement 
D) the auditor will likely be able to perform the audit at a lower cost 
A) auditors may respond by altering the audit plan to include more audit procedures and expanding the scope of the audit to include more of the client's locations 
B) auditors may respond by altering the audit plan to include less audit procedures and expanding the scope of the audit to include more of the client's locations 
C) the auditor will likely consider withdrawing from the engagement 
D) the auditor will likely be able to perform the audit at a lower cost

Question 10

Examples of analytical procedures include _______.

Accepted Answer

A) ratio analysis 
B) trend analysis 
C) complex statistical techniques 
D) All of these answer choices are correct. 
A) ratio analysis 
B) trend analysis 
C) complex statistical techniques 
D) All of these answer choices are correct.

Question 11

Auditors will assess the risk of fraud by considering _______.

Accepted Answer

A) fraud risk factors that may not be present, such as pressure and opportunities for management to commit fraud 
B) fraud risk factors that may be present, such as pressure and opportunities for management to commit fraud 
C) fraud risk factors that may be present, such as a lack of pressure and opportunities for management to commit fraud 
D) management's opinion and statements on whether fraud is occurring or not 
A) fraud risk factors that may not be present, such as pressure and opportunities for management to commit fraud 
B) fraud risk factors that may be present, such as pressure and opportunities for management to commit fraud 
C) fraud risk factors that may be present, such as a lack of pressure and opportunities for management to commit fraud 
D) management's opinion and statements on whether fraud is occurring or not

Question 12

When auditors are performing substantive procedures and identify misstatements they did not expect, they _______.

Accepted Answer

A) reconsider their audit strategy and audit plan, and determine if the nature, timing, or extent of internal control testing needs to be modified 
B) reconsider their audit strategy and audit plan, and determine if the nature, timing, or extent of substantive procedures need to be modified 
C) should seek to obtain written representations from management as to the accuracy of the balances in question 
D) should consider withdrawing from the engagement 
A) reconsider their audit strategy and audit plan, and determine if the nature, timing, or extent of internal control testing needs to be modified 
B) reconsider their audit strategy and audit plan, and determine if the nature, timing, or extent of substantive procedures need to be modified 
C) should seek to obtain written representations from management as to the accuracy of the balances in question 
D) should consider withdrawing from the engagement

Question 13

The difference between what is reported in the client prepared financial statements and what is required for the item to be presented fairly in accordance with the applicable financial reporting framework is called _______.

Accepted Answer

A) misstatement 
B) projected estimate 
C) auditing misappropriation 
D) accumulated inaccuracy 
A) misstatement 
B) projected estimate 
C) auditing misappropriation 
D) accumulated inaccuracy

Question 14

Examples of substantive procedures performed to test the reasonableness of accounting estimates include:

Accepted Answer

A) Inquiry about the method of measurement 
B) Inquiry about assumptions used by management 
C) Recalculate the accounting estimate 
D) All of these answer choices are correct 
A) Inquiry about the method of measurement 
B) Inquiry about assumptions used by management 
C) Recalculate the accounting estimate 
D) All of these answer choices are correct

Question 15

Briefly discuss and explain the relationship between the timing of audit procedures and the risk of material misstatement.

Accepted Answer

For assertions that have a lower risk of

Question 16

After auditors have assessed control risk, _______.

Accepted Answer

A) they are in a good position to evaluate the risk of fraud 
B) the audit is ready to be finalized and the audit opinion issued 
C) the findings should be submitted to management for review and approval 
D) the findings should be referred to the internal audit function for investigation 
A) they are in a good position to evaluate the risk of fraud 
B) the audit is ready to be finalized and the audit opinion issued 
C) the findings should be submitted to management for review and approval 
D) the findings should be referred to the internal audit function for investigation

Question 17

The most important factor when responding to assessed risks is _______.

Accepted Answer

A) consideration of the nature of the audit procedure 
B) consideration of the nature of the associated internal control 
C) the opinion of management regarding the assessed risk 
D) the opinion of the internal auditor regarding the assessed risk 
A) consideration of the nature of the audit procedure 
B) consideration of the nature of the associated internal control 
C) the opinion of management regarding the assessed risk 
D) the opinion of the internal auditor regarding the assessed risk

Question 18

Which of the following factors is used by the audit team to assess the risk of fraud?

Accepted Answer

A) Pressure and opportunities for management to commit forgery 
B) Inclusion of elements of unpredictability 
C) Misappropriation of assets 
D) Modification of planned audit procedures 
A) Pressure and opportunities for management to commit forgery 
B) Inclusion of elements of unpredictability 
C) Misappropriation of assets 
D) Modification of planned audit procedures

Question 19

If the risk of material misstatement is low and detection risk is high _______.

Accepted Answer

A) then a smaller sample size should be selected 
B) then a larger sample size should be selected 
C) then control risk should be assessed as high 
D) the auditor should consider outsourcing the audit work to the internal audit function 
A) then a smaller sample size should be selected 
B) then a larger sample size should be selected 
C) then control risk should be assessed as high 
D) the auditor should consider outsourcing the audit work to the internal audit function

Question 20

Statistical sampling _______.

Accepted Answer

A) should generally not be used for auditing engagements 
B) is typically less complicated than non-statistical sampling 
C) can be used in addition to testing specific items from a population 
D) can be used instead of testing specific items from a population 
A) should generally not be used for auditing engagements 
B) is typically less complicated than non-statistical sampling 
C) can be used in addition to testing specific items from a population 
D) can be used instead of testing specific items from a population

A factor that auditors consider when determining the type of substantive procedure to use is _______.

Auditors performing audit procedures related to accounts, assertions, or disclosures that they normally would not test because they are immaterial or considered low risk is an example of an _______.

Every audit will involve _______.

Determining fair value of a transaction or financial statement item for inclusion in the financial statements is a type of accounting estimate.

A client currently being audited has an inventory with a historical cost of $1,450,000 and an NRV (net realizable value) of $1,200,000.What is the correct value of the inventory, and why?

An audit strategy can take _______.

In general, an auditor is more likely to use audit data analytics (ADA) when which of the following conditions exist?

A dual-purpose test _______.

If the control environment is assessed to be weak, _______.

Examples of analytical procedures include _______.

Auditors will assess the risk of fraud by considering _______.

When auditors are performing substantive procedures and identify misstatements they did not expect, they _______.

The difference between what is reported in the client prepared financial statements and what is required for the item to be presented fairly in accordance with the applicable financial reporting framework is called _______.

Examples of substantive procedures performed to test the reasonableness of accounting estimates include:

Briefly discuss and explain the relationship between the timing of audit procedures and the risk of material misstatement.

After auditors have assessed control risk, _______.

The most important factor when responding to assessed risks is _______.

Which of the following factors is used by the audit team to assess the risk of fraud?

If the risk of material misstatement is low and detection risk is high _______.

Statistical sampling _______.

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

A factor that auditors consider when determining the type of substantive procedure to use is _______.

Auditors performing audit procedures related to accounts, assertions, or disclosures that they normally would not test because they are immaterial or considered low risk is an example of an _______.

Every audit will involve _______.

Determining fair value of a transaction or financial statement item for inclusion in the financial statements is a type of accounting estimate.

A client currently being audited has an inventory with a historical cost of $1,450,000 and an NRV (net realizable value) of $1,200,000.What is the correct value of the inventory, and why?

An audit strategy can take _______.

In general, an auditor is more likely to use audit data analytics (ADA) when which of the following conditions exist?

A dual-purpose test _______.

If the control environment is assessed to be weak, _______.

Examples of analytical procedures include _______.

Auditors will assess the risk of fraud by considering _______.

When auditors are performing substantive procedures and identify misstatements they did not expect, they _______.

The difference between what is reported in the client prepared financial statements and what is required for the item to be presented fairly in accordance with the applicable financial reporting framework is called _______.

Examples of substantive procedures performed to test the reasonableness of accounting estimates include:

Briefly discuss and explain the relationship between the timing of audit procedures and the risk of material misstatement.

After auditors have assessed control risk, _______.

The most important factor when responding to assessed risks is _______.

Which of the following factors is used by the audit team to assess the risk of fraud?

If the risk of material misstatement is low and detection risk is high _______.

Statistical sampling _______.

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