Question 1

If significant fraud risk exists, the auditors should _______.

Accepted Answer

A) respond by including elements of predictability in their audit plan 
B) respond by including elements of unpredictability in their audit plan 
C) plan to place greater reliance on the internal audit function 
D) be able to place greater reliance on management assertions 
A) respond by including elements of predictability in their audit plan 
B) respond by including elements of unpredictability in their audit plan 
C) plan to place greater reliance on the internal audit function 
D) be able to place greater reliance on management assertions

Question 2

Auditors will have more confidence in internal controls and audit evidence generated internally _______.

Accepted Answer

A) with a client that maintains an effective control environment 
B) with a client that maintains a poor control environment 
C) if the controls are centralized and controlled by one department 
D) if the audit evidence is received from one department of function only 
A) with a client that maintains an effective control environment 
B) with a client that maintains a poor control environment 
C) if the controls are centralized and controlled by one department 
D) if the audit evidence is received from one department of function only

Question 3

Roll-forward procedures relate to _______.

Accepted Answer

A) auditors updating their audit findings from an interim period through year-end 
B) auditors updating their audit findings from year-end through an interim period 
C) any substantive procedure performed after the balance sheet date 
D) any procedure carried out by the auditor to update their audit findings through the date of the audit report 
A) auditors updating their audit findings from an interim period through year-end 
B) auditors updating their audit findings from year-end through an interim period 
C) any substantive procedure performed after the balance sheet date 
D) any procedure carried out by the auditor to update their audit findings through the date of the audit report

Question 4

The amount of estimation uncertainty is affected by _______.

Accepted Answer

A) the nature of the accounting estimate 
B) the subjectivity of the assumptions used to make the estimate 
C) the extent to which a generally accepted method or model is available to aid in developing the estimate 
D) All of these answer choices are correct. 
A) the nature of the accounting estimate 
B) the subjectivity of the assumptions used to make the estimate 
C) the extent to which a generally accepted method or model is available to aid in developing the estimate 
D) All of these answer choices are correct.

Question 5

Once the final outcome of a transaction or event occurs _______.

Accepted Answer

A) it is expected that there will be a difference between the outcome of the accounting estimate and the amount originally recognized or disclosed in the financial statements 
B) it is expected that there will be no difference between the outcome of the accounting estimate and the amount originally recognized or disclosed in the financial statements 
C) the amount should be adjusted to match the estimated balance 
D) the auditor should not concern themselves with investigating abnormally large variances 
A) it is expected that there will be a difference between the outcome of the accounting estimate and the amount originally recognized or disclosed in the financial statements 
B) it is expected that there will be no difference between the outcome of the accounting estimate and the amount originally recognized or disclosed in the financial statements 
C) the amount should be adjusted to match the estimated balance 
D) the auditor should not concern themselves with investigating abnormally large variances

Question 6

If the assessed risk of material misstatement for an assertion is high, auditors need to gather more persuasive audit evidence.

Accepted Answer

A) True 
 B)False

Question 7

When evidence is collected at an interim date, substantive tests are more effective.

Accepted Answer

A) True 
 B)False

Question 8

When the entity's control environment has been assessed as effective, limited roll-forward procedures such as substantive analytical procedures are necessary.

Accepted Answer

A) True 
 B)False

Question 9

An example of possible management bias would be _______.

Accepted Answer

A) changes in the method of making the accounting estimate that are based on subjective assumptions 
B) using management's own assumptions for fair value estimates when they are inconsistent with readily observable market assumptions 
C) selecting or developing significant assumptions that yield an estimate more favorable for management's objectives 
D) All of these answer choices are correct. 
A) changes in the method of making the accounting estimate that are based on subjective assumptions 
B) using management's own assumptions for fair value estimates when they are inconsistent with readily observable market assumptions 
C) selecting or developing significant assumptions that yield an estimate more favorable for management's objectives 
D) All of these answer choices are correct.

Question 10

A reliance on controls strategy would involve _______.

Accepted Answer

A) the auditor performing primarily tests of controls 
B) the auditor performing primarily substantive procedures 
C) obtaining written assertions and representations from management 
D) the external auditor relying on the internal audit function 
A) the auditor performing primarily tests of controls 
B) the auditor performing primarily substantive procedures 
C) obtaining written assertions and representations from management 
D) the external auditor relying on the internal audit function

Question 11

Before auditors can use substantive analytical procedures, _______.

Accepted Answer

A) they must be ready to issue the preliminary audit opinion 
B) they must consider the availability and reliability of data to be used to develop their expectation 
C) they must consider the availability and reliability of data to be used to develop their audit opinion 
D) they must be approved by the internal auditors beforehand 
A) they must be ready to issue the preliminary audit opinion 
B) they must consider the availability and reliability of data to be used to develop their expectation 
C) they must consider the availability and reliability of data to be used to develop their audit opinion 
D) they must be approved by the internal auditors beforehand

Question 12

What are substantive procedures?

Accepted Answer

A) Audit procedures designed to detect material misstatements at the assertion level 
B) Audit procedures designed to aid testing controls 
C) Audit procedures that are applied when internal controls are not functioning as designed 
D) Audit procedures applied to gather appropriate relevant and reliable data 
A) Audit procedures designed to detect material misstatements at the assertion level 
B) Audit procedures designed to aid testing controls 
C) Audit procedures that are applied when internal controls are not functioning as designed 
D) Audit procedures applied to gather appropriate relevant and reliable data

Question 13

A misstatement could occur with _______.

Accepted Answer

A) an account balance 
B) a transaction 
C) a classification 
D) All of these answer choices are correct 
A) an account balance 
B) a transaction 
C) a classification 
D) All of these answer choices are correct

Question 14

When internal controls are strong and the auditor is able to obtain relevant and reliable data, he or she usually considers using audit data analytics (ADA) as a _______.

Accepted Answer

The answer of When internal controls are strong and the...

Question 15

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 state that auditors _______.

Accepted Answer

A) are required to perform substantive procedures for all relevant assertions that have been identified after issuance of the audit opinion 
B) are required to perform substantive procedures for all relevant assertions that have been identified during the risk assessment phase 
C) are required to perform tests of controls for all relevant assertions that have been identified during the risk assessment phase 
D) should notify the client immediately of a change in fee structure pertaining to the audit 
A) are required to perform substantive procedures for all relevant assertions that have been identified after issuance of the audit opinion 
B) are required to perform substantive procedures for all relevant assertions that have been identified during the risk assessment phase 
C) are required to perform tests of controls for all relevant assertions that have been identified during the risk assessment phase 
D) should notify the client immediately of a change in fee structure pertaining to the audit

Question 16

Some substantive procedures can only be performed at year-end _______.

Accepted Answer

A) due to management not allowing the auditors access beforehand 
B) because there have been no transactions occurring in these accounts during the year 
C) due to the nature of the assertion or the timing of the transactions 
D) once the internal audit function has completed its preliminary testing of the account 
A) due to management not allowing the auditors access beforehand 
B) because there have been no transactions occurring in these accounts during the year 
C) due to the nature of the assertion or the timing of the transactions 
D) once the internal audit function has completed its preliminary testing of the account

Question 17

When the audit population can efficiently be tested using traditional audit tests, the auditor is more likely to use _______.

Accepted Answer

A) audit sampling 
B) audit data analytics 
C) substantive procedures 
D) none of the above is correct 
A) audit sampling 
B) audit data analytics 
C) substantive procedures 
D) none of the above is correct

Question 18

The more judgment that is involved in conducting the substantive procedures and evaluating the results, the less documentation is needed.

Accepted Answer

A) True 
 B)False

Question 19

If testing the operating effectiveness of controls surrounding an estimate alone does not provide sufficient appropriate audit evidence, _______.

Accepted Answer

A) the auditors should consider increasing the risk and cost associated with the audit 
B) auditors also conduct tests of internal controls pertaining to the reasonableness of accounting estimates 
C) auditors also conduct substantive procedures on the reasonableness of accounting estimates 
D) the auditors should disregard testing of controls completely, and instead focus on substantive testing 
A) the auditors should consider increasing the risk and cost associated with the audit 
B) auditors also conduct tests of internal controls pertaining to the reasonableness of accounting estimates 
C) auditors also conduct substantive procedures on the reasonableness of accounting estimates 
D) the auditors should disregard testing of controls completely, and instead focus on substantive testing

Question 20

A misstatement is defined as _______.

Accepted Answer

A) the auditor incorrectly billing the client for work that was not performed 
B) a difference between what is reported in the client prepared financial statements with what is required for the item to be presented fairly in accordance with the applicable financial reporting framework 
C) there being no 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 
D) variances that only occur in the interim financial statements 
A) the auditor incorrectly billing the client for work that was not performed 
B) a difference between what is reported in the client prepared financial statements with what is required for the item to be presented fairly in accordance with the applicable financial reporting framework 
C) there being no 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 
D) variances that only occur in the interim financial statements

If significant fraud risk exists, the auditors should _______.

Auditors will have more confidence in internal controls and audit evidence generated internally _______.

Roll-forward procedures relate to _______.

The amount of estimation uncertainty is affected by _______.

Once the final outcome of a transaction or event occurs _______.

If the assessed risk of material misstatement for an assertion is high, auditors need to gather more persuasive audit evidence.

When evidence is collected at an interim date, substantive tests are more effective.

When the entity's control environment has been assessed as effective, limited roll-forward procedures such as substantive analytical procedures are necessary.

An example of possible management bias would be _______.

A reliance on controls strategy would involve _______.

Before auditors can use substantive analytical procedures, _______.

What are substantive procedures?

A misstatement could occur with _______.

When internal controls are strong and the auditor is able to obtain relevant and reliable data, he or she usually considers using audit data analytics (ADA) as a _______.

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 state that auditors _______.

Some substantive procedures can only be performed at year-end _______.

When the audit population can efficiently be tested using traditional audit tests, the auditor is more likely to use _______.

The more judgment that is involved in conducting the substantive procedures and evaluating the results, the less documentation is needed.

If testing the operating effectiveness of controls surrounding an estimate alone does not provide sufficient appropriate audit evidence, _______.

A misstatement is defined as _______.

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

If significant fraud risk exists, the auditors should _______.

Auditors will have more confidence in internal controls and audit evidence generated internally _______.

Roll-forward procedures relate to _______.

The amount of estimation uncertainty is affected by _______.

Once the final outcome of a transaction or event occurs _______.

If the assessed risk of material misstatement for an assertion is high, auditors need to gather more persuasive audit evidence.

When evidence is collected at an interim date, substantive tests are more effective.

When the entity's control environment has been assessed as effective, limited roll-forward procedures such as substantive analytical procedures are necessary.

An example of possible management bias would be _______.

A reliance on controls strategy would involve _______.

Before auditors can use substantive analytical procedures, _______.

What are substantive procedures?

A misstatement could occur with _______.

When internal controls are strong and the auditor is able to obtain relevant and reliable data, he or she usually considers using audit data analytics (ADA) as a _______.

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 state that auditors _______.

Some substantive procedures can only be performed at year-end _______.

When the audit population can efficiently be tested using traditional audit tests, the auditor is more likely to use _______.

The more judgment that is involved in conducting the substantive procedures and evaluating the results, the less documentation is needed.

If testing the operating effectiveness of controls surrounding an estimate alone does not provide sufficient appropriate audit evidence, _______.

A misstatement is defined as _______.

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