Question 1

The cutoff assertion for sales means _______.

Accepted Answer

A) that transactions have been recorded in the proper accounting period 
B) that the auditor should check to make sure sales are being shipped to the correct client customers 
C) that transactions are being recorded in the correct accounts 
D) that sales should be limited to certain clients who may not have the ability to pay 
A) that transactions have been recorded in the proper accounting period 
B) that the auditor should check to make sure sales are being shipped to the correct client customers 
C) that transactions are being recorded in the correct accounts 
D) that sales should be limited to certain clients who may not have the ability to pay

Question 2

Two things that auditors do with misstatements during the audit are _______.

Accepted Answer

A) documenting and accumulating them 
B) documenting and referring them to the internal auditors 
C) documenting and referring them to senior management 
D) accumulating and immediately correcting them 
A) documenting and accumulating them 
B) documenting and referring them to the internal auditors 
C) documenting and referring them to senior management 
D) accumulating and immediately correcting them

Question 3

Auditors can use statistical audit sampling _______.

Accepted Answer

A) to determine which clients to accept 
B) to select a sample of items to test 
C) as a means of testing the system of internal control 
D) to determine which accounts should not be audited 
A) to determine which clients to accept 
B) to select a sample of items to test 
C) as a means of testing the system of internal control 
D) to determine which accounts should not be audited

Question 4

The objective of auditors is to obtain _______.

Accepted Answer

A) sufficient appropriate audit evidence regarding the assessed risks of immaterial misstatement 
B) insufficient appropriate audit evidence regarding the assessed risks of material misstatement 
C) sufficient appropriate audit evidence regarding the assessed risks of material misstatement 
D) sufficient appropriate audit evidence from internal control only regarding the assessed risks of material misstatement 
A) sufficient appropriate audit evidence regarding the assessed risks of immaterial misstatement 
B) insufficient appropriate audit evidence regarding the assessed risks of material misstatement 
C) sufficient appropriate audit evidence regarding the assessed risks of material misstatement 
D) sufficient appropriate audit evidence from internal control only regarding the assessed risks of material misstatement

Question 5

An effective control environment suggests that _______.

Accepted Answer

A) internal control risk should be assessed at the maximum 
B) management and those charged with the audit demonstrate a commitment to ethical values and strong internal control 
C) management and those charged with governance demonstrate a commitment to ethical values and strong internal control 
D) the system of internal control is ineffective 
A) internal control risk should be assessed at the maximum 
B) management and those charged with the audit demonstrate a commitment to ethical values and strong internal control 
C) management and those charged with governance demonstrate a commitment to ethical values and strong internal control 
D) the system of internal control is ineffective

Question 6

When internal controls are strong, _______.

Accepted Answer

A) the auditor should plan to conduct more substantive testing 
B) the auditor may be able to conduct less substantive testing 
C) there is no need to test the internal controls 
D) the auditor is ready to issue an unmodified opinion 
A) the auditor should plan to conduct more substantive testing 
B) the auditor may be able to conduct less substantive testing 
C) there is no need to test the internal controls 
D) the auditor is ready to issue an unmodified opinion

Question 7

Examples of initial procedures that an auditor may perform include _______.

Accepted Answer

A) trace beginning balances to working papers from the prior year's audit 
B) scan the transactions in the account for unusual items 
C) obtain a trial balance or other detailed report for the account 
D) All of these answer choices are correct. 
A) trace beginning balances to working papers from the prior year's audit 
B) scan the transactions in the account for unusual items 
C) obtain a trial balance or other detailed report for the account 
D) All of these answer choices are correct.

Question 8

For clients with multiple locations, the auditors_______.

Accepted Answer

A) could vary which locations are tested each year and the type of audit procedures that are performed at the different locations 
B) could vary which locations are tested each year and not change the type of audit procedures that are performed at the different locations 
C) could not vary which locations are tested each year, but instead vary the type of audit procedures that are performed at the different locations 
D) should always hire another auditor to check other locations, and not attempt to do this themselves 
A) could vary which locations are tested each year and the type of audit procedures that are performed at the different locations 
B) could vary which locations are tested each year and not change the type of audit procedures that are performed at the different locations 
C) could not vary which locations are tested each year, but instead vary the type of audit procedures that are performed at the different locations 
D) should always hire another auditor to check other locations, and not attempt to do this themselves

Question 9

In order to obtain more reliable evidence, _______.

Accepted Answer

A) the auditors should request the internal audit function generate it 
B) auditors must exercise professional skepticism and be prepared to modify the planned audit procedures as needed 
C) the auditors should request that management generate it 
D) auditors should only rely on internally generated evidence 
A) the auditors should request the internal audit function generate it 
B) auditors must exercise professional skepticism and be prepared to modify the planned audit procedures as needed 
C) the auditors should request that management generate it 
D) auditors should only rely on internally generated evidence

Question 10

If internal controls are strong, _______.

Accepted Answer

A) the auditor can usually assess control risk as low 
B) the auditor can usually assess control risk as high 
C) the auditor does not need to test the controls 
D) the auditor should allow the internal audit function to conduct any testing 
A) the auditor can usually assess control risk as low 
B) the auditor can usually assess control risk as high 
C) the auditor does not need to test the controls 
D) the auditor should allow the internal audit function to conduct any testing

Question 11

AU-C 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures states _______.

Accepted Answer

A) the objective of the auditor is to obtain sufficient appropriate evidence that accounting estimates are reasonable and disclosures are adequate 
B) the objective of the internal auditor is to obtain sufficient appropriate evidence that accounting estimates are reasonable and disclosures are adequate 
C) the objective of the auditor is to obtain sufficient appropriate evidence that accounting estimates are reasonable only 
D) the objective of the auditor is to obtain sufficient appropriate evidence that disclosures are adequate only 
A) the objective of the auditor is to obtain sufficient appropriate evidence that accounting estimates are reasonable and disclosures are adequate 
B) the objective of the internal auditor is to obtain sufficient appropriate evidence that accounting estimates are reasonable and disclosures are adequate 
C) the objective of the auditor is to obtain sufficient appropriate evidence that accounting estimates are reasonable only 
D) the objective of the auditor is to obtain sufficient appropriate evidence that disclosures are adequate only

Question 12

An accounting estimate is _______.

Accepted Answer

A) an exact monetary amount when a precise means of measurement is available 
B) an approximation of a monetary amount when a precise means of measurement is not available 
C) prohibited by GAAP and should be questioned by the auditor 
D) a figure that should be left to the external auditor to determine at the end of the year 
A) an exact monetary amount when a precise means of measurement is available 
B) an approximation of a monetary amount when a precise means of measurement is not available 
C) prohibited by GAAP and should be questioned by the auditor 
D) a figure that should be left to the external auditor to determine at the end of the year

Question 13

Which of the following procedures aim to provide sufficient appropriate audit evidence on which to base conclusions at year-end when substantive procedures were performed at an interim date?

Accepted Answer

A) Roll-forward procedures 
B) Analytical procedures 
C) Auditing procedures 
D) Interim procedures 
A) Roll-forward procedures 
B) Analytical procedures 
C) Auditing procedures 
D) Interim procedures

Question 14

In order to evaluate management's estimation process, _______.

Accepted Answer

A) auditors use the knowledge gained about the industry and the applicable financial reporting framework during risk assessment 
B) auditors use the knowledge gained about other industries and the applicable financial reporting framework during risk assessment 
C) auditors compare management estimates with other management estimates at other companies 
D) the auditors ask the internal audit function to review and come to a conclusion which can be included in the audit report 
A) auditors use the knowledge gained about the industry and the applicable financial reporting framework during risk assessment 
B) auditors use the knowledge gained about other industries and the applicable financial reporting framework during risk assessment 
C) auditors compare management estimates with other management estimates at other companies 
D) the auditors ask the internal audit function to review and come to a conclusion which can be included in the audit report

Question 15

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

Accepted Answer

A) the auditors should immediately consider withdrawal from the engagement 
B) the auditors should address this by changing the audit plan to include more audit procedures and expanding the scope of the audit to include more of the client's locations 
C) the auditors should plan to increase their reliance on the evidence generated by the system 
D) the auditors should plan to increase their reliance on the internal audit function 
A) the auditors should immediately consider withdrawal from the engagement 
B) the auditors should address this by changing the audit plan to include more audit procedures and expanding the scope of the audit to include more of the client's locations 
C) the auditors should plan to increase their reliance on the evidence generated by the system 
D) the auditors should plan to increase their reliance on the internal audit function

Question 16

Estimation uncertainty is defined as _______.

Accepted Answer

A) the susceptibility of an accounting estimate and related disclosures to be accurate 
B) the susceptibility of an accounting estimate and related disclosures due to an inherent lack of precision in its measurement 
C) the uncertainty surrounding the ultimate cost of the audit 
D) the uncertainty surrounding which staff members to assign to a particular audit 
A) the susceptibility of an accounting estimate and related disclosures to be accurate 
B) the susceptibility of an accounting estimate and related disclosures due to an inherent lack of precision in its measurement 
C) the uncertainty surrounding the ultimate cost of the audit 
D) the uncertainty surrounding which staff members to assign to a particular audit

Question 17

AU-C 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures states the objective of the auditor is to obtain sufficient appropriate evidence that _______.

Accepted Answer

A) the accounting estimates are reasonable 
B) accounting estimates are reasonable, but disclosures are not adequate 
C) accounting estimates are reasonable, and disclosures are adequate 
D) disclosures are adequate 
A) the accounting estimates are reasonable 
B) accounting estimates are reasonable, but disclosures are not adequate 
C) accounting estimates are reasonable, and disclosures are adequate 
D) disclosures are adequate

Question 18

The auditor is more likely to use audit sampling when _______.

Accepted Answer

A) professional standards expect the auditor to perform certain audit procedures 
B) evidence to support the audit test is not available in electronic form 
C) the audit population is relatively small and can efficiently be tested using traditional audit tests 
D) All of these answer choices are correct. 
A) professional standards expect the auditor to perform certain audit procedures 
B) evidence to support the audit test is not available in electronic form 
C) the audit population is relatively small and can efficiently be tested using traditional audit tests 
D) All of these answer choices are correct.

Question 19

Examples of substantive procedures include _______.

Accepted Answer

A) observation 
B) inquiry 
C) confirmation 
D) All of these answer choices are correct. 
A) observation 
B) inquiry 
C) confirmation 
D) All of these answer choices are correct.

Question 20

If the client has well-designed, implemented, and documented controls over the preparation of _______, then an appropriate risk response is required to test the operating effectiveness of the controls.

Accepted Answer

accounting

The cutoff assertion for sales means _______.

Two things that auditors do with misstatements during the audit are _______.

Auditors can use statistical audit sampling _______.

The objective of auditors is to obtain _______.

An effective control environment suggests that _______.

When internal controls are strong, _______.

Examples of initial procedures that an auditor may perform include _______.

For clients with multiple locations, the auditors_______.

In order to obtain more reliable evidence, _______.

If internal controls are strong, _______.

AU-C 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures states _______.

An accounting estimate is _______.

Which of the following procedures aim to provide sufficient appropriate audit evidence on which to base conclusions at year-end when substantive procedures were performed at an interim date?

In order to evaluate management's estimation process, _______.

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

Estimation uncertainty is defined as _______.

AU-C 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures states the objective of the auditor is to obtain sufficient appropriate evidence that _______.

The auditor is more likely to use audit sampling when _______.

Examples of substantive procedures include _______.

If the client has well-designed, implemented, and documented controls over the preparation of _______, then an appropriate risk response is required to test the operating effectiveness of the controls.

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

The cutoff assertion for sales means _______.

Two things that auditors do with misstatements during the audit are _______.

Auditors can use statistical audit sampling _______.

The objective of auditors is to obtain _______.

An effective control environment suggests that _______.

When internal controls are strong, _______.

Examples of initial procedures that an auditor may perform include _______.

For clients with multiple locations, the auditors_______.

In order to obtain more reliable evidence, _______.

If internal controls are strong, _______.

AU-C 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures states _______.

An accounting estimate is _______.

Which of the following procedures aim to provide sufficient appropriate audit evidence on which to base conclusions at year-end when substantive procedures were performed at an interim date?

In order to evaluate management's estimation process, _______.

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

Estimation uncertainty is defined as _______.

AU-C 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures states the objective of the auditor is to obtain sufficient appropriate evidence that _______.

The auditor is more likely to use audit sampling when _______.

Examples of substantive procedures include _______.

If the client has well-designed, implemented, and documented controls over the preparation of _______, then an appropriate risk response is required to test the operating effectiveness of the controls.

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