Question 1

Which of the following are possible indicators of fraud in a company?

Accepted Answer

A) A high turnover of key employees 
B) Overly dominant management 
C) Poor compensation practices 
D) A simplified business structure 
A) A high turnover of key employees 
B) Overly dominant management 
C) Poor compensation practices 
D) A simplified business structure

Question 2

Which overview defines audit strategy?

Accepted Answer

A) The determination of the amount of time to spend testing the client's internal controls and conducting detailed testing of transactions and account balances. 
B) Gaining an understanding of the client, including identifying risk factors. 
C) Performing tests of controls and detailed substantive testing of transactions and accounts. 
D) Evaluation of results of the detailed testing in light of the auditor's understanding of the client and forming an opinion on the fair presentation of the client's financial statements. 
A) The determination of the amount of time to spend testing the client's internal controls and conducting detailed testing of transactions and account balances. 
B) Gaining an understanding of the client, including identifying risk factors. 
C) Performing tests of controls and detailed substantive testing of transactions and accounts. 
D) Evaluation of results of the detailed testing in light of the auditor's understanding of the client and forming an opinion on the fair presentation of the client's financial statements.

Question 3

The auditor's opinion is expressed in the _______.

Accepted Answer

A) audit report 
B) financial statement footnotes 
C) retained earnings statement 
D) risk response phase documentation 
A) audit report 
B) financial statement footnotes 
C) retained earnings statement 
D) risk response phase documentation

Question 4

How are components of the audit risk model rearranged to solve for detection risk?

Accepted Answer

A) DR = AR ÷ RMM 
B) DR = AR + RMM 
C) DR = AR - RMM 
D) DR = AR x RMM 
A) DR = AR ÷ RMM 
B) DR = AR + RMM 
C) DR = AR - RMM 
D) DR = AR x RMM

Question 5

In an audit strategy, the first step is to identify ________ risks during the ________ phase.

Accepted Answer

A) inherent; risk assessment 
B) detection; risk response 
C) significant; reporting 
D) control; risk response 
A) inherent; risk assessment 
B) detection; risk response 
C) significant; reporting 
D) control; risk response

Question 6

The main purpose of an engagement letter is to _______.

Accepted Answer

A) avoid any misunderstandings between the auditor and the client 
B) advertise the additional services that the CPA firm provides 
C) present the conclusion of the audit 
D) request any and all information that the CPA firm might need to complete the audit 
A) avoid any misunderstandings between the auditor and the client 
B) advertise the additional services that the CPA firm provides 
C) present the conclusion of the audit 
D) request any and all information that the CPA firm might need to complete the audit

Question 7

The purpose of Alert No.10 from the PCAOB is to _______.

Accepted Answer

A) remind auditors of the requirement to appropriately apply professional skepticism throughout the audit, as well as various judgments about certain situations 
B) present the new auditing standard 
C) present a listing of which registered accounting firms failed to exercise professional skepticism 
D) present a detailed report listing the client companies that need more scrutinizing by audit firms regarding fraud red flags 
A) remind auditors of the requirement to appropriately apply professional skepticism throughout the audit, as well as various judgments about certain situations 
B) present the new auditing standard 
C) present a listing of which registered accounting firms failed to exercise professional skepticism 
D) present a detailed report listing the client companies that need more scrutinizing by audit firms regarding fraud red flags

Which of the following are possible indicators of fraud in a company?

Which overview defines audit strategy?

The auditor's opinion is expressed in the _______.

How are components of the audit risk model rearranged to solve for detection risk?

In an audit strategy, the first step is to identify risks during the phase.

The main purpose of an engagement letter is to _______.

The purpose of Alert No.10 from the PCAOB is to _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

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 the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

Exam 3: Risk Assessment Part Iaudit Risk and Audit Strategy

Which of the following are possible indicators of fraud in a company?

Which overview defines audit strategy?

The auditor's opinion is expressed in the _______.

How are components of the audit risk model rearranged to solve for detection risk?

In an audit strategy, the first step is to identify ________ risks during the ________ phase.

The main purpose of an engagement letter is to _______.

The purpose of Alert No.10 from the PCAOB is to _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

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 the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

In an audit strategy, the first step is to identify risks during the phase.