Question 1

A disadvantage of the integrated test facility approach to computer assisted audit is:

Accepted Answer

A)  there is a risk that errors could be created in the client's data 
B)  it does not overcome the limitations of the use of test data 
C)  it is disruptive to the client. 
D)  all the above are limitations. 
A)  there is a risk that errors could be created in the client's data 
B)  it does not overcome the limitations of the use of test data 
C)  it is disruptive to the client. 
D)  all the above are limitations.

Question 2

Based on a study and evaluation completed at an interim date, the auditor concludes that no significant internal accounting control weaknesses exist. The records and procedures would most likely be tested again at year-end if:

Accepted Answer

A)  the internal accounting control system provides a basis for reliance in reducing the extent of substantive testing. 
B)  tests of controls were not performed by the internal auditor during the remaining period. 
C)  inquiries and observations lead the auditor to believe that conditions have changed. 
D)  the auditor uses non-statistical sampling during interim compliance testing. 
A)  the internal accounting control system provides a basis for reliance in reducing the extent of substantive testing. 
B)  tests of controls were not performed by the internal auditor during the remaining period. 
C)  inquiries and observations lead the auditor to believe that conditions have changed. 
D)  the auditor uses non-statistical sampling during interim compliance testing.

Question 3

When control risk is assessed at the maximum, the extent of documentation required in the working papers is that:

Accepted Answer

A)  no documentation is necessary. 
B)  the basis for the assessment and the conclusion must both be documented. 
C)  only the conclusion needs to be documented. 
D)  only the basis for the assessment must be documented. 
A)  no documentation is necessary. 
B)  the basis for the assessment and the conclusion must both be documented. 
C)  only the conclusion needs to be documented. 
D)  only the basis for the assessment must be documented.

Question 4

At what stage during the audit is the existence of internal controls tested and how are these tests carried out?

Accepted Answer

The existence of internal control will u

Question 5

Discuss the test data approach to testing controls.

Accepted Answer

Under the test data approach, dummy tran

Question 6

After performing additional tests of controls, the auditor reassesses control risk from the initial planning level of slightly below maximum to moderate. The auditor should now:

Accepted Answer

A)  decrease the level of detection risk, and decrease substantive testing. 
B)  increase the level of detection risk, and increase substantive testing. 
C)  increase planned substantive testing. 
D)  increase the level of detection risk, and decrease substantive testing. 
A)  decrease the level of detection risk, and decrease substantive testing. 
B)  increase the level of detection risk, and increase substantive testing. 
C)  increase planned substantive testing. 
D)  increase the level of detection risk, and decrease substantive testing.

Question 7

The audit test that would normally be regarded as a test of controls is:

Accepted Answer

A)  enquiries of third parties 
B)  test of the specific items making up the balance in a given general ledger account. 
C)  test of the additions to property, plant, and equipment by physical inspections. 
D)  test of the signatures on purchase orders to a list of approved signatories. 
A)  enquiries of third parties 
B)  test of the specific items making up the balance in a given general ledger account. 
C)  test of the additions to property, plant, and equipment by physical inspections. 
D)  test of the signatures on purchase orders to a list of approved signatories.

Question 8

After the auditor planned the audit based on the lower assessed level of control risk approach it was found that the tests of control did not support this approach. Although the controls were well designed they were not implemented and therefore ineffective. What audit strategy should the auditor now pursue?

Accepted Answer

A)  adopt a predominantly substantive approach. 
B)  perform more extensive tests of control than originally planned. 
C)  reduce the level of substantive procedures. 
D)  none of the above. 
A)  adopt a predominantly substantive approach. 
B)  perform more extensive tests of control than originally planned. 
C)  reduce the level of substantive procedures. 
D)  none of the above.

Question 9

What is the purpose of the preliminary assessment of control risk?

Accepted Answer

A)  to obtain a reasonable expectation of controls so as to decide on an appropriate audit strategy. 
B)  to determine the extent to which internal controls have been implemented 
C)  to obtain the necessary information for developing the flowchart. 
D)  to provide management with an opinion on the effectiveness of controls. 
A)  to obtain a reasonable expectation of controls so as to decide on an appropriate audit strategy. 
B)  to determine the extent to which internal controls have been implemented 
C)  to obtain the necessary information for developing the flowchart. 
D)  to provide management with an opinion on the effectiveness of controls.

Question 10

To determine whether the internal control structure policies and procedures operate effectively to minimise errors of failure to invoice a shipment, the auditor would select a sample of transactions from the population represented by the:

Accepted Answer

A)  bill of lading file. 
B)  customer order file. 
C)  sales invoice file. 
D)  subsidiary customer accounts ledger. 
A)  bill of lading file. 
B)  customer order file. 
C)  sales invoice file. 
D)  subsidiary customer accounts ledger.

Question 11

The timing of tests of controls refers to:

Accepted Answer

A)  whether they are performed earlier or later during the audit. 
B)  whether they relate to part or the whole of the accounting period. 
C)  the end of the year being audited. 
D)  none of the above. 
A)  whether they are performed earlier or later during the audit. 
B)  whether they relate to part or the whole of the accounting period. 
C)  the end of the year being audited. 
D)  none of the above.

A disadvantage of the integrated test facility approach to computer assisted audit is:

Based on a study and evaluation completed at an interim date, the auditor concludes that no significant internal accounting control weaknesses exist. The records and procedures would most likely be tested again at year-end if:

When control risk is assessed at the maximum, the extent of documentation required in the working papers is that:

At what stage during the audit is the existence of internal controls tested and how are these tests carried out?

Discuss the test data approach to testing controls.

After performing additional tests of controls, the auditor reassesses control risk from the initial planning level of slightly below maximum to moderate. The auditor should now:

The audit test that would normally be regarded as a test of controls is:

What is the purpose of the preliminary assessment of control risk?

To determine whether the internal control structure policies and procedures operate effectively to minimise errors of failure to invoice a shipment, the auditor would select a sample of transactions from the population represented by the:

The timing of tests of controls refers to:

An Overview of Auditing

Governance and the Auditor

Professional Ethics, Independence and Audit Quality

Other Assurance Engagements and Quality Standards

The Auditors Legal Liability

Overview of the Audit Financial Statements

The Auditors Report

Client Evaluation and Planning the Audit

Audit Risk Assessment

Materiality and Audit Evidence

Designing Substantive Procedures

Audit Sampling

Auditing Sales and Receivables

Auditing Purchases, Payables and Payroll

Auditing Inventories and Property, Plant and Equipment

Auditing Cash and Investments

Completing the Audit

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Exam 11: Tests of Controls

A disadvantage of the integrated test facility approach to computer assisted audit is:

Based on a study and evaluation completed at an interim date, the auditor concludes that no significant internal accounting control weaknesses exist. The records and procedures would most likely be tested again at year-end if:

When control risk is assessed at the maximum, the extent of documentation required in the working papers is that:

At what stage during the audit is the existence of internal controls tested and how are these tests carried out?

Discuss the test data approach to testing controls.

After performing additional tests of controls, the auditor reassesses control risk from the initial planning level of slightly below maximum to moderate. The auditor should now:

The audit test that would normally be regarded as a test of controls is:

What is the purpose of the preliminary assessment of control risk?

To determine whether the internal control structure policies and procedures operate effectively to minimise errors of failure to invoice a shipment, the auditor would select a sample of transactions from the population represented by the:

The timing of tests of controls refers to:

An Overview of Auditing

Governance and the Auditor

Professional Ethics, Independence and Audit Quality

Other Assurance Engagements and Quality Standards

The Auditors Legal Liability

Overview of the Audit Financial Statements

The Auditors Report

Client Evaluation and Planning the Audit

Audit Risk Assessment

Materiality and Audit Evidence

Designing Substantive Procedures

Audit Sampling

Auditing Sales and Receivables

Auditing Purchases, Payables and Payroll

Auditing Inventories and Property, Plant and Equipment

Auditing Cash and Investments

Completing the Audit

Filters