Question 1

Which of the following is an example of a substantive test that could be used for the audit of the accuracy of sales prices?

Accepted Answer

A) inspect sales price master authorization forms for the presence of an approval signature 
B) observe that the point-of-sale system automatically pulls sales prices from the master file 
C) inquire about the process that is used to update sales prices in the sales price master file 
D) calculate the gross margin for each product that is sold by the company 
A) inspect sales price master authorization forms for the presence of an approval signature 
B) observe that the point-of-sale system automatically pulls sales prices from the master file 
C) inquire about the process that is used to update sales prices in the sales price master file 
D) calculate the gross margin for each product that is sold by the company D

Question 2

Julianne is performing an analysis of the bad debt expense as a percentage of total sales.When performing the analytical procedure,it is important that Julianne

Accepted Answer

A) can rely on the internal controls of the accounts receivable process. 
B) has an expectation of the result that should be obtained. 
C) has concluded that the accounts receivable balance is free from material misstatement. 
D) has requested permission from the client. 
A) can rely on the internal controls of the accounts receivable process. 
B) has an expectation of the result that should be obtained. 
C) has concluded that the accounts receivable balance is free from material misstatement. 
D) has requested permission from the client. B

Question 3

The audit program for most audits is designed in three parts.These parts are

Accepted Answer

A) risk assessment procedures,tests of controls,and tests of details. 
B) risk assessment procedures,analytical procedures,and tests of details. 
C) obtaining an understanding of internal controls,analytical procedures,and tests of details. 
D) tests of controls,analytical procedures,and tests of details of balances. 
A) risk assessment procedures,tests of controls,and tests of details. 
B) risk assessment procedures,analytical procedures,and tests of details. 
C) obtaining an understanding of internal controls,analytical procedures,and tests of details. 
D) tests of controls,analytical procedures,and tests of details of balances. D

Question 4

When considering the relationships between types of audit tests and evidence,which of the following procedures is suitable for use for all types of audit tests (procedures to obtain an understanding of internal control,tests of controls,analytical procedures,and tests of details of balances)?

Accepted Answer

A) inspection 
B) observation 
C) inquiries of the client 
D) recalculation 
A) inspection 
B) observation 
C) inquiries of the client 
D) recalculation

Question 5

Materiality is used to help decide the scope of testing,determine the sample size,and

Accepted Answer

A) develop the audit report. 
B) decide which analytical review calculations to use. 
C) evaluate the results of testing. 
D) conduct understanding of business tests. 
A) develop the audit report. 
B) decide which analytical review calculations to use. 
C) evaluate the results of testing. 
D) conduct understanding of business tests.

Question 6

Describe the difference among substantive tests of transactions,substantive analytical procedures,and substantive tests of balances.

Accepted Answer

Substantive tests of transactions -Audit

Question 7

List the steps an auditor could adopt to conduct risk assessment,and develop and perform risk response (further audit procedures)to address the risks identified for the area of Accounts Receivable.

Accepted Answer

Steps an auditor could adopt to conduct

Question 8

When the auditor identifies an area of the accounting system with missing controls (i.e. ,a weakness or deviation),this would lead to a modification of the audit program in that area that would

Accepted Answer

A) increase the amount of tests of controls. 
B) increase the reliance on tests of controls. 
C) cause the issuance of a qualified or adverse opinion. 
D) eliminate the need for a test of controls. 
A) increase the amount of tests of controls. 
B) increase the reliance on tests of controls. 
C) cause the issuance of a qualified or adverse opinion. 
D) eliminate the need for a test of controls.

Question 9

The auditor is deciding upon audit procedures to be used in the audit for a particular cycle (i.e. ,the combination of the four types of tests needed to obtain sufficient appropriate audit evidence).This type of decision is called

Accepted Answer

A) audit risk. 
B) audit strategy. 
C) evidence mix. 
D) detection risk. 
A) audit risk. 
B) audit strategy. 
C) evidence mix. 
D) detection risk.

Question 10

Symco Inc.has a policy that all cash disbursements of $2000 or more must be approved by the treasurer.While performing a test of controls on a sample of disbursements,Craig discovered that the assistant controller had authorized a cash disbursement of $3500 while the treasurer was on vacation.This control deviation is significant only if

Accepted Answer

A) it is determined that the assistant controller is not qualified to approve cash disbursements of this size. 
B) it occurred with sufficient frequency to cause the auditor to believe there may be material dollar misstatements in the statements. 
C) the amount of the deviation identified is larger than the planning materiality. 
D) the amount of the deviation identified is larger than the planning materiality and no compensating control exists. 
A) it is determined that the assistant controller is not qualified to approve cash disbursements of this size. 
B) it occurred with sufficient frequency to cause the auditor to believe there may be material dollar misstatements in the statements. 
C) the amount of the deviation identified is larger than the planning materiality. 
D) the amount of the deviation identified is larger than the planning materiality and no compensating control exists.

Question 11

Audit risk is assessed at which level of the audit?

Accepted Answer

A) account 
B) cycle 
C) transaction-related audit objective 
D) overall audit 
A) account 
B) cycle 
C) transaction-related audit objective 
D) overall audit

Question 12

The auditor would like to design a test of control to test that unit selling prices are obtained from the price list master file of approved prices.Which of the following typical tests of controls would be suitable?

Accepted Answer

A) Compare prices used on sales invoices to the authorized customer purchase order. 
B) Review changes to the price file throughout the year for proper authorizations and trace prices to copies of sales invoices. 
C) Use analytical review to compare total sales last year to total sales this year. 
D) Discuss the process used to authorize sales prices with the sales manager and the controller. 
A) Compare prices used on sales invoices to the authorized customer purchase order. 
B) Review changes to the price file throughout the year for proper authorizations and trace prices to copies of sales invoices. 
C) Use analytical review to compare total sales last year to total sales this year. 
D) Discuss the process used to authorize sales prices with the sales manager and the controller.

Question 13

An example of an audit procedure that relates to the auditor's understanding of internal control is to

Accepted Answer

A) count petty cash at all locations. 
B) use test data to verify functioning of data entry controls. 
C) observe entity activities and operations. 
D) trace all large fixed-asset purchases to supporting invoices. 
A) count petty cash at all locations. 
B) use test data to verify functioning of data entry controls. 
C) observe entity activities and operations. 
D) trace all large fixed-asset purchases to supporting invoices.

Question 14

Eleonora is inspecting a sample of "Code of Conduct Acknowledgement" forms that must be signed by all employees to indicate that they have read and understood the company's code of conduct.Eleonora is ensuring that they have been signed by the employees.Eleonora is performing

Accepted Answer

A) a test of controls. 
B) an analytical procedure. 
C) a substantive procedure. 
D) a procedure to obtain an understanding of internal controls. 
A) a test of controls. 
B) an analytical procedure. 
C) a substantive procedure. 
D) a procedure to obtain an understanding of internal controls.

Question 15

After completing tests of key controls,the auditor should review the results and consider whether

Accepted Answer

A) the planned degree of reliance on internal controls is justified. 
B) the audit evidence obtained from the study of internal controls can provide a reasonable basis for an opinion. 
C) further study of internal controls is likely to justify any restriction of tests of details of balances. 
D) sufficient knowledge has been obtained about the entity's entire internal control structure. 
A) the planned degree of reliance on internal controls is justified. 
B) the audit evidence obtained from the study of internal controls can provide a reasonable basis for an opinion. 
C) further study of internal controls is likely to justify any restriction of tests of details of balances. 
D) sufficient knowledge has been obtained about the entity's entire internal control structure.

Question 16

The purpose of tests of controls is to provide reasonable assurance that the

Accepted Answer

A) accounting treatment of transactions and balances is valid and proper. 
B) accounting control procedures are operating effectively. 
C) entity has complied with the disclosure requirements of a generally accepted accounting framework. 
D) entity has complied with requirements of quality control. 
A) accounting treatment of transactions and balances is valid and proper. 
B) accounting control procedures are operating effectively. 
C) entity has complied with the disclosure requirements of a generally accepted accounting framework. 
D) entity has complied with requirements of quality control.

Question 17

When considering the relationships between types of audit tests and evidence,which of the following procedures is used only for tests of details of balances?

Accepted Answer

A) inspection 
B) recalculation 
C) reperformance 
D) external confirmation 
A) inspection 
B) recalculation 
C) reperformance 
D) external confirmation

Question 18

Tests of details are designed based upon planned results of analytical review and planned results of tests of controls.Should the planned results differ materially from the actual results of analytical review and tests of controls,then

Accepted Answer

A) audit risk will be revised. 
B) the planned audit program will require revision. 
C) inherent risk will be revised. 
D) tests of controls will not be considered for overall risk assessment processes. 
A) audit risk will be revised. 
B) the planned audit program will require revision. 
C) inherent risk will be revised. 
D) tests of controls will not be considered for overall risk assessment processes.

Question 19

When does the auditor normally conduct tests of controls?

Accepted Answer

A) prior to the completion of the tests of details 
B) after the completion of all analytical review 
C) prior to the preparation of the client risk analysis 
D) prior to the finalization of the audit risk model 
A) prior to the completion of the tests of details 
B) after the completion of all analytical review 
C) prior to the preparation of the client risk analysis 
D) prior to the finalization of the audit risk model

Question 20

A standard audit program can dramatically increase

Accepted Answer

A) audit efficiency. 
B) quality of audit evidence. 
C) communication among the audit team. 
D) the amount of work that can be delegated to more junior staff members. 
A) audit efficiency. 
B) quality of audit evidence. 
C) communication among the audit team. 
D) the amount of work that can be delegated to more junior staff members.

Which of the following is an example of a substantive test that could be used for the audit of the accuracy of sales prices?

Julianne is performing an analysis of the bad debt expense as a percentage of total sales.When performing the analytical procedure,it is important that Julianne

The audit program for most audits is designed in three parts.These parts are

When considering the relationships between types of audit tests and evidence,which of the following procedures is suitable for use for all types of audit tests (procedures to obtain an understanding of internal control,tests of controls,analytical procedures,and tests of details of balances)?

Materiality is used to help decide the scope of testing,determine the sample size,and

Describe the difference among substantive tests of transactions,substantive analytical procedures,and substantive tests of balances.

List the steps an auditor could adopt to conduct risk assessment,and develop and perform risk response (further audit procedures)to address the risks identified for the area of Accounts Receivable.

When the auditor identifies an area of the accounting system with missing controls (i.e. ,a weakness or deviation),this would lead to a modification of the audit program in that area that would

The auditor is deciding upon audit procedures to be used in the audit for a particular cycle (i.e. ,the combination of the four types of tests needed to obtain sufficient appropriate audit evidence).This type of decision is called

Audit risk is assessed at which level of the audit?

The auditor would like to design a test of control to test that unit selling prices are obtained from the price list master file of approved prices.Which of the following typical tests of controls would be suitable?

An example of an audit procedure that relates to the auditor's understanding of internal control is to

Eleonora is inspecting a sample of "Code of Conduct Acknowledgement" forms that must be signed by all employees to indicate that they have read and understood the company's code of conduct.Eleonora is ensuring that they have been signed by the employees.Eleonora is performing

After completing tests of key controls,the auditor should review the results and consider whether

The purpose of tests of controls is to provide reasonable assurance that the

When considering the relationships between types of audit tests and evidence,which of the following procedures is used only for tests of details of balances?

Tests of details are designed based upon planned results of analytical review and planned results of tests of controls.Should the planned results differ materially from the actual results of analytical review and tests of controls,then

When does the auditor normally conduct tests of controls?

A standard audit program can dramatically increase

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 10: Develop Risk Response: Audit Strategy and Audit Program

Which of the following is an example of a substantive test that could be used for the audit of the accuracy of sales prices?

Julianne is performing an analysis of the bad debt expense as a percentage of total sales.When performing the analytical procedure,it is important that Julianne

The audit program for most audits is designed in three parts.These parts are

When considering the relationships between types of audit tests and evidence,which of the following procedures is suitable for use for all types of audit tests (procedures to obtain an understanding of internal control,tests of controls,analytical procedures,and tests of details of balances)?

Materiality is used to help decide the scope of testing,determine the sample size,and

Describe the difference among substantive tests of transactions,substantive analytical procedures,and substantive tests of balances.

List the steps an auditor could adopt to conduct risk assessment,and develop and perform risk response (further audit procedures)to address the risks identified for the area of Accounts Receivable.

When the auditor identifies an area of the accounting system with missing controls (i.e. ,a weakness or deviation),this would lead to a modification of the audit program in that area that would

The auditor is deciding upon audit procedures to be used in the audit for a particular cycle (i.e. ,the combination of the four types of tests needed to obtain sufficient appropriate audit evidence).This type of decision is called

Audit risk is assessed at which level of the audit?

The auditor would like to design a test of control to test that unit selling prices are obtained from the price list master file of approved prices.Which of the following typical tests of controls would be suitable?

An example of an audit procedure that relates to the auditor's understanding of internal control is to

Eleonora is inspecting a sample of "Code of Conduct Acknowledgement" forms that must be signed by all employees to indicate that they have read and understood the company's code of conduct.Eleonora is ensuring that they have been signed by the employees.Eleonora is performing

After completing tests of key controls,the auditor should review the results and consider whether

The purpose of tests of controls is to provide reasonable assurance that the

When considering the relationships between types of audit tests and evidence,which of the following procedures is used only for tests of details of balances?

Tests of details are designed based upon planned results of analytical review and planned results of tests of controls.Should the planned results differ materially from the actual results of analytical review and tests of controls,then

When does the auditor normally conduct tests of controls?

A standard audit program can dramatically increase

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters