Question 1

Which of the following factors would lead an auditor to assess inherent risk at a higher level?

Accepted Answer

A)  The account balance is easily determined without estimation. 
B)  The account balance is composed of a high volume of nonroutine transactions. 
C)  The account balance is composed of simple transactions. 
D)  All of the above would lead the auditor to assess a higher level of inherent risk. 
A)  The account balance is easily determined without estimation. 
B)  The account balance is composed of a high volume of nonroutine transactions. 
C)  The account balance is composed of simple transactions. 
D)  All of the above would lead the auditor to assess a higher level of inherent risk.

Question 2

Audit procedures have to be announced or be completed at predictable times.

Accepted Answer

A) True 
 B)False

Question 3

What is the auditor trying to accomplish by varying the timing of audit procedures from the prior year?

Accepted Answer

A)  Introduce unpredictability. 
B)  Confuse the client. 
C)  Gather information during different times of the year. 
D)  Finish the audit sooner. 
A)  Introduce unpredictability. 
B)  Confuse the client. 
C)  Gather information during different times of the year. 
D)  Finish the audit sooner.

Question 4

What is the main reason to establish guidelines for brainstorming sessions?

Accepted Answer

A)  To not hurt feelings. 
B)  It is required by the SEC. 
C)  To encourage interactive and constructive group dialogue and idea exchange. 
D)  To pass information up to top-level management efficiently. 
A)  To not hurt feelings. 
B)  It is required by the SEC. 
C)  To encourage interactive and constructive group dialogue and idea exchange. 
D)  To pass information up to top-level management efficiently.

Question 5

Which of the following approaches can be used to introduce unpredictability into the audit?

Accepted Answer

A)  Assessing high risk accounts. 
B)  Performing procedures on an unannounced basis. 
C)  Performing the audit in the same location each year. 
D)  Selecting items that would normally be tested. 
A)  Assessing high risk accounts. 
B)  Performing procedures on an unannounced basis. 
C)  Performing the audit in the same location each year. 
D)  Selecting items that would normally be tested.

Question 6

When business risk is low, the auditor does not have a high concern about the ability of the organization to operate efficiently.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is a factor that would cause an increase in the assessment of control risk?

Accepted Answer

A)  New products have uncertain likelihood of success 
B)  Little interaction between senior management and operating staff 
C)  A new business strategy is improperly implemented. 
D)  The industry is mature and declining. 
A)  New products have uncertain likelihood of success 
B)  Little interaction between senior management and operating staff 
C)  A new business strategy is improperly implemented. 
D)  The industry is mature and declining.

Question 8

News media and web searches can provide useful information related to client management's integrity and the risk of material misstatement in the financial statements.

Accepted Answer

A) True 
 B)False

Question 9

During the process of a brainstorming session, the focus is more on the quality of ideas generated rather than the quantity of ideas generated.

Accepted Answer

A) True 
 B)False

Question 10

In which of the following situations will auditors typically rely on internal controls over financial reporting?

Accepted Answer

A)  If control risk is assessed at a high level. 
B)  If the controls are determined to be designed and operating effectively. 
C)  If the clients asks the auditor to test controls. 
D)  If the controls are sufficient to increase control risk to an acceptable level. 
A)  If control risk is assessed at a high level. 
B)  If the controls are determined to be designed and operating effectively. 
C)  If the clients asks the auditor to test controls. 
D)  If the controls are sufficient to increase control risk to an acceptable level.

Question 11

When an auditor chooses not to rely on a client's internal controls because the control design is ineffective, which of the following tests are eliminated?

Accepted Answer

A)  Substantive testing. 
B)  Tests of controls. 
C)  Tests of details of balances. 
D)  Substantive analytical procedures. 
A)  Substantive testing. 
B)  Tests of controls. 
C)  Tests of details of balances. 
D)  Substantive analytical procedures.

Question 12

A risk factor indicating a heightened risk of fraud would be considered a significant risk.

Accepted Answer

A) True 
 B)False

Question 13

Predecessor auditor.
Discuss the required communications between predecessor and successor auditors.

Accepted Answer

auditing standards require a successor a

Question 14

The risk of material misstatement refers to which of the following?

Accepted Answer

A)  Inherent risk. 
B)  Control risk and acceptable audit risk. 
C)  The combination of inherent risk and control risk. 
D)  Inherent risk and audit risk. 
A)  Inherent risk. 
B)  Control risk and acceptable audit risk. 
C)  The combination of inherent risk and control risk. 
D)  Inherent risk and audit risk.

Question 15

Which of the following terms best describes the types and appropriateness of audit procedures used?

Accepted Answer

A)  Nature of detection risk. 
B)  Material misstatement risk. 
C)  Nature of auditing procedures. 
D)  Nature of risk response. 
A)  Nature of detection risk. 
B)  Material misstatement risk. 
C)  Nature of auditing procedures. 
D)  Nature of risk response.

Question 16

When the risk of material misstatement is heightened, the auditor increases the extent of audit procedures and requires more evidence.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements best describes what is meant by setting control risk at100%?

Accepted Answer

A)  Controls are effective. 
B)  Controls are relevant. 
C)  Controls are ineffective. 
D)  Cannot be determined from the information given. 
A)  Controls are effective. 
B)  Controls are relevant. 
C)  Controls are ineffective. 
D)  Cannot be determined from the information given.

Question 18

Detection risk is affected by which aspects of substantive audit procedures?

Accepted Answer

A)  Nature. 
B)  Timing. 
C)  Extent. 
D)  All of the above. 
A)  Nature. 
B)  Timing. 
C)  Extent. 
D)  All of the above.

Question 19

LEXIS is a public database where the existence of legal proceedings against a company or key members of the company can be found.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a reason a predecessor auditor can decline to reply to a firm's current auditor?

Accepted Answer

A)  Data is under court order. 
B)  They must always respond. 
C)  The client does not approve of confidential information being shared. 
D)  Both A and C are correct. 
A)  Data is under court order. 
B)  They must always respond. 
C)  The client does not approve of confidential information being shared. 
D)  Both A and C are correct.

Which of the following factors would lead an auditor to assess inherent risk at a higher level?

Audit procedures have to be announced or be completed at predictable times.

What is the auditor trying to accomplish by varying the timing of audit procedures from the prior year?

What is the main reason to establish guidelines for brainstorming sessions?

Which of the following approaches can be used to introduce unpredictability into the audit?

When business risk is low, the auditor does not have a high concern about the ability of the organization to operate efficiently.

Which of the following is a factor that would cause an increase in the assessment of control risk?

News media and web searches can provide useful information related to client management's integrity and the risk of material misstatement in the financial statements.

During the process of a brainstorming session, the focus is more on the quality of ideas generated rather than the quantity of ideas generated.

In which of the following situations will auditors typically rely on internal controls over financial reporting?

When an auditor chooses not to rely on a client's internal controls because the control design is ineffective, which of the following tests are eliminated?

A risk factor indicating a heightened risk of fraud would be considered a significant risk.

Predecessor auditor. Discuss the required communications between predecessor and successor auditors.

The risk of material misstatement refers to which of the following?

Which of the following terms best describes the types and appropriateness of audit procedures used?

When the risk of material misstatement is heightened, the auditor increases the extent of audit procedures and requires more evidence.

Which of the following statements best describes what is meant by setting control risk at100%?

Detection risk is affected by which aspects of substantive audit procedures?

LEXIS is a public database where the existence of legal proceedings against a company or key members of the company can be found.

Which of the following is a reason a predecessor auditor can decline to reply to a firm's current auditor?

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

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Exam 7: Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Which of the following factors would lead an auditor to assess inherent risk at a higher level?

Audit procedures have to be announced or be completed at predictable times.

What is the auditor trying to accomplish by varying the timing of audit procedures from the prior year?

What is the main reason to establish guidelines for brainstorming sessions?

Which of the following approaches can be used to introduce unpredictability into the audit?

When business risk is low, the auditor does not have a high concern about the ability of the organization to operate efficiently.

Which of the following is a factor that would cause an increase in the assessment of control risk?

News media and web searches can provide useful information related to client management's integrity and the risk of material misstatement in the financial statements.

During the process of a brainstorming session, the focus is more on the quality of ideas generated rather than the quantity of ideas generated.

In which of the following situations will auditors typically rely on internal controls over financial reporting?

When an auditor chooses not to rely on a client's internal controls because the control design is ineffective, which of the following tests are eliminated?

A risk factor indicating a heightened risk of fraud would be considered a significant risk.

Predecessor auditor. Discuss the required communications between predecessor and successor auditors.

The risk of material misstatement refers to which of the following?

Which of the following terms best describes the types and appropriateness of audit procedures used?

When the risk of material misstatement is heightened, the auditor increases the extent of audit procedures and requires more evidence.

Which of the following statements best describes what is meant by setting control risk at100%?

Detection risk is affected by which aspects of substantive audit procedures?

LEXIS is a public database where the existence of legal proceedings against a company or key members of the company can be found.

Which of the following is a reason a predecessor auditor can decline to reply to a firm's current auditor?

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters