Question 1

ASA 315 requires the auditor to assess the risk of material misstatement in the client's financial report.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is NOT part of the methodology used in designing substantive tests of balances?

Accepted Answer

A)  Design and perform analytical procedures. 
B)  Assess inherent risk. 
C)  Assess client business risks. 
D)  Assess control risk. 
A)  Design and perform analytical procedures. 
B)  Assess inherent risk. 
C)  Assess client business risks. 
D)  Assess control risk.

Question 3

Which one of the following types of documentation is required for an audit in accordance with generally accepted auditing standards?

Accepted Answer

A)  an internal control questionnaire 
B)  a client representation letter 
C)  a planning memorandum or checklist 
D)  a client engagement letter 
A)  an internal control questionnaire 
B)  a client representation letter 
C)  a planning memorandum or checklist 
D)  a client engagement letter

Question 4

The actual operation of an internal control system may be most objectively evaluated by:

Accepted Answer

A)  review of the previous year's audit work papers to update the report of internal control evaluation. 
B)  substantive tests of accounts balances based on the auditor's assessment of internal control strength. 
C)  selection of items processed by the system and determination of the presence or absence of errors and control test deviations. 
D)  completing a questionnaire and flowchart related to the accounting system in the year under audit. 
A)  review of the previous year's audit work papers to update the report of internal control evaluation. 
B)  substantive tests of accounts balances based on the auditor's assessment of internal control strength. 
C)  selection of items processed by the system and determination of the presence or absence of errors and control test deviations. 
D)  completing a questionnaire and flowchart related to the accounting system in the year under audit.

Question 5

Which of the following tests determine whether accounting transactions have been properly authorised, correctly recorded and summarised in the journals, and correctly posted to subsidiary ledgers and the general ledgers?

Accepted Answer

A)  substantive tests of balances 
B)  substantive tests of transactions 
C)  tests of controls 
D)  analytical procedures 
A)  substantive tests of balances 
B)  substantive tests of transactions 
C)  tests of controls 
D)  analytical procedures

Question 6

The evidence mix which the auditor chose in each of four different audits is shown below:
 
Amount of testing: E = extensive M = medium S = small N = none
In which audit did the client company have sophisticated internal controls and in which audit did the client have insufficient controls?

Accepted Answer

A)  sophisticated in #2 and insufficient in #3 
B)  sophisticated in #1 and insufficient in #2 
C)  sophisticated in #1 and insufficient in #3 
D)  sophisticated in #4 and insufficient in #2 
A)  sophisticated in #2 and insufficient in #3 
B)  sophisticated in #1 and insufficient in #2 
C)  sophisticated in #1 and insufficient in #3 
D)  sophisticated in #4 and insufficient in #2

Question 7

There are seven methods of obtaining audit evidence: physical examination, confirmation, documentation, observation, inquiries of the client, re-performance, and analytical procedures.For each of the following types of audit tests, indicate the type(s)of evidence-gathering procedures that can be used during the test: (1)tests of controls, (2)substantive tests of transactions, (3)analytical procedures and (4)tests of details of balances.

Accepted Answer

1.Tests of controls.Documentation, obser

Question 8

Why does an auditor evaluate the client's system of internal control?

Accepted Answer

A)  to ascertain whether irregularities are probable 
B)  to ascertain whether any employees have incompatible functions 
C)  to determine the extent of substantive tests which must be performed 
D)  to determine the extent of tests of controls which must be performed 
A)  to ascertain whether irregularities are probable 
B)  to ascertain whether any employees have incompatible functions 
C)  to determine the extent of substantive tests which must be performed 
D)  to determine the extent of tests of controls which must be performed

Question 9

The highest cost audit will be incurred when the auditor expected that the internal control system would:

Accepted Answer

A)  be effective, but the auditor found extensive control test deviations and significant errors during tests of transactions. 
B)  have few effective controls, but client's personnel were well-trained and knowledgeable. 
C)  have few effective controls, and tests of balances found many errors. 
D)  be very sophisticated, and the tests of controls confirmed this. 
A)  be effective, but the auditor found extensive control test deviations and significant errors during tests of transactions. 
B)  have few effective controls, but client's personnel were well-trained and knowledgeable. 
C)  have few effective controls, and tests of balances found many errors. 
D)  be very sophisticated, and the tests of controls confirmed this.

Question 10

The timing of phase I audit procedures are typically:

Accepted Answer

A)  before the balance sheet date. 
B)  on or after the balance sheet date. 
C)  anytime. 
D)  at the end of fieldwork. 
A)  before the balance sheet date. 
B)  on or after the balance sheet date. 
C)  anytime. 
D)  at the end of fieldwork.

Question 11

List the nine balance-related audit objectives in the verification of the ending balance in accounts receivable and provide one specific useful audit procedure for each of the objectives.

Accepted Answer

The nine balance-related audit objective

Question 12

Phase II of the audit primarily relies on which type(s)of audit evidence?

Accepted Answer

A)  documentation 
B)  analytical procedures 
C)  physical examination 
D)  all of the above 
A)  documentation 
B)  analytical procedures 
C)  physical examination 
D)  all of the above

Question 13

With respect to the auditor's planning of a year-end examination, which one of the following statements is ALWAYS true?

Accepted Answer

A)  An engagement should not be accepted after the financial year ends. 
B)  An inventory count must be observed at the balance sheet date. 
C)  The client's audit committee should not be told of the specific audit procedures that will be performed. 
D)  It is an acceptable practice to carry out substantial parts of the examination at interim dates. 
A)  An engagement should not be accepted after the financial year ends. 
B)  An inventory count must be observed at the balance sheet date. 
C)  The client's audit committee should not be told of the specific audit procedures that will be performed. 
D)  It is an acceptable practice to carry out substantial parts of the examination at interim dates.

Question 14

Substantive tests of transactions and tests of controls are often conducted simultaneously.

Accepted Answer

A) True 
 B)False

Question 15

Substantive tests of balances are sometimes done before the year-end.This can only be done if:

Accepted Answer

A)  substantive tests have to be increased. 
B)  internal controls are effective. 
C)  more reliable evidence is needed. 
D)  none of the above 
A)  substantive tests have to be increased. 
B)  internal controls are effective. 
C)  more reliable evidence is needed. 
D)  none of the above

Question 16

Tests of controls and substantive tests of transactions are often conducted simultaneously on the same transactions.

Accepted Answer

A) True 
 B)False

Question 17

Phase III of the audit primarily relies on which type(s)of audit evidence?

Accepted Answer

A)  physical examination 
B)  documentation 
C)  analytical procedures 
D)  all of the above 
A)  physical examination 
B)  documentation 
C)  analytical procedures 
D)  all of the above

Question 18

If tests of controls reveal that controls are sufficiently effective to justify reducing control risk, the auditor is justified in reducing substantive audit tests.

Accepted Answer

A) True 
 B)False

Question 19

When are audit procedures regarding presentation and disclosure performed?

Accepted Answer

A)  at balance sheet date 
B)  throughout the audit 
C)  shortly before the audit report is issued 
D)  on the last day of fieldwork 
A)  at balance sheet date 
B)  throughout the audit 
C)  shortly before the audit report is issued 
D)  on the last day of fieldwork

Question 20

ASA 315 refers to the benefits and risks related to internal controls present in an IT system.What are the implications for the auditor in conducting tests of controls and substantive tests?

Accepted Answer

The implications are that significant in

ASA 315 requires the auditor to assess the risk of material misstatement in the client's financial report.

Which of the following is NOT part of the methodology used in designing substantive tests of balances?

Which one of the following types of documentation is required for an audit in accordance with generally accepted auditing standards?

The actual operation of an internal control system may be most objectively evaluated by:

Which of the following tests determine whether accounting transactions have been properly authorised, correctly recorded and summarised in the journals, and correctly posted to subsidiary ledgers and the general ledgers?

The evidence mix which the auditor chose in each of four different audits is shown below: Amount of testing: E = extensive M = medium S = small N = none In which audit did the client company have sophisticated internal controls and in which audit did the client have insufficient controls?

Why does an auditor evaluate the client's system of internal control?

The highest cost audit will be incurred when the auditor expected that the internal control system would:

The timing of phase I audit procedures are typically:

List the nine balance-related audit objectives in the verification of the ending balance in accounts receivable and provide one specific useful audit procedure for each of the objectives.

Phase II of the audit primarily relies on which type(s)of audit evidence?

With respect to the auditor's planning of a year-end examination, which one of the following statements is ALWAYS true?

Substantive tests of transactions and tests of controls are often conducted simultaneously.

Substantive tests of balances are sometimes done before the year-end.This can only be done if:

Tests of controls and substantive tests of transactions are often conducted simultaneously on the same transactions.

Phase III of the audit primarily relies on which type(s)of audit evidence?

If tests of controls reveal that controls are sufficiently effective to justify reducing control risk, the auditor is justified in reducing substantive audit tests.

When are audit procedures regarding presentation and disclosure performed?

ASA 315 refers to the benefits and risks related to internal controls present in an IT system.What are the implications for the auditor in conducting tests of controls and substantive tests?

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters

Exam 11: Overall audit plan and audit program

ASA 315 requires the auditor to assess the risk of material misstatement in the client's financial report.

Which of the following is NOT part of the methodology used in designing substantive tests of balances?

Which one of the following types of documentation is required for an audit in accordance with generally accepted auditing standards?

The actual operation of an internal control system may be most objectively evaluated by:

Which of the following tests determine whether accounting transactions have been properly authorised, correctly recorded and summarised in the journals, and correctly posted to subsidiary ledgers and the general ledgers?

The evidence mix which the auditor chose in each of four different audits is shown below: Amount of testing: E = extensive M = medium S = small N = none In which audit did the client company have sophisticated internal controls and in which audit did the client have insufficient controls?

Why does an auditor evaluate the client's system of internal control?

The highest cost audit will be incurred when the auditor expected that the internal control system would:

The timing of phase I audit procedures are typically:

List the nine balance-related audit objectives in the verification of the ending balance in accounts receivable and provide one specific useful audit procedure for each of the objectives.

Phase II of the audit primarily relies on which type(s)of audit evidence?

With respect to the auditor's planning of a year-end examination, which one of the following statements is ALWAYS true?

Substantive tests of transactions and tests of controls are often conducted simultaneously.

Substantive tests of balances are sometimes done before the year-end.This can only be done if:

Tests of controls and substantive tests of transactions are often conducted simultaneously on the same transactions.

Phase III of the audit primarily relies on which type(s)of audit evidence?

If tests of controls reveal that controls are sufficiently effective to justify reducing control risk, the auditor is justified in reducing substantive audit tests.

When are audit procedures regarding presentation and disclosure performed?

ASA 315 refers to the benefits and risks related to internal controls present in an IT system.What are the implications for the auditor in conducting tests of controls and substantive tests?

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters