Exam 10: Audit Strategy and Audit Program

The auditor of ABC Ltd. has concluded that there are significant risks of misstatement of revenue at the company with potential overstatement of revenue. Which of the following audit tests should the auditor conduct to address this significant risk?

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?

The auditor has decided that there is a risk of material misstatement with respect to sales revenue. Which of the following audit tests should the auditor use to quantify the potential error?

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)?

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

A) There are seven types of audit evidence: inspection, observation, inquiries of the client, external confirmation, recalculation, reperformance, and analytical procedures. For each of the following types of audit tests, indicate the type(s) of evidence that can be obtained through the test: (1) tests of controls, (2) analytical procedures, and (3) tests of details of balances. B) Contrast the circumstances in which the auditor would choose not to test controls with those in which he or she would perform tests of controls. C) Types of audit tests include tests of controls, analytical procedures, and tests of details of balances. Rank these types of tests from least costly to most costly.

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

Last year the materiality for the client was $590 000. This year it is $400 000. All things being equal, how will this change in materiality affect the extent of tests of details?

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 auditor has conducted tests of controls of the write-off of accounts receivable and found two exceptions. These exceptions are

If the auditor is not using tests of control, then

There will be heavy emphasis on tests of controls when

The auditor selects several transactions in each functional area and traces them through the entire accounting system, paying special attention to evidence about whether or not the control features are in operation. This is an example of a

Which of the following ultimately determines the specific audit procedures necessary to provide an auditor with a reasonable basis for the expression of an opinion?

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

Conversion is the process of

Control risk has been assessed at 100% for your client. What audit approach will you follow?

Which of the following audit tests is usually the least costly to perform?

Which of the following areas is considered to have a high risk of fraud in the retail industry?

When the auditor has determined that there is a significant risk of misstatement for a particular assertion (for example, completeness of revenue), what type of audit testing does CAS 330 require?