Exam 8: Tests of Control and Substantive Test Implications

The auditor should identify the types of risk that could cause misstatement in the material account balances and the processes that would allow the misstatement to occur.

The auditor will need to determine that any whistleblower program is effective by:

A top-down, risk-based approach to a financial report audit requires auditors to consider the materiality of account balances.

Which of the following accounts is not related to the revenue and cost of goods sold process?

When determining if the sales are proper and the receivables are valid, the auditor could:

Changes in guidance What are the major changes in guidance since the introduction of auditing standards?

Recent research by COSO reinforces the concept that the control environment is not a very important factor associated with test of controls.

The challenge in a financial report audit is to find the most cost-effective manner in which to develop sufficient evidence to render an opinion on the financial report.

The control environment plays a critical role in influencing the total risk management process.

The external auditor is required to issue two separate reports - one on the fairness of the internal controls and a second on the fairness of the financial statements.

The external auditor must perform enough work to make an independent decision about the quality of the client's internal controls.

Management's assessment of controls Weaknesses in internal control are classified as a deficiency or a significant deficiency. Identify the factors that management and auditors should consider when categorising identified control weaknesses.

The auditor performs a walkthrough of the processes and concludes that the design of controls addresses the relevant assertions, and that if the controls are operating effectively, the auditor could conclude that internal control over financial reporting is effective.

In planning the audit, auditors assess control risk for:

In a financial report audit, the amount of direct testing of account balances is inversely related to:

The auditor could assess control risk for an account at the maximum when:

The risk-based audit approach requires the auditor to:

Which of the following accounts would not be considered significant for a non-manufacturing company?

Which of the following accounts is not related to the purchasing process?

In the procurement process which of the following controls would the auditor determine to be key controls?