Exam 8: Tests of Control and Substantive Test Implications

The external auditor will often consider the work performed by the internal auditor

Large public company audited financial report is required to be accompanied by:

The extent of testing for computerised controls is not influenced by:

In assessing an entity's internal controls, the auditor does not complete preliminary analytical procedures.

Planning a financial report audit Discuss the different steps and phases that are required in planning a financial report audit.

When an auditor assesses controls as operating effectively, the auditor could conclude that:

In deciding how to categorise a weakness, management and auditors should not consider the nature of the deficiency.

The external auditor determines important controls that need to be tested for the purposes of formulating an opinion on the entity's internal controls.

Identifying audit work What are the fundamental questions that the auditor must address to determine the optimal amount of audit work?

Increased substantive testing is required when the auditor finds:

Auditor assessment of controls Discuss the purpose of the auditor performing a walkthrough of processes and how the results are used to determine if there is a deficiency or a significant deficiency.

When assessing the risk of material misstatement, which of the following would the auditor consider to be a management motivation for account misstatements?

Direct testing examines:

The auditor must consider the effect of the controls on the likely misstatement of financial account balances and on the substantive testing that needs to be performed.

The area of accounting judgements and estimates is almost always considered low risk.