Question 1

Which is usually included in an engagement letter?

Accepted Answer

The answer of Which is usually included in an engagement...

Question 2

Since materiality is relative, it is necessary to have bases for establishing whether misstatements are material. Normally, the most common base for deciding materiality is:

Accepted Answer

A)  total assets. 
B)  net income after taxes. 
C)  net working capital. 
D)  net income before taxes. 
A)  total assets. 
B)  net income after taxes. 
C)  net working capital. 
D)  net income before taxes.

Question 3

Auditors should obtain copies of the client's corporate charter (articles of incorporation), bylaws, and minutes of the meetings of the board of directors to help their understanding of the company's management and governance structure.

Accepted Answer

A) True 
 B)False

Question 4

If the omission or misstatement of information, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users of financial statements, then that information is, by definition of ISA 320:

Accepted Answer

A)  insignificant. 
B)  material. 
C)  relevant. 
D)  significant. 
A)  insignificant. 
B)  material. 
C)  relevant. 
D)  significant.

Question 5

Which of the following is not a purpose of analytical procedures?

Accepted Answer

A)  Understand the client's industry. 
B)  Reduce detailed audit tests. 
C)  Evaluate internal controls. 
D)  Assess the client's ability to continue as a going concern. 
A)  Understand the client's industry. 
B)  Reduce detailed audit tests. 
C)  Evaluate internal controls. 
D)  Assess the client's ability to continue as a going concern.

Question 6

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Make a surprise count of petty cash to verify that the amount of the petty cash fund is intact.

Accepted Answer

A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance 
A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance

Question 7

Below are 10 documents typically examined during an audit. Classify each document as either internal or external.
-Payroll time cards.

Accepted Answer

The answer of Below are 10 documents typically examined during...

Question 8

One of the primary determinants of the reliability of audit evidence is the quantity of evidence.

Accepted Answer

A) True 
 B)False

Question 9

Before accepting a new client, most audit firms investigate the company to determine its acceptability. However, confidentiality requirements prohibit audit firms from contacting certain parties-such as the company's attorneys and bankers-during this investigation.

Accepted Answer

A) True 
 B)False

Question 10

Below are 10 documents typically examined during an audit. Classify each document as either internal or external.
-Canceled checks for payments of accounts payable.

Accepted Answer

The answer of Below are 10 documents typically examined during...

Question 11

Auditors commonly allocate materiality to balance sheet accounts rather than income statement accounts because most income statement misstatements have a(n) ________ effect on the balance sheet.

Accepted Answer

A)  increased 
B)  equal 
C)  reduced 
D)  undetermined 
A)  increased 
B)  equal 
C)  reduced 
D)  undetermined

Question 12

Which of the following is not typically included in initial audit planning?

Accepted Answer

A)  Determination of the purpose of the audit. 
B)  Client acceptance/continuation decisions. 
C)  Perform analytical procedures as substantive tests. 
D)  Obtain an understanding with the client. 
A)  Determination of the purpose of the audit. 
B)  Client acceptance/continuation decisions. 
C)  Perform analytical procedures as substantive tests. 
D)  Obtain an understanding with the client.

Question 13

Analytical procedures must be used during which phase(s) of the audit?

Accepted Answer

The answer of Analytical procedures must be used during which...

Question 14

Which of the following is not a characteristic of the reliability of evidence?

Accepted Answer

A)  Qualifications of individuals providing information. 
B)  Degree of subjectivity. 
C)  Degree of objectivity. 
D)  Auditor's direct knowledge. 
A)  Qualifications of individuals providing information. 
B)  Degree of subjectivity. 
C)  Degree of objectivity. 
D)  Auditor's direct knowledge.

Question 15

Sarbanes- Oxley requires auditors of public companies to maintain audit documentation for what period of time?

Accepted Answer

A)  Not less than 3 years. 
B)  Not less than 7 years. 
C)  Not less than 5 years. 
D)  Through the issuance of the financial statements. 
A)  Not less than 3 years. 
B)  Not less than 7 years. 
C)  Not less than 5 years. 
D)  Through the issuance of the financial statements.

Question 16

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Foot entries in the sales journal to determine whether they were correctly totaled by the client.

Accepted Answer

A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance 
A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance

Question 17

There is no precise definition of materiality in the professional literature.

Accepted Answer

A) True 
 B)False

Question 18

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Compare vendor names and amounts on purchases invoices with entries in the purchases journal.

Accepted Answer

A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance 
A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance

Question 19

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Examine a piece of equipment to make sure a recent purchase of equipment was actually received and is in operation.

Accepted Answer

A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance 
A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance

Question 20

Which is usually included in the engagement letter?

Accepted Answer

The answer of Which is usually included in the engagement...

Which is usually included in an engagement letter?

Since materiality is relative, it is necessary to have bases for establishing whether misstatements are material. Normally, the most common base for deciding materiality is:

Auditors should obtain copies of the client's corporate charter (articles of incorporation), bylaws, and minutes of the meetings of the board of directors to help their understanding of the company's management and governance structure.

If the omission or misstatement of information, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users of financial statements, then that information is, by definition of ISA 320:

Which of the following is not a purpose of analytical procedures?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Make a surprise count of petty cash to verify that the amount of the petty cash fund is intact.

Below are 10 documents typically examined during an audit. Classify each document as either internal or external. -Payroll time cards.

One of the primary determinants of the reliability of audit evidence is the quantity of evidence.

Before accepting a new client, most audit firms investigate the company to determine its acceptability. However, confidentiality requirements prohibit audit firms from contacting certain parties-such as the company's attorneys and bankers-during this investigation.

Below are 10 documents typically examined during an audit. Classify each document as either internal or external. -Canceled checks for payments of accounts payable.

Auditors commonly allocate materiality to balance sheet accounts rather than income statement accounts because most income statement misstatements have a(n) ________ effect on the balance sheet.

Which of the following is not typically included in initial audit planning?

Analytical procedures must be used during which phase(s) of the audit?

Which of the following is not a characteristic of the reliability of evidence?

Sarbanes- Oxley requires auditors of public companies to maintain audit documentation for what period of time?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Foot entries in the sales journal to determine whether they were correctly totaled by the client.

There is no precise definition of materiality in the professional literature.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Compare vendor names and amounts on purchases invoices with entries in the purchases journal.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Examine a piece of equipment to make sure a recent purchase of equipment was actually received and is in operation.

Which is usually included in the engagement letter?

The Demand for Audit, Cpa Profession, Audit Reports and Other Assurance Services

Professional Ethics, Legal Liability, Audit Responsibilities and Objectives

Internal Control, Control Risk, Section 404 Audits, Fraud Auditing, and the Impact of Information Technology on the Audit Process

Overall Audit Strategy, Audit Program, Audit of the Sales and Collection Cycle, Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable, Audit Sampling for Tests of Details of Balances, and Audit of the Acquisition and Payment Cycle

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts, Audit of the Payroll and Personnel Cycle, Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition, Repayment, Audit of Cash and Financial Instruments, and Completing the Audit

Other Assurance Services, Internal and Governmental Financial Auditing and Operations Auditing

Filters

Exam 3: Audit Evidence, Audit Planning, Analytical Procedures, Materiality and Risk

Which is usually included in an engagement letter?

Since materiality is relative, it is necessary to have bases for establishing whether misstatements are material. Normally, the most common base for deciding materiality is:

Auditors should obtain copies of the client's corporate charter (articles of incorporation), bylaws, and minutes of the meetings of the board of directors to help their understanding of the company's management and governance structure.

If the omission or misstatement of information, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users of financial statements, then that information is, by definition of ISA 320:

Which of the following is not a purpose of analytical procedures?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Make a surprise count of petty cash to verify that the amount of the petty cash fund is intact.

Below are 10 documents typically examined during an audit. Classify each document as either internal or external. -Payroll time cards.

One of the primary determinants of the reliability of audit evidence is the quantity of evidence.

Before accepting a new client, most audit firms investigate the company to determine its acceptability. However, confidentiality requirements prohibit audit firms from contacting certain parties-such as the company's attorneys and bankers-during this investigation.

Below are 10 documents typically examined during an audit. Classify each document as either internal or external. -Canceled checks for payments of accounts payable.

Auditors commonly allocate materiality to balance sheet accounts rather than income statement accounts because most income statement misstatements have a(n) ________ effect on the balance sheet.

Which of the following is not typically included in initial audit planning?

Analytical procedures must be used during which phase(s) of the audit?

Which of the following is not a characteristic of the reliability of evidence?

Sarbanes- Oxley requires auditors of public companies to maintain audit documentation for what period of time?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Foot entries in the sales journal to determine whether they were correctly totaled by the client.

There is no precise definition of materiality in the professional literature.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Compare vendor names and amounts on purchases invoices with entries in the purchases journal.

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Examine a piece of equipment to make sure a recent purchase of equipment was actually received and is in operation.

Which is usually included in the engagement letter?

The Demand for Audit, Cpa Profession, Audit Reports and Other Assurance Services

Professional Ethics, Legal Liability, Audit Responsibilities and Objectives

Internal Control, Control Risk, Section 404 Audits, Fraud Auditing, and the Impact of Information Technology on the Audit Process

Overall Audit Strategy, Audit Program, Audit of the Sales and Collection Cycle, Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable, Audit Sampling for Tests of Details of Balances, and Audit of the Acquisition and Payment Cycle

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts, Audit of the Payroll and Personnel Cycle, Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition, Repayment, Audit of Cash and Financial Instruments, and Completing the Audit

Other Assurance Services, Internal and Governmental Financial Auditing and Operations Auditing

Filters