Exam 5: Overall Audit Strategy, Audit Program, Audit of the Sales and Collection Cycle, Audit Sampling for Tests of Controls and Substantive Tests of Transactions

The acceptable risk of assessing control risk too low will normally be assessed at a ________ level when auditing a public company.

When controls are deemed ineffective and assessed control risk is at the maximum for a private company, there will be _ ________ emphasis placed on tests of controls.

Testing from source documents to the journal is useful for testing nonexistent transactions.

Which of the following relationships between types of tests and audit evidence is not correct?

In which of the following will sales return and allowances not be recorded?

To prevent fraud, management should deny cash access to anyone responsible for:

In using audit sampling for exception rates, the auditor is primarily interested in determining the

Which of the following is not an account affected by the sales and collection cycle?

An auditor can increase the likelihood that a sample is representative by using care in:

Place the following steps in their proper order:1. Analyze exceptions2. Select the sample3. Define attributes and exception conditions4. State the objectives of the audit test5. Specify the tolerable exception rate

Tests of controls address each of the following questions except:

Explain each of the following types of documents and indicate the class of transactions in which they are commonly used.1. Customer order2. Shipping document3. Remittance advice4. Sales returns and allowance journal5. Uncollectible account authorization form

In practice, auditors ________ know if a sample is truly a representative one.

Substantive tests of transactions are the most expensive type of audit test to perform.

When an auditor believes that analytical procedures indicate a reasonable possibility of misstatement, the auditor usually would:

Tests of transactions are used to determine whether _ ________ have been satisfied.

Which of the following is not a useful risk assessment procedure for obtaining an understanding of internal controls?

An exception in a test of control indicates the ________ of misstatements.

Match each of the descriptions with the following terms for each of the documents and records -An internal document for communicating the description, quantity, and related information for goods ordered by a customer. This is frequently used to indicate credit approval and authorization for shipment.

A means of reducing the potential bias in systematic sample selection is to: