Exam 10: Audit Strategy and Audit Program

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

The auditor would like to design a test of control to test that shipping documents are issued in numerical order by the computer and are accounted for weekly. Which of the following typical tests of controls would be suitable?

An example of an audit procedure that relates to the auditor's understanding of internal control is to

Which of the following is an example of a substantive test that could be used for the audit of the accuracy of sales prices?

CAS 240 requires which of the following to be considered a significant risk?

A PA has designed an audit approach where she places maximum possible reliance on controls. This means that she will be

The auditor is deciding upon audit procedures to be used in the audit for a particular cycle (i.e., the combination of the four types of tests needed to obtain sufficient appropriate audit evidence). This type of decision is called

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

Discuss the purposes of tests of controls and tests of details of balances. Give an example of each.

You are conducting the audit of a medium-sized company that has a chief accountant and three employees. Segregation of duties is excellent, with jobs allocated to provide maximum levels of controls. Segregation is supported by accounting software with user identification and passwords that limit functions to the appropriate jobs. Required: A) What type of audit approach would you recommend? Why? B) How would your answer change if the accounting department was organized on a job-sharing basis so that all employees did some of every task to keep the work more interesting? Why?

The auditor would like to design a test of control to test that statements are mailed to all customers each month. Which of the following typical tests of controls would be suitable?

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

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?

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

Materiality is used to help decide the scope of testing, determine the sample size, and

Audit risk is assessed at which level of the audit?

A planned approach to the conduct of audit testing, taking into account assessed risks, is called an

After completing tests of key controls, the auditor should review the results and consider whether

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

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