Exam 6: Audit Planning, understanding the Client, assessing Risks, and Responding

When an auditor accepts an audit engagement but does not possess the industry expertise of the business entity involved,the auditor should:

Individuals who commit fraud are ordinarily able to rationalize the act and also have an: Incentive Opporturity A. Yes Yes B. Yes No C. No Yes D. No No  

The substantive approach to an audit is appropriate for many small businesses.

Which of the following situations would heighten an auditor's concern about the risk of fraudulent financial reporting

Which of the following is not an assertion that is made in the financial statements by management concerning each major account balance?

Which of the following is not a general objective for the audit of asset accounts?

Which of the following conditions identified during the audit increases the risk of employee fraud?

Confirming a bank account establishes existence but not rights to the cash balance.

Many auditors take an approach to assessing the risk of material misstatement by beginning with an assessment of business risks. a.Define business risks. b.Why have auditors found it effective to take the approach of assessing business risks? c.Identify a business risk and explain how it might affect the auditor's audit procedures.

Which of the following is (are)considered a further audit procedure(s)that may be designed after assessing the risks of material misstatement? Substantive Tests of Details Substantive Analytical Procedures A. Yes Yes B. Yes No C. No Yes D. No No

Engagement letters are used by most auditors in performing professional services. a.Describe the purpose of an engagement letter. b.List four items that are normally included in an engagement letter.

Which of the following is not one of the assertions made by management about an account balance?

A form filed with the SEC when a company changes auditors is a:

To best test existence,an auditor would sample from the:

A successor auditor should always make inquiries of the predecessor auditor before accepting an audit engagement.The successor should specifically inquire about the predecessor's:

Which of the following nonfinancial information would an auditor most likely consider in performing analytical procedures during risk assessment?

In the United States,the hiring of a company's external auditors of a public company is most likely the responsibility of the

Which of the following situations would lead a CPA to conclude that a potential audit engagement should not be accepted?

Which of the following is least likely to be considered a risk assessment procedure?

Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers.The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the: