Question 1

An increased extent of tests of controls is most likely to occur when

Accepted Answer

A) it is a first-year audit. 
B) the auditor is doing a "fraud audit." 
C) controls are effective and the preliminary control risk assessment is low. 
D) controls are ineffective and the preliminary control risk assessment is high. 
A) it is a first-year audit. 
B) the auditor is doing a "fraud audit." 
C) controls are effective and the preliminary control risk assessment is low. 
D) controls are ineffective and the preliminary control risk assessment is high. C

Question 2

A system walkthrough is primarily used to help the auditor

Accepted Answer

A) test the ending account balances. 
B) test the details of transactions. 
C) determine whether internal controls have been properly implemented. 
D) determine whether the audit engagement should be accepted. 
A) test the ending account balances. 
B) test the details of transactions. 
C) determine whether internal controls have been properly implemented. 
D) determine whether the audit engagement should be accepted. C

Question 3

Subsequent events represent events that occasionally occur after the balance sheet date,but before the issuance of the financial statements and the auditor's report,that have an effect on the financial statements.

Accepted Answer

A) True 
 B)False  True

Question 4

In the context of an audit of financial statements,substantive tests are audit procedures that

Accepted Answer

A) may be eliminated under certain conditions. 
B) are designed to discover significant subsequent events. 
C) are designed to test for dollar misstatements. 
D) will increase proportionately with the auditor's reliance on internal control. 
A) may be eliminated under certain conditions. 
B) are designed to discover significant subsequent events. 
C) are designed to test for dollar misstatements. 
D) will increase proportionately with the auditor's reliance on internal control.

Question 5

Many auditors perform extensive analytical procedures because

Accepted Answer

A) they are required by GAAS. 
B) they pinpoint errors in accounts. 
C) they indicate areas of potential risk and misstatement. 
D) they are required for tests of controls. 
A) they are required by GAAS. 
B) they pinpoint errors in accounts. 
C) they indicate areas of potential risk and misstatement. 
D) they are required for tests of controls.

Question 6

Tests of controls are performed to support a reduced assessment of detection risk.

Accepted Answer

A) True 
 B)False

Question 7

Tests of details of balances emphasize the overall reasonableness of transactions and the general ledger balances.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is ordinarily designed to detect material dollar errors on the financial statements?

Accepted Answer

A) tests of controls 
B) analytical review procedures 
C) computer controls 
D) tests of details of balances 
A) tests of controls 
B) analytical review procedures 
C) computer controls 
D) tests of details of balances

Question 9

The auditor's understanding of internal control performed as part of risk assessment procedures provides the basis for the auditor's initial assessment of control risk.

Accepted Answer

A) True 
 B)False

Question 10

Substantive tests of balances performed before year-end provide significant assurance and are normally only done when internal controls are ineffective.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

Transaction-related audit objectives would most likely be performed in which phase of the audit process?

Accepted Answer

A) plan and design audit approach 
B) perform tests of controls and substantive tests of transactions 
C) perform substantive analytical procedures and tests of details of balances 
D) complete the audit and issue the audit report 
A) plan and design audit approach 
B) perform tests of controls and substantive tests of transactions 
C) perform substantive analytical procedures and tests of details of balances 
D) complete the audit and issue the audit report

Question 13

Collectively,procedures performed to obtain an understanding of the entity and its environment,including internal controls,represent the auditor's

Accepted Answer

A) audit strategy. 
B) tests of controls. 
C) risk assessment procedures. 
D) tests of transactions. 
A) audit strategy. 
B) tests of controls. 
C) risk assessment procedures. 
D) tests of transactions.

Question 14

In accumulating final evidence upon which to base an audit opinion,the auditor should perform four activities.List the activities below.

Accepted Answer

1. perform final analytical procedures
2

Question 15

When designing an audit program for tests of details of balances,the auditor should make assumptions about inherent risk and control risk,and predictions concerning the outcome of tests of controls,substantive tests of transactions,and analytical procedures.

Accepted Answer

A) True 
 B)False

Question 16

Discuss the major activities and procedures performed by the auditor in the plan and design of the audit approach.

Accepted Answer

The major activities performed in the pl

Question 17

Which of the following is True?

Accepted Answer

A) Tests of details of balances focus on the ending general ledger balances for both balance sheet and income statement accounts. 
B) Tests of details of balances focus on the transactions during the period for both balance sheet and income statement accounts. 
C) Tests of details of balances focus on the auditor's understanding of internal controls. 
D) Tests of details of balances focus on comparisons of recorded amounts to expectations developed by the auditor. 
A) Tests of details of balances focus on the ending general ledger balances for both balance sheet and income statement accounts. 
B) Tests of details of balances focus on the transactions during the period for both balance sheet and income statement accounts. 
C) Tests of details of balances focus on the auditor's understanding of internal controls. 
D) Tests of details of balances focus on comparisons of recorded amounts to expectations developed by the auditor.

Question 18

If all transaction-related audit objectives are met,the auditor does not need to perform substantive test of balances to meet the realizable value audit objective.

Accepted Answer

A) True 
 B)False

Question 19

Auditors follow a four step approach to reduce assessed control risk.Which of the following is not one of the four?

Accepted Answer

A) Apply transaction-related audit objectives to a class of transactions. 
B) Identify accounts that have high inherent risk. 
C) Identify key controls that reduce control risk. 
D) For potential misstatements,design appropriate substantive tests of transactions. 
A) Apply transaction-related audit objectives to a class of transactions. 
B) Identify accounts that have high inherent risk. 
C) Identify key controls that reduce control risk. 
D) For potential misstatements,design appropriate substantive tests of transactions.

Question 20

The evidence mix includes risk assessment procedures.

Accepted Answer

A) True 
 B)False

Exam 13: Overall Audit Strategy and Audit Program

An increased extent of tests of controls is most likely to occur when

A system walkthrough is primarily used to help the auditor

Subsequent events represent events that occasionally occur after the balance sheet date,but before the issuance of the financial statements and the auditor's report,that have an effect on the financial statements.

In the context of an audit of financial statements,substantive tests are audit procedures that

Many auditors perform extensive analytical procedures because

Tests of controls are performed to support a reduced assessment of detection risk.

Tests of details of balances emphasize the overall reasonableness of transactions and the general ledger balances.

Which of the following is ordinarily designed to detect material dollar errors on the financial statements?

The auditor's understanding of internal control performed as part of risk assessment procedures provides the basis for the auditor's initial assessment of control risk.

Substantive tests of balances performed before year-end provide significant assurance and are normally only done when internal controls are ineffective.

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

Transaction-related audit objectives would most likely be performed in which phase of the audit process?

Collectively,procedures performed to obtain an understanding of the entity and its environment,including internal controls,represent the auditor's

In accumulating final evidence upon which to base an audit opinion,the auditor should perform four activities.List the activities below.

When designing an audit program for tests of details of balances,the auditor should make assumptions about inherent risk and control risk,and predictions concerning the outcome of tests of controls,substantive tests of transactions,and analytical procedures.

Discuss the major activities and procedures performed by the auditor in the plan and design of the audit approach.

Which of the following is True?

If all transaction-related audit objectives are met,the auditor does not need to perform substantive test of balances to meet the realizable value audit objective.

Auditors follow a four step approach to reduce assessed control risk.Which of the following is not one of the four?

The evidence mix includes risk assessment procedures.

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Audit of the Sales and Collection Cycle: Tests of Controls

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

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters