Exam 6: Audit Responsibilities and Objectives

Discuss the differences in the auditor's responsibilities for discovering (1)material errors, (2)material fraud (3)illegal acts having a direct effect on the financial statements, and (4)illegal acts that do not have a direct effect on the financial statements.

In describing the cycle approach to segmenting an audit, which of the following statements is not true?

Which of the following best describes tests of details of balances?

After the auditor has completed all audit procedures, it is necessary to combine the information obtained to reach an overall conclusion as to whether the financial statements are fairly presented.This is a highly subjective process that relies heavily on:

Which of the following statements is not correct?

Management makes the following assertions about account balances:

One of the characteristics of professional skepticism is ________, which is the conviction to decide for oneself, rather than accepting the claims of others.

The general balance-related audit objective that deals with determining that details in the account balance agree with related master file amounts, foot to the total in the account balance, and agree with the total in the general ledger is the detail tie-in objective.

An audit must be performed with an attitude of professional skepticism.Professional skepticism consists of two primary components: a questioning mind and:

Which of the following is not one of the three categories of assertions?

The effect of a violation of the completeness transaction-related audit objective for cash disbursements transactions would be an overstatement of cash disbursements.

Listed below are several accounts listed from a company's trial balance.Next to each account put the letter corresponding to the transaction cycle used to audit the account: S = Sales and collection cycle I = Inventory and warehousing cycle A = Acquisition and payment cycle C = Capital acquisition and repayment cycle P = Payroll and personnel cycle 1.________ Sales returns and allowances 5.________ Salaries and commissions 2.________ Capital stock 6.________ Cost of goods sold 3.________ Buildings 7.________ Trade accounts receivable 4.________ Notes payable 8.________ Rent

Which of the following statements best describes the auditor's responsibility regarding the detection of fraud?

The concept of professional skepticism has been a foundational element of auditing standards for year and continues to be difficult to implement in practice.Recent academic research on the topic of professional skepticism suggests that there are six characteristics to skepticism.List and briefly describe each of these characteristics.

Most illegal acts affect the financial statements:

When dealing with laws and regulations that do not have a direct effect on the financial statements, the auditor:

When using the cycle approach to segmenting the audit, the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that:

"The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered." This is an example of:

Which of the following is an accurate statement concerning the auditor's responsibility to consider laws and regulations?

The most important general ledger account included in and affecting several cycles is the: