Question 1

A deficiency uncovered in the audit of internal control is explained by which of the following in relation to a financial statement misstatement?

Accepted Answer

A) The amount of the misstatement 
B) The likelihood of the misstatement 
C) The amount, likelihood, and classification of the misstatement 
D) The amount and the classification of the misstatement 
A) The amount of the misstatement 
B) The likelihood of the misstatement 
C) The amount, likelihood, and classification of the misstatement 
D) The amount and the classification of the misstatement

Question 2

Three factors the auditor considers when assessing control risk are: the auditor's belief concerning the effectiveness of internal controls, the results of tests of controls, and the cost-effectiveness of a reduced assessed control risk.Identify the combination of conditions for these three factors that is required before a reduction in substantive testing is permitted.

Accepted Answer

a reduction in substantive testing is pe

Question 3

List each of the five types of audit tests and give at least two types of evidence that may be obtained from each type of test.

Accepted Answer

•Risk assessment procedures - documentat

Question 4

Only tests of details of balances involve physical examination and confirmation.

Accepted Answer

A) True 
 B)False

Question 5

There are three stages of the audit in which analytical procedures are performed.Identify each of these three stages and, for each stage, discuss the purpose of performing analytical procedures in that stage.Also indicate in which stage(s)analytical procedures are required by current professional auditing standards.

Accepted Answer

Analytical procedures are performed in t

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Management implements internal controls to ensure that all required footnote disclosures are accurate.Auditors tests those controls to provide evidence supporting the ________ presentation.

Accepted Answer

A) completeness and valuation 
B) completeness and accuracy 
C) rights and obligations and existence 
D) occurrence and accuracy 
A) completeness and valuation 
B) completeness and accuracy 
C) rights and obligations and existence 
D) occurrence and accuracy

Question 8

Because of the high cost of tests of details of balances, auditors do not perform this type fo testing unless fraud is suspected.

Accepted Answer

A) True 
 B)False

Question 9

If no material differences are found using analytical procedures and the auditor concludes that misstatements are not likely to have occurred:

Accepted Answer

A) other substantive tests may be reduced. 
B) it will be necessary to increase the tests of balances. 
C) it will not be necessary to perform tests of balances. 
D) it will be necessary to increase the tests of transactions. 
A) other substantive tests may be reduced. 
B) it will be necessary to increase the tests of balances. 
C) it will not be necessary to perform tests of balances. 
D) it will be necessary to increase the tests of transactions.

Question 10

If inherent risk is increased to medium from low, tests of details of balances can be reduced.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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.

Question 13

Which of the following further audit procedures are used to determine whether all six transaction-related audit objectives have been achieved for each class of transactions?

Accepted Answer

A) Tests of controls 
B) Risk assessment procedures 
C) Substantive tests of transactions 
D) Preliminary analytical procedures 
A) Tests of controls 
B) Risk assessment procedures 
C) Substantive tests of transactions 
D) Preliminary analytical procedures

Question 14

Once auditors determine an automated control is functioning properly, they can focus subsequent tests on assessing whether any changes have occurred that will limit the effectiveness of the control.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is/are performed in an audit of internal control over financial reporting?

Accepted Answer

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

Question 16

Which of the following tests commonly occur together?

Accepted Answer

A) Substantive tests of transactions and tests of controls 
B) Substantive tests of transactions and obtaining an understanding of internal controls 
C) Analytical procedures and tests of controls 
D) Tests of controls and tests of details of balances 
A) Substantive tests of transactions and tests of controls 
B) Substantive tests of transactions and obtaining an understanding of internal controls 
C) Analytical procedures and tests of controls 
D) Tests of controls and tests of details of balances

Question 17

A major part of the auditor's risk assessment procedures is done to obtain an understanding of internal control.

Accepted Answer

A) True 
 B)False

Question 18

Discuss the relationship of each of the following to the extent of planned tests of details of balances: (1)tolerable misstatement, (2)inherent risk, (3)control risk, and (4)acceptable audit risk.

Accepted Answer

Inherent risk and control risk are direc

Question 19

Analytical procedures are the most expensive type of audit test to perform because of the expertise and training required to properly use them.

Accepted Answer

A) True 
 B)False

Question 20

Substantive tests of transactions and control tests are often conducted simultaneously.

Accepted Answer

A) True 
 B)False

Exam 13: Overall Audit Strategy and Audit Program

A deficiency uncovered in the audit of internal control is explained by which of the following in relation to a financial statement misstatement?

List each of the five types of audit tests and give at least two types of evidence that may be obtained from each type of test.

Only tests of details of balances involve physical examination and confirmation.

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

Management implements internal controls to ensure that all required footnote disclosures are accurate.Auditors tests those controls to provide evidence supporting the ________ presentation.

Because of the high cost of tests of details of balances, auditors do not perform this type fo testing unless fraud is suspected.

If no material differences are found using analytical procedures and the auditor concludes that misstatements are not likely to have occurred:

If inherent risk is increased to medium from low, tests of details of balances can be reduced.

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.

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

Which of the following further audit procedures are used to determine whether all six transaction-related audit objectives have been achieved for each class of transactions?

Once auditors determine an automated control is functioning properly, they can focus subsequent tests on assessing whether any changes have occurred that will limit the effectiveness of the control.

Which of the following is/are performed in an audit of internal control over financial reporting?

Which of the following tests commonly occur together?

A major part of the auditor's risk assessment procedures is done to obtain an understanding of internal control.

Discuss the relationship of each of the following to the extent of planned tests of details of balances: (1)tolerable misstatement, (2)inherent risk, (3)control risk, and (4)acceptable audit risk.

Analytical procedures are the most expensive type of audit test to perform because of the expertise and training required to properly use them.

Substantive tests of transactions and control tests are often conducted simultaneously.

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

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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

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