Question 1

Tests of controls are generally more costly to perform than analytical procedures.

Accepted Answer

A) True 
 B)False

Question 2

Which audit tests involve physical examination and confirmation?

Accepted Answer

A) Tests of controls 
B) Tests of transactions 
C) Tests of balances 
D) Analytical procedures 
A) Tests of controls 
B) Tests of transactions 
C) Tests of balances 
D) Analytical procedures

Question 3

Presentation and disclosure related audit objectives would be performed in which phase of the audit process?

Accepted Answer

A) Plan and design audit approach 
B) Perform audit tests for controls and transactions 
C) Perform analytical procedures and tests of balances 
D) Complete the audit and issue the audit report 
A) Plan and design audit approach 
B) Perform audit tests for controls and transactions 
C) Perform analytical procedures and tests of balances 
D) Complete the audit and issue the audit report

Question 4

When the auditor has completed the tests of details of balances and enters phase 4 of the audit process, she must still perform audit procedures for which of the following?

Accepted Answer

A) Contingent liabilities and employee compensation 
B) Contingent liabilities and subsequent events 
C) Subsequent events and contractual commitments 
D) Subsequent events and unrecorded liabilities 
A) Contingent liabilities and employee compensation 
B) Contingent liabilities and subsequent events 
C) Subsequent events and contractual commitments 
D) Subsequent events and unrecorded liabilities

Question 5

Shown below (1 through 5)are the five types of tests which auditors use to determine whether financial statements are fairly stated.Which three are substantive tests?
1)Risk assessment procedures
2)Tests of controls
3)Tests of transactions
4)Substantive analytical procedures
5) Tests of details of balances

Accepted Answer

A) 1, 2, and 3. 
B) 3, 4, and 5. 
C) 2, 3, and 5. 
D) 2, 3, and 4. 
A) 1, 2, and 3. 
B) 3, 4, and 5. 
C) 2, 3, and 5. 
D) 2, 3, and 4.

Question 6

At what point in the audit process are tests of details most appropriately designed?

Accepted Answer

A) Plan and design audit approach 
B) Perform audit tests for controls and transactions 
C) Perform analytical procedures and tests of balances 
D) Complete the audit and issue the audit report 
A) Plan and design audit approach 
B) Perform audit tests for controls and transactions 
C) Perform analytical procedures and tests of balances 
D) Complete the audit and issue the audit report

Question 7

An exception in a test of control provides only an indication of the likelihood of monetary misstatements in the financial statements because tests of controls do not reveal whether monetary misstatements have actually occurred.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a valid basis for omitting an audit test in forming an opinion on the clients financial statements?

Accepted Answer

A) The difficulty and expense involved in testing a particular item 
B) The relative risk involved 
C) The degree of reliance on the relevant internal controls 
D) The relationship between the cost of obtaining evidence and its usefulness 
A) The difficulty and expense involved in testing a particular item 
B) The relative risk involved 
C) The degree of reliance on the relevant internal controls 
D) The relationship between the cost of obtaining evidence and its usefulness

Question 9

The reliance the auditor places on substantive tests in relation to the reliance placed on internal control varies in a relationship that is ordinarily:

Accepted Answer

A) parallel. 
B) inverse. 
C) direct. 
D) equal. 
A) parallel. 
B) inverse. 
C) direct. 
D) equal.

Question 10

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 audit tests for controls and transactions 
C) Perform analytical procedures and tests of balances 
D) Complete the audit and issue the audit report 
A) Plan and design audit approach 
B) Perform audit tests for controls and transactions 
C) Perform analytical procedures and tests of balances 
D) Complete the audit and issue the audit report

Question 11

The choice of which types of tests to use and how extensively they need to be performed must be the same for all audits.

Accepted Answer

A) True 
 B)False

Question 12

Many auditors perform extensive analytical procedures on audits 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 13

In order to promote audit efficiency the auditor considers cost in selecting audit tests to perform.Which of the following audit tests would be the most costly?

Accepted Answer

A) Analytical procedures 
B) Risk assessment procedures 
C) Tests of controls 
D) Tests of details of balances 
A) Analytical procedures 
B) Risk assessment procedures 
C) Tests of controls 
D) Tests of details of balances

Question 14

Tests of controls are directed toward the control's:

Accepted Answer

A) efficiency. 
B) effectiveness. 
C) cost and effectiveness. 
D) cost benefit ratio. 
A) efficiency. 
B) effectiveness. 
C) cost and effectiveness. 
D) cost benefit ratio.

Question 15

Analytical procedures:

Accepted Answer

A) involve comparisons of recorded amounts to expectations developed by management. 
B) are only performed during the planning stage of the audit. 
C) are required to be performed when auditing an account balance. 
D) provide substantive evidence. 
A) involve comparisons of recorded amounts to expectations developed by management. 
B) are only performed during the planning stage of the audit. 
C) are required to be performed when auditing an account balance. 
D) provide substantive evidence.

Question 16

Auditors who test manual controls that rely on IT-generated reports must consider:

Accepted Answer

A) the effectiveness of management's review. 
B) automated controls over the accuracy of information in the report. 
C) both A and B 
D) neither A or B. 
A) the effectiveness of management's review. 
B) automated controls over the accuracy of information in the report. 
C) both A and B 
D) neither A or B.

Question 17

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 18

The purpose of tests of controls is to provide reasonable assurance that the:

Accepted Answer

A) accounting treatment of transactions and balances is valid and proper. 
B) internal control procedures are functioning as intended. 
C) entity has complied with GAAP disclosure requirements. 
D) entity has complied with requirements of quality control. 
A) accounting treatment of transactions and balances is valid and proper. 
B) internal control procedures are functioning as intended. 
C) entity has complied with GAAP disclosure requirements. 
D) entity has complied with requirements of quality control.

Question 19

The extent of tests of details of balances cannot be reduced when transaction-related audit objectives have been satisfied by tests of controls or substantive tests of transactions.

Accepted Answer

A) True 
 B)False

Question 20

In the audit of a public company, automated controls must be tested if they are considered to be key controls for reducing the likelihood of material misstatements in the financial statements.

Accepted Answer

A) True 
 B)False

Exam 13: Overall Audit Strategy and Audit Program

Tests of controls are generally more costly to perform than analytical procedures.

Which audit tests involve physical examination and confirmation?

Presentation and disclosure related audit objectives would be performed in which phase of the audit process?

When the auditor has completed the tests of details of balances and enters phase 4 of the audit process, she must still perform audit procedures for which of the following?

At what point in the audit process are tests of details most appropriately designed?

An exception in a test of control provides only an indication of the likelihood of monetary misstatements in the financial statements because tests of controls do not reveal whether monetary misstatements have actually occurred.

Which of the following is not a valid basis for omitting an audit test in forming an opinion on the clients financial statements?

The reliance the auditor places on substantive tests in relation to the reliance placed on internal control varies in a relationship that is ordinarily:

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

The choice of which types of tests to use and how extensively they need to be performed must be the same for all audits.

Many auditors perform extensive analytical procedures on audits because:

In order to promote audit efficiency the auditor considers cost in selecting audit tests to perform.Which of the following audit tests would be the most costly?

Tests of controls are directed toward the control's:

Analytical procedures:

Auditors who test manual controls that rely on IT-generated reports must consider:

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

The purpose of tests of controls is to provide reasonable assurance that the:

The extent of tests of details of balances cannot be reduced when transaction-related audit objectives have been satisfied by tests of controls or substantive tests of transactions.

In the audit of a public company, automated controls must be tested if they are considered to be key controls for reducing the likelihood of material misstatements in the financial statements.

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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