Exam 3: Audit Planning, Types of Audit Tests, and Materiality

BDK Accounting is auditing a new client, A La Carte Catering. BDK could save audit time by using work from A La Carte's internal audit staff. The staff consists of three accountants with public accounting experience and certification. A La Carte requires every member of its accounting department to spend two out of every five years on the internal audit staff. Then, the employee is rotated back into the accounting department for a couple of years. What factors should BDK consider when determining whether or not it can use work of the internal audit staff? In this case, what should BDK decide?

A dual-purpose test:

Evaluating a prospective client requires which of the following steps?

A written understanding between the auditor and the client concerning the auditor's responsibility for the discovery of illegal acts is usually set forth in a(n):

Evaluating a prospective client requires which of the following steps?

Which of the following situations would most likely require special audit planning?

There are five general types of audit tests.

All companies must have an audit committee.

The first phase of audit planning is risk assessment.

Which of the following is not an audit procedure that is commonly used in performing tests of controls?

Often in an audit, total combined tolerable misstatement is greater than overall materiality. Why is this the case?

Which of the following is the most important qualitative factor that auditors should consider when making materiality judgments?