Exam 6: Audit Responsibilities and Objectives

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

The posting and summarization audit objective is the auditor's counterpart to management's assertion of:

The auditor's best defense when material misstatements are not uncovered is to have conducted the audit:

Auditors generally use a financial statement cycle approach when performing a financial statement audit.Describe the transaction flow,using specific examples,from journals to financial statements that produce financial statements.

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

Briefly explain each management assertion related to classes of transactions and events for the period under audit.

Match seven of the terms (a-k)with the definitions provided below (1-7): a.Tests of details of balances b.Tests of controls c.Substantive tests of transactions d.Analytical procedures e.Transaction-related audit objectives f.Management assertions g.Balance-related audit objectives h.Fraud i.Illegal act j.Error k.Management fraud ________ 1.An intentional misstatement of the financial statements. ________ 2.A set of six audit objectives the auditor must meet,including timing,posting and summarization,and accuracy. ________ 3.Implied or expressed representations made by the client about classes of transactions,account balances and disclosures in the financial statements. ________ 4.Audit procedures testing for monetary misstatements to determine whether the balance-related audit objectives have been satisfied for each significant account balance. ________ 5.A set of nine audit objectives the auditor must meet,including completeness,detail tie-in,and rights and obligations. ________ 6.Audit procedures designed to test the effectiveness of control policies and procedures. ________ 7.Use of comparisons and relationships to assess whether account balances or other data appears reasonable.

The audit objective of posting and summarization is associated with the management assertion of accuracy.

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

List the four phases of a Financial Statement Audit

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 2.________ Capital stock 3.________ Buildings 4.________ Notes payable 5.________ Salaries and commissions 6.________ Cost of goods sold 7.________ Trade accounts receivable 8.________ Rent

Auditors have found that generally the most efficient and effective way to conduct audits is to:

The cutoff objective,"transactions near the balance sheet date are recorded in the proper period," is a balance-related audit objective.

The concept of reasonable assurance indicates that the auditor is:

Because they operate the business on a daily basis,a company's management knows more about the company's transactions and related assets,liabilities,and equity than the auditors.

If a client has violated federal tax laws:

The detail tie-in is part of the ________ assertion for account balances.

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

The objective of the audit of financial statements by an independent auditor is to verify that the financial statements are free of misstatements and accurately represent the company's financial position and results of operations.

Determining that the footnote disclosures related to long-term debt are accurate is an example of the ________ audit objective.