Question 1

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 2

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 3

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 4

A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a:

Accepted Answer

A)  test of controls. 
B)  substantive test. 
C)  test of attributes. 
D)  monetary-unit sampling test. 
A)  test of controls. 
B)  substantive test. 
C)  test of attributes. 
D)  monetary-unit sampling test.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Which of the following procedures would most likely be performed in response to the auditor's assessment of the risk of monetary misstatements in the financial statements?

Accepted Answer

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

Question 7

Auditors use analytical procedures and tests of details of balances to satisfy planned detection risk.

Accepted Answer

A) True 
 B)False

Question 8

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 9

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 10

Which of the following types of evidence is not available when using substantive tests of transactions?

Accepted Answer

A)  Inspection 
B)  Confirmation 
C)  Inquiries of the client 
D)  Reperformance 
A)  Inspection 
B)  Confirmation 
C)  Inquiries of the client 
D)  Reperformance

Question 11

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 12

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 13

What type of test is used to obtain the most types of evidence?

Accepted Answer

A)  Substantive tests of transactions 
B)  Tests of controls 
C)  Risk assessment tests 
D)  Tests of details of balances 
A)  Substantive tests of transactions 
B)  Tests of controls 
C)  Risk assessment tests 
D)  Tests of details of balances

Question 14

The auditor's understanding of internal control performed as part of risk assessment procedures provides the basis for the auditor's initial assessment of control risk.

Accepted Answer

A) True 
 B)False

Question 15

If tests of controls support the control risk assessment,then ________ in the audit risk model is increased.

Accepted Answer

A)  planned detection risk. 
B)  planned inherent risk. 
C)  planned fraud risk. 
D)  planned assurance risk. 
A)  planned detection risk. 
B)  planned inherent risk. 
C)  planned fraud risk. 
D)  planned assurance risk.

Question 16

Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor's use of tests of details of balances.Which of the following is true?

Accepted Answer

A)  They are likely to be performed prior to the clients end of the fiscal year. 
B)  They are likely to eliminate the need for tests of details of balances. 
C)  They are likely to have no impact on the planned tests of details of balances. 
D)  They are likely to be used only in the audit of internal control. 
A)  They are likely to be performed prior to the clients end of the fiscal year. 
B)  They are likely to eliminate the need for tests of details of balances. 
C)  They are likely to have no impact on the planned tests of details of balances. 
D)  They are likely to be used only in the audit of internal control.

Question 17

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 18

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 19

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 20

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

Exam 13: Developing the Overall Audit Plan and Audit Program

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

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

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

A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a:

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

Which of the following procedures would most likely be performed in response to the auditor's assessment of the risk of monetary misstatements in the financial statements?

Auditors use analytical procedures and tests of details of balances to satisfy planned detection risk.

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

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.

Which of the following types of evidence is not available when using substantive tests of transactions?

Many auditors perform extensive analytical procedures on audits because:

Analytical procedures:

What type of test is used to obtain the most types of evidence?

The auditor's understanding of internal control performed as part of risk assessment procedures provides the basis for the auditor's initial assessment of control risk.

If tests of controls support the control risk assessment,then ________ in the audit risk model is increased.

Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor's use of tests of details of balances.Which of the following is true?

Which of the following tests commonly occur together?

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.

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

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

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Nature and Type of Audit Evidence

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for 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 Inventory and Warehousing Cycle

Audit of the Payroll and Personnel Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Audit Completion

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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