Exam 6: Audit Planning, understanding the Client, assessing Risks, and Responding

Which statement is correct relating to a potential successor auditor's responsibility for communicating with the predecessor auditors in connection with a prospective new audit client?

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(Multiple Choice)

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Question 1

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Tracing from source documents forward to ledgers is most likely to address which assertion related to posted entries:

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Question 2

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Many auditors take an approach to assessing the risk of material misstatement by beginning with an assessment of business risks. a.Define business risks. b.Why have auditors found it effective to take the approach of assessing business risks? c.Identify a business risk and explain how it might affect the auditor's audit procedures.

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Question 3

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a.Business risks are those that threaten management's ability to achieve the organization's objectives.
b.Auditors have found this approach effective because significant business risks often create related risks of material misstatement (inherent risks)that the auditors should address in designing their audit procedures.
c.Students may provide a number of examples.The textbook provides the following:
Assume that the auditors have identified as a significant business risk and audit risk that sales personnel,informally or through written side agreements,may be modifying the terms of contracts with customers which may affect the amount of revenue that should be recognized.The auditors must design tests that are focused on determining whether such modifications of terms have been made,perhaps by obtaining tailored confirmations from customers about the existence of such side agreements.

Which of the following is not a general objective for the audit of asset accounts?

(Multiple Choice)

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Question 4

Which of the following conditions identified during the audit increases the risk of employee fraud?

(Multiple Choice)

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Question 5

When planning an audit,an auditor should:

(Multiple Choice)

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Question 6

Which of the following statements is accurate about "fraud risk factors" considered when conducting an audit?

(Multiple Choice)

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Question 7

Which of the following circumstances would an auditor most likely consider a risk factor relating to misstatements arising from fraudulent financial reporting?

(Multiple Choice)

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Question 8

Which of the following procedures is not performed as a part of planning an audit engagement?

(Multiple Choice)

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Question 9

Which of the following is not an example of a likely adjustment in the auditors' overall audit approach when significant risk is found to exist?

(Multiple Choice)

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Question 10

Engagement letters are used by most auditors in performing professional services. a.Describe the purpose of an engagement letter. b.List four items that are normally included in an engagement letter.

(Essay)

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Question 11

An audit plan includes a detailed listing of the audit procedures to be performed in the verification of items in the financial statements.

(True/False)

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Question 12

Which of the following is correct concerning requirements about auditor communications about fraud?

(Multiple Choice)

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Question 13

Which of the following factors would most likely cause a CPA to decide not to accept a new audit engagement?

(Multiple Choice)

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Question 14

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

(Multiple Choice)

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Question 15

The auditors will not ordinarily initiate discussion with the audit committee concerning the:

(Multiple Choice)

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Question 16

Auditors perform various tasks in planning an audit engagement.Provide an overall description of how each task is performed and its purpose. a.Obtain an understanding of the client's business. b.Assess audit risk and materiality for the engagement. c.Assess fraud risk. d.Assess the risk of material misstatement of assertions about financial statement accounts and classes of transactions.

(Essay)

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Question 17

Preliminary arrangements agreed to by the auditors and the client should be reduced to writing by the auditors.The best place to set forth these arrangements is in:

(Multiple Choice)

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Question 18

As a part of the planning process,the auditors often prepare an audit plan,an audit program,and a time budget. a.Describe an audit plan and explain its purpose. b.Describe an audit program and explain its purpose. c.Describe a time budget and explain its purpose.

(Essay)

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Question 19

In using the information on the statement of cash flows while obtaining an understanding of a profitable,growing company,which of the following would ordinarily be least surprising to an auditor?

(Multiple Choice)

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Question 20

Showing 1 - 20 of 78

Which statement is correct relating to a potential successor auditor's responsibility for communicating with the predecessor auditors in connection with a prospective new audit client?

Tracing from source documents forward to ledgers is most likely to address which assertion related to posted entries:

Which of the following is not a general objective for the audit of asset accounts?

Which of the following conditions identified during the audit increases the risk of employee fraud?

When planning an audit,an auditor should:

Which of the following statements is accurate about "fraud risk factors" considered when conducting an audit?

Which of the following circumstances would an auditor most likely consider a risk factor relating to misstatements arising from fraudulent financial reporting?

Which of the following procedures is not performed as a part of planning an audit engagement?

Which of the following is not an example of a likely adjustment in the auditors' overall audit approach when significant risk is found to exist?

Engagement letters are used by most auditors in performing professional services. a.Describe the purpose of an engagement letter. b.List four items that are normally included in an engagement letter.

An audit plan includes a detailed listing of the audit procedures to be performed in the verification of items in the financial statements.

Which of the following is correct concerning requirements about auditor communications about fraud?

Which of the following factors would most likely cause a CPA to decide not to accept a new audit engagement?

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

The auditors will not ordinarily initiate discussion with the audit committee concerning the:

Preliminary arrangements agreed to by the auditors and the client should be reduced to writing by the auditors.The best place to set forth these arrangements is in:

As a part of the planning process,the auditors often prepare an audit plan,an audit program,and a time budget. a.Describe an audit plan and explain its purpose. b.Describe an audit program and explain its purpose. c.Describe a time budget and explain its purpose.

In using the information on the statement of cash flows while obtaining an understanding of a profitable,growing company,which of the following would ordinarily be least surprising to an auditor?

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of CPAS

Audit Evidence and Documentation

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property Plant and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

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