Question 1

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

Accepted Answer

A)  Some items of factory and office equipment do not bear identification numbers. 
B)  Depreciation methods used on the client's tax return differ from those used on the books. 
C)  Assets costing less than $500 are expensed even though the expected life exceeds one year. 
D)  Inventory is comprised of precious stones. 
A)  Some items of factory and office equipment do not bear identification numbers. 
B)  Depreciation methods used on the client's tax return differ from those used on the books. 
C)  Assets costing less than $500 are expensed even though the expected life exceeds one year. 
D)  Inventory is comprised of precious stones.

Question 2

During the initial planning phase of an audit,a CPA most likely would

Accepted Answer

A)  Identify specific internal control activities that are likely to prevent fraud. 
B)  Evaluate the reasonableness of the client's accounting estimates. 
C)  Discuss the timing of the audit procedures with the client's management. 
D)  Inquire of the client's attorney as to any unrecorded claims. 
A)  Identify specific internal control activities that are likely to prevent fraud. 
B)  Evaluate the reasonableness of the client's accounting estimates. 
C)  Discuss the timing of the audit procedures with the client's management. 
D)  Inquire of the client's attorney as to any unrecorded claims.

Question 3

To provide for the greatest degree of independence in performing internal audit functions,an internal auditor most likely should report to the

Accepted Answer

A)  Vice-President - Finance 
B)  Corporate controller. 
C)  Audit committee of the board of directors. 
D)  Corporate stockholders. 
A)  Vice-President - Finance 
B)  Corporate controller. 
C)  Audit committee of the board of directors. 
D)  Corporate stockholders.

Question 4

In the planning stages of an audit,what information does an auditor gain through analytical procedures?

Accepted Answer

An auditor is required to apply analytic

Question 5

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

Accepted Answer

A)  Inquiring. 
B)  Observing. 
C)  Confirming. 
D)  Inspecting. 
A)  Inquiring. 
B)  Observing. 
C)  Confirming. 
D)  Inspecting.

Question 6

Engagement letters include all of the following except:

Accepted Answer

A)  A list of additional services that will be provided. 
B)  A list of adjusting journal entries. 
C)  Information about the audit fee. 
D)  Arrangements involving the use of specialists. 
A)  A list of additional services that will be provided. 
B)  A list of adjusting journal entries. 
C)  Information about the audit fee. 
D)  Arrangements involving the use of specialists.

Question 7

In order to properly preplan the audit,the auditor must determine the engagement team requirements and ensure the independence of the audit team and audit firm.

Accepted Answer

A) True 
 B)False

Question 8

Before accepting an engagement to audit a new client,a CPA is required to obtain

Accepted Answer

A)  An understanding of the prospective client's industry and business. 
B)  The prospective client's signature on the engagement letter. 
C)  A preliminary understanding of the prospective client's control environment. 
D)  The prospective client's consent to make inquiries of the predecessor auditor, if any. 
A)  An understanding of the prospective client's industry and business. 
B)  The prospective client's signature on the engagement letter. 
C)  A preliminary understanding of the prospective client's control environment. 
D)  The prospective client's consent to make inquiries of the predecessor auditor, if any.

Question 9

Which of the following is not a concern as to whether a misstatement is qualitatively material?

Accepted Answer

A)  The misstatement hides a failure to meet analysts' expectations. 
B)  The misstatement is less than 5% of pretax income. 
C)  The misstatement increases management's compensation. 
D)  The misstatement changes a small amount of profit to a small reported loss. 
A)  The misstatement hides a failure to meet analysts' expectations. 
B)  The misstatement is less than 5% of pretax income. 
C)  The misstatement increases management's compensation. 
D)  The misstatement changes a small amount of profit to a small reported loss.

Question 10

Name and describe three supervisory activities that should be performed by the engagement partner and other engagement team members performing supervisory activities.

Accepted Answer

Student's examples may vary:
Inform enga

Question 11

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

Accepted Answer

Answers may vary,but could include:
1.No

Question 12

Discuss the purposes for planning the audit and identify the steps that are performed during this phase of the engagement.

Accepted Answer

Engagement planning involves all the iss

Question 13

The audit committee is directly responsible for the appointment,compensation,and oversight of the work of any accounting firm employed by a public company.

Accepted Answer

A) True 
 B)False

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

During the initial planning phase of an audit,a CPA most likely would

To provide for the greatest degree of independence in performing internal audit functions,an internal auditor most likely should report to the

In the planning stages of an audit,what information does an auditor gain through analytical procedures?

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

Engagement letters include all of the following except:

In order to properly preplan the audit,the auditor must determine the engagement team requirements and ensure the independence of the audit team and audit firm.

Before accepting an engagement to audit a new client,a CPA is required to obtain

Which of the following is not a concern as to whether a misstatement is qualitatively material?

Name and describe three supervisory activities that should be performed by the engagement partner and other engagement team members performing supervisory activities.

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

Discuss the purposes for planning the audit and identify the steps that are performed during this phase of the engagement.

The audit committee is directly responsible for the appointment,compensation,and oversight of the work of any accounting firm employed by a public company.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters

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

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

During the initial planning phase of an audit,a CPA most likely would

To provide for the greatest degree of independence in performing internal audit functions,an internal auditor most likely should report to the

In the planning stages of an audit,what information does an auditor gain through analytical procedures?

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

Engagement letters include all of the following except:

In order to properly preplan the audit,the auditor must determine the engagement team requirements and ensure the independence of the audit team and audit firm.

Before accepting an engagement to audit a new client,a CPA is required to obtain

Which of the following is not a concern as to whether a misstatement is qualitatively material?

Name and describe three supervisory activities that should be performed by the engagement partner and other engagement team members performing supervisory activities.

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

Discuss the purposes for planning the audit and identify the steps that are performed during this phase of the engagement.

The audit committee is directly responsible for the appointment,compensation,and oversight of the work of any accounting firm employed by a public company.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters