Question 1

As AP risk decreases, then:

Accepted Answer

A)  detection risk increases. 
B)  audit risk decreases. 
C)  inherent risk increases. 
D)  Both a and b 
A)  detection risk increases. 
B)  audit risk decreases. 
C)  inherent risk increases. 
D)  Both a and b

Question 2

Deciding that internal controls are not effective when they in fact they are is an example of assessing control risk too low.

Accepted Answer

A) True 
 B)False

Question 3

Use of benchmarking allows the auditor to:

Accepted Answer

A)  test the application controls only when changes are made to the application program. 
B)  test the general controls only when changes are made to the operating system. 
C)  reduce the scope of testing for general controls. 
D)  All of the above. 
A)  test the application controls only when changes are made to the application program. 
B)  test the general controls only when changes are made to the operating system. 
C)  reduce the scope of testing for general controls. 
D)  All of the above.

Question 4

Control objectives relate to assertions.

Accepted Answer

A) True 
 B)False

Question 5

All things being equal, as the risk of assessing control risk too low __________; sample size __________:

Accepted Answer

A)  increases; decreases. 
B)  increases; increases. 
C)  decreases; decreases. 
D)  None of the above. 
A)  increases; decreases. 
B)  increases; increases. 
C)  decreases; decreases. 
D)  None of the above.

Question 6

Benchmarking allows auditors to skip testing of application controls if ITGC are effective.

Accepted Answer

A) True 
 B)False

Question 7

The advantages of using parallel processing verses the test data approach is:

Accepted Answer

A)  parallel processing tests the entire input, processing, and output functions. 
B)  parallel processing uses actual client data. 
C)  parallel processing prevents the risk of client data being infected with test data. 
D)  All of the above. 
A)  parallel processing tests the entire input, processing, and output functions. 
B)  parallel processing uses actual client data. 
C)  parallel processing prevents the risk of client data being infected with test data. 
D)  All of the above.

Question 8

When testing the occurrence assertion, the auditor may:

Accepted Answer

A)  examine supporting documentation for paid invoices. 
B)  examine open purchase orders. 
C)  examine the appropriate journals for evidence of posting. 
D)  All of the above. 
A)  examine supporting documentation for paid invoices. 
B)  examine open purchase orders. 
C)  examine the appropriate journals for evidence of posting. 
D)  All of the above.

Question 9

The client's correct interpretation of GAAP in company policies is approved by:

Accepted Answer

A)  the board of directors. 
B)  top financial management. 
C)  the audit committee. 
D)  Both b and c 
A)  the board of directors. 
B)  top financial management. 
C)  the audit committee. 
D)  Both b and c

Question 10

Detection risk is a function of:

Accepted Answer

A)  tests of details of balances. 
B)  the scope of substantive balances. 
C)  the risk a material misstatement is missed by the audit's analytical procedures. 
D)  Both a and c 
A)  tests of details of balances. 
B)  the scope of substantive balances. 
C)  the risk a material misstatement is missed by the audit's analytical procedures. 
D)  Both a and c

Question 11

Reviewing sales invoices and asking a sales manager to explain why a price deviation occurred is an example of which audit testing procedure(s):

Accepted Answer

A)  observation. 
B)  inquiry. 
C)  inspection. 
D)  Both b and c 
A)  observation. 
B)  inquiry. 
C)  inspection. 
D)  Both b and c

Question 12

Gloria is a newly hired inexperienced staff associate at a local accounting firm.
She is given the task of performing a control test on the ICFR portion of the integrated
audit for one of her firm's larger clients. Gloria conducts her test and finds no
control deviations. She concludes that the control she tested is effective. Gloria marked
the step complete in the audit program.When the senior on the engagement started
the review, there were no work papers that documented Gloria's work.
Required:
(a) List the information Gloria should have included in her work paper documentation.
(b)Would any aspect of the procedure Gloria performed affect the permanent work
paper file?

Accepted Answer

(a) Gloria should include the nature, ti

Question 13

Examining vouchers for evidence of correct authorization is an example of attribute sampling.

Accepted Answer

A) True 
 B)False

Question 14

Under what circumstances can an auditor rely exclusively on entity-level controls for its test of IFGC?

Accepted Answer

A)  If the controls are pervasive. 
B)  If the controls achieve the greatest precision. 
C)  If the controls support those in the application processes. 
D)  All of the above. 
A)  If the controls are pervasive. 
B)  If the controls achieve the greatest precision. 
C)  If the controls support those in the application processes. 
D)  All of the above.

Question 15

Client A has equity interests in several affiliates. In addition, Client A sits on the Board of Directors for Company B, one of the affiliates. If Client A decides to appoint his spouse as the managing director at Company B, then which of the following would be an example of a related-party transaction?

Accepted Answer

A)  Sales between Client A and all of its affiliates. 
B)  Sales between Client A and Company B. 
C)  Sales from Company B to another of Client A's affiliates. 
D)  All of the above. 
A)  Sales between Client A and all of its affiliates. 
B)  Sales between Client A and Company B. 
C)  Sales from Company B to another of Client A's affiliates. 
D)  All of the above.

Question 16

Inherent risk cannot be controlled by the auditor.

Accepted Answer

A) True 
 B)False

Question 17

Entity-level controls:

Accepted Answer

A)  are pervasive. 
B)  affect only top management. 
C)  can be less than effective if application controls are strong. 
D)  All of the above. 
A)  are pervasive. 
B)  affect only top management. 
C)  can be less than effective if application controls are strong. 
D)  All of the above.

Question 18

The test data approach works well when testing which type of control?

Accepted Answer

A)  Output controls. 
B)  Error handling procedures. 
C)  Output accuracy. 
D)  All of the above. 
A)  Output controls. 
B)  Error handling procedures. 
C)  Output accuracy. 
D)  All of the above.

Question 19

Which of the following is considered a service organization?

Accepted Answer

A)  arrangements between a company and its pension trustee. 
B)  arrangements between contracted workers and the company. 
C)  arrangements between landscapers and the company. 
D)  All of the above are potential service organizations. 
A)  arrangements between a company and its pension trustee. 
B)  arrangements between contracted workers and the company. 
C)  arrangements between landscapers and the company. 
D)  All of the above are potential service organizations.

Question 20

Client A hires part-time seasonal employees to perform routine accounting tasks during periods of high transaction volume. The employees frequently make mistakes, some of which are material, but these are usually detected by a supervisor who reviews their work. This arrangement in said to:

Accepted Answer

A)  be a serious control problem . 
B)  be a serious problem with an effective compensating control. 
C)  be a serious problem without an effective compensating control. 
D)  require a qualified audit opinion regarding the ICFR. 
A)  be a serious control problem . 
B)  be a serious problem with an effective compensating control. 
C)  be a serious problem without an effective compensating control. 
D)  require a qualified audit opinion regarding the ICFR.

As AP risk decreases, then:

Deciding that internal controls are not effective when they in fact they are is an example of assessing control risk too low.

Use of benchmarking allows the auditor to:

Control objectives relate to assertions.

All things being equal, as the risk of assessing control risk too low ; sample size :

Benchmarking allows auditors to skip testing of application controls if ITGC are effective.

The advantages of using parallel processing verses the test data approach is:

When testing the occurrence assertion, the auditor may:

The client's correct interpretation of GAAP in company policies is approved by:

Detection risk is a function of:

Reviewing sales invoices and asking a sales manager to explain why a price deviation occurred is an example of which audit testing procedure(s):

Examining vouchers for evidence of correct authorization is an example of attribute sampling.

Under what circumstances can an auditor rely exclusively on entity-level controls for its test of IFGC?

Inherent risk cannot be controlled by the auditor.

Entity-level controls:

The test data approach works well when testing which type of control?

Which of the following is considered a service organization?

Client A hires part-time seasonal employees to perform routine accounting tasks during periods of high transaction volume. The employees frequently make mistakes, some of which are material, but these are usually detected by a supervisor who reviews their work. This arrangement in said to:

An Introduction to Auditing

Overview of an Integrated Audit

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Substantive Procedures and the Financial Statement Audit

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Assets, Liabilities and Equity Related to the Financing Cycle

Topics Beyond the Integrated Audit

Filters

Exam 8: Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

As AP risk decreases, then:

Deciding that internal controls are not effective when they in fact they are is an example of assessing control risk too low.

Use of benchmarking allows the auditor to:

Control objectives relate to assertions.

All things being equal, as the risk of assessing control risk too low __________; sample size __________:

Benchmarking allows auditors to skip testing of application controls if ITGC are effective.

The advantages of using parallel processing verses the test data approach is:

When testing the occurrence assertion, the auditor may:

The client's correct interpretation of GAAP in company policies is approved by:

Detection risk is a function of:

Reviewing sales invoices and asking a sales manager to explain why a price deviation occurred is an example of which audit testing procedure(s):

Examining vouchers for evidence of correct authorization is an example of attribute sampling.

Under what circumstances can an auditor rely exclusively on entity-level controls for its test of IFGC?

Inherent risk cannot be controlled by the auditor.

Entity-level controls:

The test data approach works well when testing which type of control?

Which of the following is considered a service organization?

Client A hires part-time seasonal employees to perform routine accounting tasks during periods of high transaction volume. The employees frequently make mistakes, some of which are material, but these are usually detected by a supervisor who reviews their work. This arrangement in said to:

An Introduction to Auditing

Overview of an Integrated Audit

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Substantive Procedures and the Financial Statement Audit

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Assets, Liabilities and Equity Related to the Financing Cycle

Topics Beyond the Integrated Audit

Filters

All things being equal, as the risk of assessing control risk too low ; sample size :