Exam 6: Audit Planning and Risk Assessment

For each scenario below, indicate which element of the fraud triangle is present. (a) Large amounts of cash are on hand. (b) Management failed to correct ICFR deficiencies in a timely manner. (c) The organizational structure is complex and lines or authority are unclear. (d) Future employee layoffs are expected. (e) Employee behavior suggests dissatisfaction with the company. (f) Restrictions on the auditor limit access to evidence. (g) Management attempts to influence the scope of the audit work. (h) Industry factors threaten the company's financial stability. (i) Significant related party transactions are audited by another firm. (j) The personal financial situation of management is threatened.

Which of the following is not a consideration for an auditor while "scaling" the audit?

Time budgets are typically

The document that presents all of the issues discussed as part of audit strategy is the

Auditors test the operating effectiveness of internal controls only if they

An IT specialist may be used to inspect systems documentation and perform other procedures for an audit engagement when the client company uses new, emerging technology.

When inquiry, observation, and inspection are all used to trace a transaction as it is initiated, authorized, processed, and recorded, the process is called a(n)

The components of the fraud triangle include incentive, opportunity, and rationalization.

Materiality is first set at the account balance level and is then aggregated to the financial statement level.

Development of the audit strategy includes all of the following activities except

The nature, timing, and extent of audit needed audit tests will depend upon the answers to each of the following questions except

The audit plan documents detailed information about audit procedures to be performed on the engagement.

Statutory audits are required on all integrated audits performed in accordance with international accounting standards.

If an audit program calls for the auditor to interview the client about an important control activity, this is an example of which type of audit procedure?

Which of the following is an example of a specialist who might assist an audit engagement team on a high-risk audit area?

Significant developments within the client that affect audit strategy include:

The materiality threshold for each account balance or class of transactions is called

Which of the following would not be an appropriate benchmark to use in setting financial statement-level materiality?

An audit strategy will focus on going concern issues for a client company operating in an industry which has experienced a recent market downturn.

A highly effective audit would have all of its testing performed at an interim date.