Question 1

An example of an opportunity for misappropriation of assets risk factor is

Accepted Answer

A)  compensation inconsistent with expectations. 
B)  lack of complete and timely reconciliations of assets. 
C)  management's practice of committing to creditors to achieve unrealistic forecasts. 
D)  known history of violations of laws and regulations. 
A)  compensation inconsistent with expectations. 
B)  lack of complete and timely reconciliations of assets. 
C)  management's practice of committing to creditors to achieve unrealistic forecasts. 
D)  known history of violations of laws and regulations.

Question 2

Which of the following items would an audit engagement partner likely communicate with the members of his or her audit team during a planning meeting?

Accepted Answer

A)  Responsibility for notifying appropriate individuals of any significant issues or difficulties encountered during the audit. 
B)  Identification of the type of audit report to be issued. 
C)  The need to complete the quarterly review before communicating with any tax professionals assigned to the audit engagement. 
D)  Responsibility for notifying the audit committee and internal auditors of the firm's specific audit approach. 
A)  Responsibility for notifying appropriate individuals of any significant issues or difficulties encountered during the audit. 
B)  Identification of the type of audit report to be issued. 
C)  The need to complete the quarterly review before communicating with any tax professionals assigned to the audit engagement. 
D)  Responsibility for notifying the audit committee and internal auditors of the firm's specific audit approach.

Question 3

An experienced audit team will begin planning the audit before it knows all the specific information about a particular client company because

Accepted Answer

A)  experienced auditors know the general framework of what needs to be done on any audit. 
B)  auditors experienced in the client's industry understand the activities and risks of the industry, which gives them an understanding of the important financial statement accounts and ICFR areas. 
C)  auditors experienced with this client company have already gained quite a bit of information from the client acceptance or continuance processes. 
D)  all of the above 
A)  experienced auditors know the general framework of what needs to be done on any audit. 
B)  auditors experienced in the client's industry understand the activities and risks of the industry, which gives them an understanding of the important financial statement accounts and ICFR areas. 
C)  auditors experienced with this client company have already gained quite a bit of information from the client acceptance or continuance processes. 
D)  all of the above

Question 4

Risk assessment points the auditor to the important areas of the client's operations and financial statements in order to

Accepted Answer

A)  understand important areas of the client's operations and financial statements. 
B)  identify potential problems. 
C)  determine what needs to be accomplished during the audit. 
D)  all of the above 
A)  understand important areas of the client's operations and financial statements. 
B)  identify potential problems. 
C)  determine what needs to be accomplished during the audit. 
D)  all of the above

Question 5

Which of the following is not an area of interest for anti-fraud controls?

Accepted Answer

A)  journal entries and adjustments made in the end-of-period financial reporting process 
B)  related party transactions 
C)  auditor credentials 
D)  significant management estimates 
A)  journal entries and adjustments made in the end-of-period financial reporting process 
B)  related party transactions 
C)  auditor credentials 
D)  significant management estimates

Question 6

Preliminary time budget information is compared to actual time worked and is used for purposes of billing, performance evaluation, and future bidding.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following would not be likely to participate in an audit planning meeting?

Accepted Answer

A)  The core audit engagement team. 
B)  The audit team's tax manager 
C)  The audit team's partner for IT 
D)  The chair of the client's audit committee. 
A)  The core audit engagement team. 
B)  The audit team's tax manager 
C)  The audit team's partner for IT 
D)  The chair of the client's audit committee.

Question 8

An internal control that is ineffective to the extent that it might not prevent the financial statements from being materially misstated is referred to as a

Accepted Answer

A)  significant risk 
B)  substantive error 
C)  material weakness 
D)  tolerable misstatement 
A)  significant risk 
B)  substantive error 
C)  material weakness 
D)  tolerable misstatement

Question 9

A client company's new or modified accounting information system requires more audit effort to understand the new system and assess its design and operating effectiveness.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a form of audit evidence?

Accepted Answer

A)  recalculation 
B)  reperformance 
C)  repetition 
D)  inquiry 
A)  recalculation 
B)  reperformance 
C)  repetition 
D)  inquiry

Question 11

For purposes of an integrated audit, materiality is assessed within the context of users who have

Accepted Answer

A)  appropriate knowledge of business and economic activities 
B)  an understanding that financial statements are prepared and audited to levels of materiality 
C)  the ability to make appropriate economic decisions on the basis of information in the financial statements 
D)  all of the above 
A)  appropriate knowledge of business and economic activities 
B)  an understanding that financial statements are prepared and audited to levels of materiality 
C)  the ability to make appropriate economic decisions on the basis of information in the financial statements 
D)  all of the above

Question 12

If internal auditors provide direct assistance to the external audit team, the independent external auditor must

Accepted Answer

A)  reperform all of the work provided by the internal auditors. 
B)  supervise and evaluate the work performed by the internal auditors. 
C)  refuse to issue an audit opinion, due to a lack of independence. 
D)  indicate a division of responsibility in the performance of the audit. 
A)  reperform all of the work provided by the internal auditors. 
B)  supervise and evaluate the work performed by the internal auditors. 
C)  refuse to issue an audit opinion, due to a lack of independence. 
D)  indicate a division of responsibility in the performance of the audit.

Question 13

An example of an incentive/pressure for fraudulent financial reporting risk factor is

Accepted Answer

A)  a threat to the client company's financial stability caused by rapid growth compared to that of other companies in the same industry. 
B)  significant operations located across international borders in jurisdictions where differing business environments exist. 
C)  inadequate job applicant screening processes for employees with access to cash. 
D)  ineffective communication of the company's ethical standards by management. 
A)  a threat to the client company's financial stability caused by rapid growth compared to that of other companies in the same industry. 
B)  significant operations located across international borders in jurisdictions where differing business environments exist. 
C)  inadequate job applicant screening processes for employees with access to cash. 
D)  ineffective communication of the company's ethical standards by management.

Question 14

Which of the following is not a form of evidence obtained through the auditor's direct personal knowledge?

Accepted Answer

A)  observation 
B)  reperformance 
C)  inquiry 
D)  inspection 
A)  observation 
B)  reperformance 
C)  inquiry 
D)  inspection

Question 15

What is the primary resource used on an audit engagement?

Accepted Answer

A)  the client's IT systems 
B)  the auditor's IT systems 
C)  human resources of the audit firm 
D)  the client's internal auditors 
A)  the client's IT systems 
B)  the auditor's IT systems 
C)  human resources of the audit firm 
D)  the client's internal auditors

Question 16

Going concern issues may arise when:

Accepted Answer

A)  Acquisitions or discontinued operations have recently occurred. 
B)  The accounting information systems have been modified. 
C)  The economy has negatively impacted the client company. 
D)  Changes in applicable accounting standards affect the client company. 
A)  Acquisitions or discontinued operations have recently occurred. 
B)  The accounting information systems have been modified. 
C)  The economy has negatively impacted the client company. 
D)  Changes in applicable accounting standards affect the client company.

Question 17

When audit tests are performed at an interim date, the auditor must

Accepted Answer

A)  obtain a letter from management to confirm the continued performance of internal controls and accuracy of the year-end balances. 
B)  perform roll forward audit procedures to determine whether a control continued to perform the same way through year-end. 
C)  reconcile account balances tested at an interim date with the year-end balances in the same accounts. 
D)  Both b) and c) 
A)  obtain a letter from management to confirm the continued performance of internal controls and accuracy of the year-end balances. 
B)  perform roll forward audit procedures to determine whether a control continued to perform the same way through year-end. 
C)  reconcile account balances tested at an interim date with the year-end balances in the same accounts. 
D)  Both b) and c)

Question 18

Which of the following items are included in the audit planning meeting?

Accepted Answer

A)  brainstorming about fraud risks 
B)  establishing responsibility for preparing the financial statements 
C)  establishing responsibility for monitoring of internal controls 
D)  preparing the engagement letter. 
A)  brainstorming about fraud risks 
B)  establishing responsibility for preparing the financial statements 
C)  establishing responsibility for monitoring of internal controls 
D)  preparing the engagement letter.

Question 19

Sufficient evidence may be provided without examining all of the transactions in an account balance is the auditor uses well-designed

Accepted Answer

A)  sampling approaches 
B)  internal control procedures 
C)  inspection techniques 
D)  assertions related to the fair presentation of account balances. 
A)  sampling approaches 
B)  internal control procedures 
C)  inspection techniques 
D)  assertions related to the fair presentation of account balances.

Question 20

Materiality is a measure of magnitude; yet, it is affected by both quantitative and qualitative factors.

Accepted Answer

A) True 
 B)False

An example of an opportunity for misappropriation of assets risk factor is

Which of the following items would an audit engagement partner likely communicate with the members of his or her audit team during a planning meeting?

An experienced audit team will begin planning the audit before it knows all the specific information about a particular client company because

Risk assessment points the auditor to the important areas of the client's operations and financial statements in order to

Which of the following is not an area of interest for anti-fraud controls?

Preliminary time budget information is compared to actual time worked and is used for purposes of billing, performance evaluation, and future bidding.

Which of the following would not be likely to participate in an audit planning meeting?

An internal control that is ineffective to the extent that it might not prevent the financial statements from being materially misstated is referred to as a

A client company's new or modified accounting information system requires more audit effort to understand the new system and assess its design and operating effectiveness.

Which of the following is not a form of audit evidence?

For purposes of an integrated audit, materiality is assessed within the context of users who have

If internal auditors provide direct assistance to the external audit team, the independent external auditor must

An example of an incentive/pressure for fraudulent financial reporting risk factor is

Which of the following is not a form of evidence obtained through the auditor's direct personal knowledge?

What is the primary resource used on an audit engagement?

Going concern issues may arise when:

When audit tests are performed at an interim date, the auditor must

Which of the following items are included in the audit planning meeting?

Sufficient evidence may be provided without examining all of the transactions in an account balance is the auditor uses well-designed

Materiality is a measure of magnitude; yet, it is affected by both quantitative and qualitative factors.

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

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

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

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 6: Audit Planning and Risk Assessment

An example of an opportunity for misappropriation of assets risk factor is

Which of the following items would an audit engagement partner likely communicate with the members of his or her audit team during a planning meeting?

An experienced audit team will begin planning the audit before it knows all the specific information about a particular client company because

Risk assessment points the auditor to the important areas of the client's operations and financial statements in order to

Which of the following is not an area of interest for anti-fraud controls?

Preliminary time budget information is compared to actual time worked and is used for purposes of billing, performance evaluation, and future bidding.

Which of the following would not be likely to participate in an audit planning meeting?

An internal control that is ineffective to the extent that it might not prevent the financial statements from being materially misstated is referred to as a

A client company's new or modified accounting information system requires more audit effort to understand the new system and assess its design and operating effectiveness.

Which of the following is not a form of audit evidence?

For purposes of an integrated audit, materiality is assessed within the context of users who have

If internal auditors provide direct assistance to the external audit team, the independent external auditor must

An example of an incentive/pressure for fraudulent financial reporting risk factor is

Which of the following is not a form of evidence obtained through the auditor's direct personal knowledge?

What is the primary resource used on an audit engagement?

Going concern issues may arise when:

When audit tests are performed at an interim date, the auditor must

Which of the following items are included in the audit planning meeting?

Sufficient evidence may be provided without examining all of the transactions in an account balance is the auditor uses well-designed

Materiality is a measure of magnitude; yet, it is affected by both quantitative and qualitative factors.

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

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

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

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