Question 1

Classification refers to ensuring that the accounting for transactions is in the period they occur.

Accepted Answer

A) True 
 B)False

Question 2

Identify three general categories of misstatements and give an example of each.

Accepted Answer

Any three of the following:
i. Invalid t

Question 3

The CPA Canada Handbook section "CAS 265: Communicating Deficiencies in Internal Control to Those Charged with Governance and Management" requires that ________.

Accepted Answer

A)  all nontrivial misstatements are communicated to management in writing 
B)  all nontrivial misstatements and possible illegal acts are communicated to management 
C)  all serious control risks uncovered are communicated to management in writing 
D)  only frauds and illegal acts are communicated to management 
A)  all nontrivial misstatements are communicated to management in writing 
B)  all nontrivial misstatements and possible illegal acts are communicated to management 
C)  all serious control risks uncovered are communicated to management in writing 
D)  only frauds and illegal acts are communicated to management

Question 4

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

Accepted Answer

A) True 
 B)False

Question 5

What internal control objective is affected by cut off errors? Why are they of such concern to auditors?

Accepted Answer

The control objective of proper period c

Question 6

If there have been no changes to a control that a previous audit has found to be working effectively, ________.

Accepted Answer

A)  an auditor must still test the controls and not place reliance on the prior year's testing 
B)  an auditor must still test the controls but not to the same extent as the prior year's testing 
C)  an auditor can rely on the prior year's work and not test controls in the current year 
D)  an auditor can rely on the prior year's work but should test the controls every few years 
A)  an auditor must still test the controls and not place reliance on the prior year's testing 
B)  an auditor must still test the controls but not to the same extent as the prior year's testing 
C)  an auditor can rely on the prior year's work and not test controls in the current year 
D)  an auditor can rely on the prior year's work but should test the controls every few years

Question 7

An advantage of using a pre-printed audit questionnaire is that the auditor is less likely to forget to ask some important question.

Accepted Answer

A) True 
 B)False

Question 8

All audit engagements require some minimal reliance on internal controls.

Accepted Answer

A) True 
 B)False

Question 9

Before concluding on the effectiveness of a control, an auditor must determine ________.

Accepted Answer

A)  the required degree of company compliance with control procedures 
B)  the maximum possible dollar amount that would not affect a user's decision based on the financial statements 
C)  the actual degree of company compliance with control procedures 
D)  the nature, extent, and timing of planned substantive procedures 
A)  the required degree of company compliance with control procedures 
B)  the maximum possible dollar amount that would not affect a user's decision based on the financial statements 
C)  the actual degree of company compliance with control procedures 
D)  the nature, extent, and timing of planned substantive procedures

Question 10

Controls such as those to protect inventory should be put in place no matter what the cost.

Accepted Answer

A) True 
 B)False

Question 11

Control tests and substantive tests of balances are easily distinguishable.

Accepted Answer

A) True 
 B)False

Question 12

Why should an auditor not rely on substantive testing to the exclusion of testing internal controls?

Accepted Answer

A major goal in audits is to be efficien

Question 13

An auditor is required to obtain a sufficient understanding of internal control to plan the audit. This requirement encompasses obtaining an understanding of the control environment, the accounting system, and the control policies and procedures.
Required:
A) What are some of the reasons for obtaining an understanding of an audit client's internal control?
B) What audit work is required for an auditor to be able to assess control risk below maximum?
C) Should an auditor always try to obtain enough evidence to be able to assess control risk below maximum? Explain.

Accepted Answer

A) Reasons for obtaining an understandin

Question 14

Internal controls are put in place to keep the company on course toward achieving its goals.

Accepted Answer

A) True 
 B)False

Question 15

An auditor does not need to test ________.

Accepted Answer

A)  control strengths because they are known to be strengths 
B)  control weaknesses because they are known to be weak 
C)  control strengths because they offset weaknesses 
D)  control weaknesses because they are offset by strengths 
A)  control strengths because they are known to be strengths 
B)  control weaknesses because they are known to be weak 
C)  control strengths because they offset weaknesses 
D)  control weaknesses because they are offset by strengths

Question 16

A clean audit is normally associated with weak controls.

Accepted Answer

A) True 
 B)False

Question 17

The internal control objective of accuracy is related to the financial statement assertion of ________.

Accepted Answer

A)  occurrence 
B)  completeness 
C)  valuation 
D)  presentation 
A)  occurrence 
B)  completeness 
C)  valuation 
D)  presentation

Question 18

Anyone who designs a processing system should ________.

Accepted Answer

A)  not do the documentation 
B)  be independent of management 
C)  have access to the data so they can make the system more efficient 
D)  not do the technical programming work 
A)  not do the documentation 
B)  be independent of management 
C)  have access to the data so they can make the system more efficient 
D)  not do the technical programming work

Question 19

Control activities are often designed to speed processing of transactions.

Accepted Answer

A) True 
 B)False

Question 20

One of the auditor's primary concerns with regard to internal controls is ________.

Accepted Answer

A)  the degree to which the internal controls are working as designed 
B)  the possibility of an inherent risk that has to be controlled 
C)  the impact the controls have on the accuracy of the accounting records 
D)  the amount of substantive work to be saved by testing controls instead 
A)  the degree to which the internal controls are working as designed 
B)  the possibility of an inherent risk that has to be controlled 
C)  the impact the controls have on the accuracy of the accounting records 
D)  the amount of substantive work to be saved by testing controls instead

Classification refers to ensuring that the accounting for transactions is in the period they occur.

Identify three general categories of misstatements and give an example of each.

The CPA Canada Handbook section "CAS 265: Communicating Deficiencies in Internal Control to Those Charged with Governance and Management" requires that ________.

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

What internal control objective is affected by cut off errors? Why are they of such concern to auditors?

If there have been no changes to a control that a previous audit has found to be working effectively, ________.

An advantage of using a pre-printed audit questionnaire is that the auditor is less likely to forget to ask some important question.

All audit engagements require some minimal reliance on internal controls.

Before concluding on the effectiveness of a control, an auditor must determine ________.

Controls such as those to protect inventory should be put in place no matter what the cost.

Control tests and substantive tests of balances are easily distinguishable.

Why should an auditor not rely on substantive testing to the exclusion of testing internal controls?

Internal controls are put in place to keep the company on course toward achieving its goals.

An auditor does not need to test ________.

A clean audit is normally associated with weak controls.

The internal control objective of accuracy is related to the financial statement assertion of ________.

Anyone who designs a processing system should ________.

Control activities are often designed to speed processing of transactions.

One of the auditor's primary concerns with regard to internal controls is ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters

Exam 9: Control Assessment and Testing

Classification refers to ensuring that the accounting for transactions is in the period they occur.

Identify three general categories of misstatements and give an example of each.

The CPA Canada Handbook section "CAS 265: Communicating Deficiencies in Internal Control to Those Charged with Governance and Management" requires that ________.

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

What internal control objective is affected by cut off errors? Why are they of such concern to auditors?

If there have been no changes to a control that a previous audit has found to be working effectively, ________.

An advantage of using a pre-printed audit questionnaire is that the auditor is less likely to forget to ask some important question.

All audit engagements require some minimal reliance on internal controls.

Before concluding on the effectiveness of a control, an auditor must determine ________.

Controls such as those to protect inventory should be put in place no matter what the cost.

Control tests and substantive tests of balances are easily distinguishable.

Why should an auditor not rely on substantive testing to the exclusion of testing internal controls?

Internal controls are put in place to keep the company on course toward achieving its goals.

An auditor does not need to test ________.

A clean audit is normally associated with weak controls.

The internal control objective of accuracy is related to the financial statement assertion of ________.

Anyone who designs a processing system should ________.

Control activities are often designed to speed processing of transactions.

One of the auditor's primary concerns with regard to internal controls is ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters