Exam 9: Execution of the Auditperforming Substantive Procedures

Maury Lions is ready to undertake substantive procedures at an educational institution. Which of the following factors will influence his substantive tests?

Analytical procedures that provide persuasive or corroborative evidence contribute minimal support for the audit conclusion.

The levels of evidence obtained when performing substantive procedures includes:

Using computer assisted audit techniques (CAATs) makes the audit:

Tracing is primarily directed towards verifying which of the following assertions?

Variables estimation sampling is used:

Misstatements can only arise from fraud.

Normally, it is more efficient to carry out substantive procedures than to test and rely on controls.

Analytical procedures may not be useful when they are used on a company with significantly diverse operations and geographical segments.

Matilda Papas has been asked to lead her audit team in the audit of the Toronto Raptors basketball team. She performed a review of their risks and found that the team's risks tend to Be driven by the nature of certain significant accounts or business activities that the Raptors Pursue. This risk is

Indicate whether you agree or disagree with the following statements and explain your reasoning. a. Svetlana Petrova was reviewing the risk profile of Gaz Prom Industries in order to determine detection risk. She concluded: "Both my inherent and control risks are low. I guess I should be willing to accept high detection risk." b. Boris Ivanov had performed an assessment of the accounts payable system at Magnitogirsk Iron and Steel Works Operations in the Urals. His focus was on the completeness assertion for accounts payable balances. Inherent risk and control risk were both high. He decided that because the overall risk assessment was high he would have to set his detection risk high. c. Jana Novotna, the auditor-in-charge of the Mosenergo petroleum giant, was explaining to Valentin Titov the importance of the timing of substantive procedures: "Although we associate examinations of internal controls with interim work and substantive procedures with year-end work, we can perform substantive procedures before year-end if there exists an effective control environment." d. Susan Martin, the audit senior at Canadian National Railways, was explaining to the junior auditor how vouching works: "we take a balance or a transaction from the underlying accounting records and agree it to the supporting evidence inside the company." e. Larisa McCarthy, the auditor-in-charge of the Firestone audit, feels that the large population of sales transactions warrants the use of representative sampling. She mentions to her staff: "Representative sampling using audit risk tables is especially useful when a lot of errors exist in an accounting system and the auditor perceives the risk of understatement to be high."

Stella Zhang has been performing analytical procedures techniques as a substantive test. The techniques that can be used to perform analytical procedures are:

The primary purpose of vouching is to ensure that:

The lack of significant change in an account balance from one year to the next does not necessarily mean that the auditor can assume the balance is reasonable.

Overall significant account conclusion statements are captured on:

Typically, substantive testing tends to be performed:

Ying Ye believes that she will have to employ sophisticated substantive audit procedures for her client. What contributes to this decision?

A significant account is one that could contain material misstatements based upon their materiality and/or relationship to identified inherent and financial statement risks.

Tobias Appel is trying to ensure that he can review controls over purchasing transactions. In addition he would like to substantiate the dollar amounts he is reviewing. What type of Procedures can he perform that will provide evidence as to whether a control is effective as well As if an item is being recorded properly?

Analytical procedures that provide persuasive evidence include: