Question 1

When assessing fraud risk, an auditor will adopt an attitude of:

Accepted Answer

A)  Confidentiality. 
B)  Professional scepticism. 
C)  Belief in management. 
D)  None of the above. 
A)  Confidentiality. 
B)  Professional scepticism. 
C)  Belief in management. 
D)  None of the above. B

Question 2

The more competitive an audit client's industry, the less pressure is placed on the client's
profits.

Accepted Answer

A) True 
 B)False  False

Question 3

A client's corporate governance structure is assessed when planning an audit.

Accepted Answer

A) True 
 B)False  True

Question 4

The execution stage of an audit involves:

Accepted Answer

A)  evaluating the results of the detailed testing and forming an opinion on the fair presentation of the client's financial statements. 
B)  the assessment of the audit firm's quality control procedures. 
C)  the performance of detailed tests of controls and substantive testing of transactions and accounts. 
D)  gaining an understanding of the client. 
A)  evaluating the results of the detailed testing and forming an opinion on the fair presentation of the client's financial statements. 
B)  the assessment of the audit firm's quality control procedures. 
C)  the performance of detailed tests of controls and substantive testing of transactions and accounts. 
D)  gaining an understanding of the client.

Question 5

Preliminary risk identification can be affected by:

Accepted Answer

A)  fraud risk. 
B)  corporate governance. 
C)  Both a and b 
D)  None of the above. 
A)  fraud risk. 
B)  corporate governance. 
C)  Both a and b 
D)  None of the above.

Question 6

Claudia Martel knows that financial reporting fraud transactions require disclosure. However, she is not sure whether related party transactions require disclosure. You advise her
That related party transactions require

Accepted Answer

A)  disclosure. 
B)  no disclosure. 
C)  disclosure only if there is risk of fraud. 
D)  auditor judgment. 
A)  disclosure. 
B)  no disclosure. 
C)  disclosure only if there is risk of fraud. 
D)  auditor judgment.

Question 7

During the planning stage of a grocery chain, Seren Dagdeviren tried to determine which procedures would be appropriate. Which of these procedures, if any, would you use in the
Planning phase of the audit?

Accepted Answer

A)  observation and inspection 
B)  analytical procedures 
C)  both a and b 
D)  none of the above 
A)  observation and inspection 
B)  analytical procedures 
C)  both a and b 
D)  none of the above

Question 8

The planning stage of an audit involves the performance of detailed tests of controls and
substantive testing of transactions and accounts.

Accepted Answer

A) True 
 B)False

Question 9

Auditors can assess the adequacy of their client's closing procedures by:

Accepted Answer

A)  Checking the accuracy of accrual calculations around year-end. 
B)  Looking at earnings trends to assess whether reported income is in line with similar periods in prior years. 
C)  a and b. 
D)  None of the above. 
A)  Checking the accuracy of accrual calculations around year-end. 
B)  Looking at earnings trends to assess whether reported income is in line with similar periods in prior years. 
C)  a and b. 
D)  None of the above.

Question 10

If auditors believe there is a risk that expenses incurred before year-end will be excluded from the current year's expenses, they will:

Accepted Answer

A)  Send out confirmation requests to a sample of the client's debtors. 
B)  Trace transactions recorded close to year-end to source documentation. 
C)  Perform analytical review analysis on the client's statement of financial position. 
D)  None of the above. 
A)  Send out confirmation requests to a sample of the client's debtors. 
B)  Trace transactions recorded close to year-end to source documentation. 
C)  Perform analytical review analysis on the client's statement of financial position. 
D)  None of the above.

Question 11

Which of the following is an example of information used by auditors in gaining an understanding of a client at the entity level?

Accepted Answer

A)  The level of competition in the client's industry 
B)  Whether the client is an importer or exporter of goods 
C)  The client's ability to withstand currency fluctuations 
D)  The level of government support in the client's industry 
A)  The level of competition in the client's industry 
B)  Whether the client is an importer or exporter of goods 
C)  The client's ability to withstand currency fluctuations 
D)  The level of government support in the client's industry

Question 12

Corporate governance means:

Accepted Answer

A)  the viability of a company to remain in business for the foreseeable future. 
B)  the rules, systems and processes within companies used to guide and control them. 
C)  an intentional act through the use of deception to obtain an unjust or illegal advantage. 
D)  the processes used by a client when finalizing the accounts for an accounting period. 
A)  the viability of a company to remain in business for the foreseeable future. 
B)  the rules, systems and processes within companies used to guide and control them. 
C)  an intentional act through the use of deception to obtain an unjust or illegal advantage. 
D)  the processes used by a client when finalizing the accounts for an accounting period.

Question 13

What should auditors do if there are risk factors that indicate that the going concern assumption is at risk?

Accepted Answer

If the auditor identifies risk factors t

Question 14

In assessing the client's relationship with its employees, the auditor will consider:

Accepted Answer

A)  The level of unionization among the workforce. 
B)  The attitude of staff to their employer. 
C)  How well a client pays its employees. 
D)  All of the above. 
A)  The level of unionization among the workforce. 
B)  The attitude of staff to their employer. 
C)  How well a client pays its employees. 
D)  All of the above.

Question 15

Wilfred Dominic was meeting with his manager to plan audit strategy in order to determine the amount of time to spend testing the client's internal controls and conducting detailed testing
Of transactions and account balances. Determining the audit strategy occurs during which phase
Of the audit?

Accepted Answer

A)  client acceptance stage 
B)  planning stage 
C)  performing stage 
D)  reporting stage 
A)  client acceptance stage 
B)  planning stage 
C)  performing stage 
D)  reporting stage

Question 16

Checking the accuracy of accrual calculations around year-end is an example of how auditors can assess the adequacy of their client's closing procedures.

Accepted Answer

A)  risk identification and strategy 
B)  understanding the client 
C)  risk and materiality assessment 
D)  all of the above 
A)  risk identification and strategy 
B)  understanding the client 
C)  risk and materiality assessment 
D)  all of the above

Question 17

If auditors identify risk factors that indicate that the going concern assumption is in doubt, they will:

Accepted Answer

A)  Undertake procedures to gather evidence regarding each risk factor. 
B)  Refuse to continue as the auditor of their client. 
C)  Report the client to the Canada Revenue Agency. 
D)  Reduce the extent of further audit testing that they undertake. 
A)  Undertake procedures to gather evidence regarding each risk factor. 
B)  Refuse to continue as the auditor of their client. 
C)  Report the client to the Canada Revenue Agency. 
D)  Reduce the extent of further audit testing that they undertake.

Question 18

When Sheila Copes, CPA audited a new client she asked questions about what the client does, how the client functions, the ownership structure of the client and its sources of financing.
She was getting an understanding of the client at the

Accepted Answer

A)  entity level. 
B)  industry level. 
C)  economy level. 
D)  all of the above. 
A)  entity level. 
B)  industry level. 
C)  economy level. 
D)  all of the above.

Question 19

When gaining an understanding of their client, at which level do auditors not usually consider the relevant issues?

Accepted Answer

A)  audit committee level 
B)  economy level 
C)  entity level 
D)  industry level 
A)  audit committee level 
B)  economy level 
C)  entity level 
D)  industry level

Question 20

Indicate whether you agree or disagree with the following statements and explain your reasoning.
a) Related party transactions require proper identification and consideration when considering risk. However, there is no requirement to disclose related party transactions unless they have an impact on material misstatements.
b) When assessing fraud risk, auditors should adopt an attitude of professional scepticism to ensure that any indicator of a potential fraud is properly investigated.
c) The responsibility for preventing and detecting fraud rests with those charged with governance at the client as well as the auditors.
d) The auditor should not ask management and those charged with governance if they are aware of a known fraud or suspect there has been fraud.
e) Elvie Lee explained to her friend how application controls work: "Application controls are designed to prevent and detect a material misstatement in the financial statements."

Accepted Answer

a) Disagree. It is the responsibility of

When assessing fraud risk, an auditor will adopt an attitude of:

The more competitive an audit client's industry, the less pressure is placed on the client's profits.

A client's corporate governance structure is assessed when planning an audit.

The execution stage of an audit involves:

Preliminary risk identification can be affected by:

Claudia Martel knows that financial reporting fraud transactions require disclosure. However, she is not sure whether related party transactions require disclosure. You advise her That related party transactions require

During the planning stage of a grocery chain, Seren Dagdeviren tried to determine which procedures would be appropriate. Which of these procedures, if any, would you use in the Planning phase of the audit?

The planning stage of an audit involves the performance of detailed tests of controls and substantive testing of transactions and accounts.

Auditors can assess the adequacy of their client's closing procedures by:

If auditors believe there is a risk that expenses incurred before year-end will be excluded from the current year's expenses, they will:

Which of the following is an example of information used by auditors in gaining an understanding of a client at the entity level?

Corporate governance means:

What should auditors do if there are risk factors that indicate that the going concern assumption is at risk?

In assessing the client's relationship with its employees, the auditor will consider:

Wilfred Dominic was meeting with his manager to plan audit strategy in order to determine the amount of time to spend testing the client's internal controls and conducting detailed testing Of transactions and account balances. Determining the audit strategy occurs during which phase Of the audit?

Checking the accuracy of accrual calculations around year-end is an example of how auditors can assess the adequacy of their client's closing procedures.

If auditors identify risk factors that indicate that the going concern assumption is in doubt, they will:

When Sheila Copes, CPA audited a new client she asked questions about what the client does, how the client functions, the ownership structure of the client and its sources of financing. She was getting an understanding of the client at the

When gaining an understanding of their client, at which level do auditors not usually consider the relevant issues?

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters

Exam 3: Audit Planning I

When assessing fraud risk, an auditor will adopt an attitude of:

The more competitive an audit client's industry, the less pressure is placed on the client's profits.

A client's corporate governance structure is assessed when planning an audit.

The execution stage of an audit involves:

Preliminary risk identification can be affected by:

Claudia Martel knows that financial reporting fraud transactions require disclosure. However, she is not sure whether related party transactions require disclosure. You advise her That related party transactions require

During the planning stage of a grocery chain, Seren Dagdeviren tried to determine which procedures would be appropriate. Which of these procedures, if any, would you use in the Planning phase of the audit?

The planning stage of an audit involves the performance of detailed tests of controls and substantive testing of transactions and accounts.

Auditors can assess the adequacy of their client's closing procedures by:

If auditors believe there is a risk that expenses incurred before year-end will be excluded from the current year's expenses, they will:

Which of the following is an example of information used by auditors in gaining an understanding of a client at the entity level?

Corporate governance means:

What should auditors do if there are risk factors that indicate that the going concern assumption is at risk?

In assessing the client's relationship with its employees, the auditor will consider:

Wilfred Dominic was meeting with his manager to plan audit strategy in order to determine the amount of time to spend testing the client's internal controls and conducting detailed testing Of transactions and account balances. Determining the audit strategy occurs during which phase Of the audit?

Checking the accuracy of accrual calculations around year-end is an example of how auditors can assess the adequacy of their client's closing procedures.

If auditors identify risk factors that indicate that the going concern assumption is in doubt, they will:

When Sheila Copes, CPA audited a new client she asked questions about what the client does, how the client functions, the ownership structure of the client and its sources of financing. She was getting an understanding of the client at the

When gaining an understanding of their client, at which level do auditors not usually consider the relevant issues?

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters