Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

CAS 300 Planning an Audit of Financial Statements requires that auditors plan their audits. Why is planning such an important stage of every audit and explain the various aspects of the preliminary risk identification process?

Accepted Answer

Planning is an essential stage of every audit because it allows auditors to effectively and efficiently conduct the audit in accordance with auditing standards. By carefully planning the audit, auditors can identify and assess the risks associated with the financial statements, determine the nature, timing, and extent of audit procedures, and allocate appropriate resources to the audit engagement.

The preliminary risk identification process is a crucial aspect of audit planning. This process involves identifying and assessing the risks of material misstatement in the financial statements, whether due to fraud or error. There are various aspects of the preliminary risk identification process that auditors must consider:

1. Understanding the entity and its environment: Auditors need to gain a thorough understanding of the entity's operations, industry, regulatory environment, and internal control systems. This helps in identifying potential risks that may impact the financial statements.

2. Assessing internal control: Auditors evaluate the effectiveness of the entity's internal control systems to identify any weaknesses or deficiencies that may increase the risk of material misstatement in the financial statements.

3. Identifying significant accounts and disclosures: Auditors identify the significant accounts and disclosures in the financial statements that are more susceptible to material misstatement, either due to their nature or complexity.

4. Considering fraud risk factors: Auditors consider the potential for fraud in the entity, including management's incentives and opportunities to commit fraud, as well as the presence of any known fraud risk factors.

5. Assessing inherent and control risks: Auditors assess the inherent risk associated with the nature of the entity's business and the complexity of its transactions, as well as the control risk related to the effectiveness of internal controls.

By conducting a thorough preliminary risk identification process, auditors can develop a comprehensive understanding of the risks associated with the financial statements, which in turn allows them to plan and perform audit procedures that are tailored to address those specific risks. This ultimately enhances the quality and effectiveness of the audit process.

Question 3

Attitudes and rationalization to justify a fraud include

Accepted Answer

A)  significant related party transactions. 
B)  an excessive focus on profit maximization. 
C)  a significant decline in demand for the client's products or services. 
D)  a high volume of transactions close to year-end. 
A)  significant related party transactions. 
B)  an excessive focus on profit maximization. 
C)  a significant decline in demand for the client's products or services. 
D)  a high volume of transactions close to year-end. B

Question 4

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

Question 5

Auditors must gain an understanding of their client at the outset of every audit.

Accepted Answer

A) True 
 B)False

Question 6

When assessing the risk of fraud, an auditor can consider

Accepted Answer

A)  attitudes and rationalization to justify a fraud. 
B)  incentives and pressures to commit fraud. 
C)  opportunities to perpetuate a fraud. 
D)  all of the above 
A)  attitudes and rationalization to justify a fraud. 
B)  incentives and pressures to commit fraud. 
C)  opportunities to perpetuate a fraud. 
D)  all of the above

Question 7

Monica Marcelloni's team has been asked to tackle three ongoing frauds and her partner has asked her to follow up only on the financial reporting fraud. Which of the following items
Will she be pursuing?

Accepted Answer

A)  theft of stock by employees or customers 
B)  employees remaining on the payroll after ceasing employment 
C)  recording fictitious sales 
D)  unauthorized refunds to customers 
A)  theft of stock by employees or customers 
B)  employees remaining on the payroll after ceasing employment 
C)  recording fictitious sales 
D)  unauthorized refunds to customers

Question 8

Which of the following statements relating to application controls is correct?

Accepted Answer

A)  They impact on the procedures used for data entry, data processing and output. 
B)  They include procedures for purchasing new computers. 
C)  They are not designed to prevent or detect a material misstatement in the financial statements. 
D)  They include the use of passwords and other security measures to minimize the risk of unauthorized access. 
A)  They impact on the procedures used for data entry, data processing and output. 
B)  They include procedures for purchasing new computers. 
C)  They are not designed to prevent or detect a material misstatement in the financial statements. 
D)  They include the use of passwords and other security measures to minimize the risk of unauthorized access.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a risk associated with the installation of a new IT system?

Accepted Answer

A)  loss of data in transfer to the new system 
B)  inadequately trained staff 
C)  data not processed correctly 
D)  selection of an inappropriate system for reporting needs 
A)  loss of data in transfer to the new system 
B)  inadequately trained staff 
C)  data not processed correctly 
D)  selection of an inappropriate system for reporting needs

Question 11

Why must auditors gain an understanding of their client at the start of every audit?

Accepted Answer

The purpose of auditors gaining an under

Question 12

During the risk assessment phase 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 13

The auditor is concerned about the audit client's closing procedures to ensure

Accepted Answer

A)  transactions and events have been recorded in the correct accounting period. 
B)  closing procedures have been correctly applied. 
C)  the financial statements accurately reflect the results of the audit client's closing procedures. 
D)  all of the above 
A)  transactions and events have been recorded in the correct accounting period. 
B)  closing procedures have been correctly applied. 
C)  the financial statements accurately reflect the results of the audit client's closing procedures. 
D)  all of the above

Question 14

Corporate governance is the rules, systems and processes within companies used to guide and control them. Why are auditors concerned with the corporate governance structures of their clients and what is the current status of corporate governance regulation in Canada?

Accepted Answer

Auditors are concerned with the corporat

Question 15

When gaining an understanding of their clients, auditors consider the particular information technology risks faced by their clients. Explain the particular risks associated with information technology and discuss the main controls that companies can have in place to mitigate these risks.

Accepted Answer

When gaining an understanding of their c

Question 16

The corporate governance principle of most concern to the auditor is

Accepted Answer

A)  safeguarding the integrity in financial reporting. 
B)  making timely and balanced disclosures. 
C)  promoting ethical and responsible decision making. 
D)  respecting the rights of shareholders. 
A)  safeguarding the integrity in financial reporting. 
B)  making timely and balanced disclosures. 
C)  promoting ethical and responsible decision making. 
D)  respecting the rights of shareholders.

Question 17

Gerry Jones has been asked to review manual or automated procedures that typically operate at a business process level and apply to the processing of transactions by individual
Applications. What kind of controls is Gerry going to be assessing?

Accepted Answer

A)  output controls 
B)  general controls 
C)  both a and b 
D)  application controls 
A)  output controls 
B)  general controls 
C)  both a and b 
D)  application controls

Question 18

The risk response phase 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 19

The purpose of planning an audit is to

Accepted Answer

A)  conduct the audit in an efficient and effective manner. 
B)  reduce audit risk to an acceptably low level. 
C)  ensure that sufficient appropriate audit evidence is obtained to reach an appropriate audit opinion. 
D)  all of the above 
A)  conduct the audit in an efficient and effective manner. 
B)  reduce audit risk to an acceptably low level. 
C)  ensure that sufficient appropriate audit evidence is obtained to reach an appropriate audit opinion. 
D)  all of the above

Question 20

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)  risk assessment phase 
C)  risk response phase 
D)  reporting stage 
A)  client acceptance stage 
B)  risk assessment phase 
C)  risk response phase 
D)  reporting stage

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

CAS 300 Planning an Audit of Financial Statements requires that auditors plan their audits. Why is planning such an important stage of every audit and explain the various aspects of the preliminary risk identification process?

Attitudes and rationalization to justify a fraud include

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

Auditors must gain an understanding of their client at the outset of every audit.

When assessing the risk of fraud, an auditor can consider

Monica Marcelloni's team has been asked to tackle three ongoing frauds and her partner has asked her to follow up only on the financial reporting fraud. Which of the following items Will she be pursuing?

Which of the following statements relating to application controls is correct?

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

Which of the following is not a risk associated with the installation of a new IT system?

Why must auditors gain an understanding of their client at the start of every audit?

During the risk assessment phase 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 auditor is concerned about the audit client's closing procedures to ensure

Corporate governance is the rules, systems and processes within companies used to guide and control them. Why are auditors concerned with the corporate governance structures of their clients and what is the current status of corporate governance regulation in Canada?

When gaining an understanding of their clients, auditors consider the particular information technology risks faced by their clients. Explain the particular risks associated with information technology and discuss the main controls that companies can have in place to mitigate these risks.

The corporate governance principle of most concern to the auditor is

Gerry Jones has been asked to review manual or automated procedures that typically operate at a business process level and apply to the processing of transactions by individual Applications. What kind of controls is Gerry going to be assessing?

The risk response phase of an audit involves

The purpose of planning an audit is to

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?

Introduction and Review 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

Understanding and Testing the Clients System of Internal Controls

Execution of the Audit Performing Substantive Procedures

Auditing Sales and Receivables

Auditing Purchases, Payables and Payroll

Auditing Inventories and PPE

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters

Exam 3: Audit Planning I

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

CAS 300 Planning an Audit of Financial Statements requires that auditors plan their audits. Why is planning such an important stage of every audit and explain the various aspects of the preliminary risk identification process?

Attitudes and rationalization to justify a fraud include

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

Auditors must gain an understanding of their client at the outset of every audit.

When assessing the risk of fraud, an auditor can consider

Monica Marcelloni's team has been asked to tackle three ongoing frauds and her partner has asked her to follow up only on the financial reporting fraud. Which of the following items Will she be pursuing?

Which of the following statements relating to application controls is correct?

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

Which of the following is not a risk associated with the installation of a new IT system?

Why must auditors gain an understanding of their client at the start of every audit?

During the risk assessment phase 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 auditor is concerned about the audit client's closing procedures to ensure

Corporate governance is the rules, systems and processes within companies used to guide and control them. Why are auditors concerned with the corporate governance structures of their clients and what is the current status of corporate governance regulation in Canada?

When gaining an understanding of their clients, auditors consider the particular information technology risks faced by their clients. Explain the particular risks associated with information technology and discuss the main controls that companies can have in place to mitigate these risks.

The corporate governance principle of most concern to the auditor is

Gerry Jones has been asked to review manual or automated procedures that typically operate at a business process level and apply to the processing of transactions by individual Applications. What kind of controls is Gerry going to be assessing?

The risk response phase of an audit involves

The purpose of planning an audit is to

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?

Introduction and Review 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

Understanding and Testing the Clients System of Internal Controls

Execution of the Audit Performing Substantive Procedures

Auditing Sales and Receivables

Auditing Purchases, Payables and Payroll

Auditing Inventories and PPE

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters