Question 1

The primary disadvantage of using flowcharts to document the auditee's control systems is that they are difficult to customize.

Accepted Answer

A) True 
 B)False  False

Question 2

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 three 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 three years D

Question 3

A control test that consists of vouching sales returns to their related receiving reports,provides evidence of the completeness of recorded sales returns.

Accepted Answer

A) True 
 B)False  False

Question 4

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 5

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 6

What effect does the auditee's use of a service organization have on the audit?

Accepted Answer

When the auditee uses the services of a

Question 7

GAAS requires some minimal reliance on internal controls for all audits.

Accepted Answer

A) True 
 B)False

Question 8

At the planning stage,the auditor's primary goal when deciding on control reliance is to ________.

Accepted Answer

A) select the most inexpensive set of evidence-gathering techniques 
B) maximize audit fees 
C) select the most effective and efficient set of evidence-gathering techniques 
D) minimize field work at remote locations 
A) select the most inexpensive set of evidence-gathering techniques 
B) maximize audit fees 
C) select the most effective and efficient set of evidence-gathering techniques 
D) minimize field work at remote locations

Question 9

An auditor is required to perform all but which of the following tasks in relation to the auditee's internal controls?

Accepted Answer

A) Obtain an understanding 
B) Perform an evaluation 
C) Document weaknesses 
D) Design and implement 
A) Obtain an understanding 
B) Perform an evaluation 
C) Document weaknesses 
D) Design and implement

Question 10

List and briefly explain some examples of general controls specific to IT.

Accepted Answer

Organization and Physical Access.This in

Question 11

Inherent risk and control risk are often evaluated together,because _____.

Accepted Answer

A) They are essentially the same. 
B) They are interrelated,as internal controls are typically developed in response to assessed inherent risks. 
C) Both are inversely related to the amount of substantive testing performed. 
D) Gathering Neither risk can be mitigated by the auditor. 
A) They are essentially the same. 
B) They are interrelated,as internal controls are typically developed in response to assessed inherent risks. 
C) Both are inversely related to the amount of substantive testing performed. 
D) Gathering Neither risk can be mitigated by the auditor.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The most important aspect of a control is the people who perform it.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Monthly comparison of the accounts receivable control account balance to the total of customer balances from A/R subsidiary ledger is an example of what general control category?

Accepted Answer

A) Periodic comparison and reconciliation 
B) Performance reviews 
C) Supervision 
D) Segregation of responsibilities 
A) Periodic comparison and reconciliation 
B) Performance reviews 
C) Supervision 
D) Segregation of responsibilities

Question 16

A duel-purpose test provides both control effectiveness evidence and substantive evidence.

Accepted Answer

A) True 
 B)False

Question 17

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 misstatements are communicated to management in writing 
B) all significant control deficiencies and other deficiencies the auditor deems of sufficient importance,should be communicated to management 
C) only serious control risks uncovered are communicated to management in writing 
D) only frauds and illegal acts are communicated to management 
A) all misstatements are communicated to management in writing 
B) all significant control deficiencies and other deficiencies the auditor deems of sufficient importance,should be communicated to management 
C) only serious control risks uncovered are communicated to management in writing 
D) only frauds and illegal acts are communicated to management

Question 18

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 19

General controls,like environmental controls,are primarily preventive in nature.

Accepted Answer

A) True 
 B)False

Question 20

Control weaknesses may be so serious that the issuance of an audit opinion is not possible.

Accepted Answer

A) True 
 B)False

Exam 9: Control Assessment and Testing

The primary disadvantage of using flowcharts to document the auditee's control systems is that they are difficult to customize.

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

A control test that consists of vouching sales returns to their related receiving reports,provides evidence of the completeness of recorded sales returns.

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

An auditor does not need to test ________.

What effect does the auditee's use of a service organization have on the audit?

GAAS requires some minimal reliance on internal controls for all audits.

At the planning stage,the auditor's primary goal when deciding on control reliance is to ________.

An auditor is required to perform all but which of the following tasks in relation to the auditee's internal controls?

List and briefly explain some examples of general controls specific to IT.

Inherent risk and control risk are often evaluated together,because _____.

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

The most important aspect of a control is the people who perform it.

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

Monthly comparison of the accounts receivable control account balance to the total of customer balances from A/R subsidiary ledger is an example of what general control category?

A duel-purpose test provides both control effectiveness evidence and substantive evidence.

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

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

General controls,like environmental controls,are primarily preventive in nature.

Control weaknesses may be so serious that the issuance of an audit opinion is not possible.

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 the Audit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, including Fraud Auditing

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