Question 1

Verifying the frequency of bank reconciliations and reconciling the latest bank statement are examples of actions an auditor might take in which generic steps of the financial statement audit process?

Accepted Answer

A) First and second 
B) Second and third 
C) Third and fourth 
D) Second and fourth

Question 2

Which of the following link accounting information systems with auditing?

Accepted Answer

A) Business processes 
B) Information technology skills 
C) Both A and B 
D) Neither A nor B

Question 3

An inexperienced auditor verified the computation of depreciation on a machine, but did not actually see the machine. The auditor's actions led to a weakness in the ___ generic step of a financial statement audit.

Accepted Answer

A) Second 
B) Third 
C) Fourth 
D) Fifth

Question 4

An auditor is concerned that her company's purchasing process is not functioning as efficiently as possible. Which type of audit will best address her concern?

Accepted Answer

A) Financial 
B) Operational 
C) Management 
D) Purchasing

Question 5

Consider the statements below as you answer the next question: • The chief financial officer of TNL Corporation is a certified public accountant.• OBP Corporation's internal audit manager is a certified fraud examiner.• CPQ Corporation maintains a set of systems flowcharts that describe current business processes.• DKM Corporation encrypts all data transmitted over its wireless network.Which corporation is most likely to receive an unqualified opinion on its financial statements?

Accepted Answer

A) TNL 
B) DKM 
C) Either CPQ or OBP 
D) Cannot be determined from the information given

Question 6

Critical thinking is important in:

Accepted Answer

A) The design of accounting information systems. 
B) The implementation of accounting information systems. 
C) Auditing. 
D) All of the above.

Question 7

As a tool for understanding human behavior, expectancy theory can be useful in:

Accepted Answer

A) Accounting information systems. 
B) Auditing. 
C) Both A and B. 
D) Neither A nor B.

Question 8

Which type of audit is a "basket" of the other types?

Accepted Answer

A) Financial 
B) Operational 
C) International 
D) Management

Question 9

The AICPA's generally accepted auditing standards are divided into three groups. Which of the following is a standard in the "reporting" group?

Accepted Answer

A) Training 
B) Supervision 
C) Evidence 
D) Disclosure

Question 10

Consider the statements below as you answer the next question: • The chief financial officer of TNL Corporation is a certified public accountant.• OBP Corporation's internal audit manager is a certified fraud examiner.• CPQ Corporation maintains a set of systems flowcharts that describe current business processes.• DKM Corporation encrypts all data transmitted over its wireless network.Which corporation will require the least amount of compliance testing?

Accepted Answer

A) CPQ 
B) OBP 
C) Either TNL or DKM 
D) Cannot be determined from the information given

Question 11

How does the FASB Conceptual Framework link accounting information systems with auditing?

Accepted Answer

A) Auditors must discuss whether the outputs of the AIS fulfill each of the qualitative characteristics in detail. 
B) Auditors express an opinion on some of the outputs of the AIS; those outputs contain the elements of financial statements from the conceptual framework. 
C) The purpose of accounting as stated in the conceptual framework is the same as the purpose of an AIS and the purpose of auditing. 
D) The conceptual framework does not link AIS with auditing.

Question 12

The third generic step in a financial statement audit could benefit from:

Accepted Answer

A) Interviews. 
B) Flowcharts. 
C) Both A and B. 
D) Neither A nor B.

Question 13

Joe was a recent graduate of Big State University's accounting program. He was assigned to an audit team managed by Pam, a licensed CPA. Based on those two statements alone, which of the following is most true?

Accepted Answer

A) At least one of the "general" GAAS is upheld. 
B) At least one of the "field work" GAAS is upheld. 
C) Both A and B are true. 
D) Neither A nor B is true.

Question 14

The COSO enterprise risk management framework can be useful in:

Accepted Answer

A) Systems audits. 
B) Investigative audits. 
C) Both A and B. 
D) Neither A nor B.

Question 15

The principles of normalization can be useful in:

Accepted Answer

A) Designing an accounting information system. 
B) reduce data redundancy in data base 
C) Both A and B. 
D) Neither A nor B.

Question 16

A company's business processes were at the managed level of the capability maturity model in 2011 and at the optimized level of the capability maturity model in 2012. Which of the following statements is most true?

Accepted Answer

A) Based on the generally accepted auditing standard of consistency, the auditors must disclose the change. 
B) The auditors must issue an unqualified opinion since the organization's processes are not chaotic. 
C) Both A and B are true. 
D) Neither A nor B is true.

Question 17

Consider the statements below as you answer the next question: • The chief financial officer of TNL Corporation is a certified public accountant.• OBP Corporation's internal audit manager is a certified fraud examiner.• CPQ Corporation maintains a set of systems flowcharts that describe current business processes.• DKM Corporation encrypts all data transmitted over its wireless network.Which statements relate to the third generic step in a financial statement audit?

Accepted Answer

A) TNL and DKM 
B) TNL and CPQ 
C) DKM and CPQ 
D) TNL, DKM and CPQ

Question 18

Understanding business processes can link auditing to accounting information systems. Which of the following can facilitate an understanding of business processes?

Accepted Answer

A) Flowcharts 
B) The capability maturity model 
C) Both A and B 
D) Neither A nor B

Question 19

The generic model of business process management discussed in the text is likely to be most useful in which type of audit?

Accepted Answer

A) Operational 
B) Financial 
C) Management 
D) Investigative

Exam 17: Auditing and Evaluating the Ais