Question 1

The audit process has three categories of audit phases: risk assessment, risk response, and reporting. Which of the following are part of the risk assessment process?

Accepted Answer

A)  preplanning, design further audit procedures, tests of control 
B)  client risk profile, plan the audit, design further audit procedures 
C)  client acceptance, understand the entity, plan the audit 
D)  preplanning, plan the audit, design further audit procedures

Question 2

You have been assigned as the in-charge-auditor for a new client, Beltair House. Beltair House is a non-profit charitable organization that operates women's shelter. In the past, the organization had been almost fully funded by the provincial government. However, due to recent government budget cuts, Beltair now has to raise operating funds from public donations.
Because of financial constraints, there is now only one full-time manager, Joan Ng. Joan has the help of several volunteers. The shelter residents also help out with the chores and with maintenance and cleaning. Ng has been able to arrange for a local food bank to provide a large portion of the food required for meals. Door-to-door canvassers have been able to raise money to keep the House going, but Ng is concerned that this will change.
Required:
Identify issues that affect the risk of this audit engagement that you will need to consider.

Accepted Answer

The answer of You have been assigned as the in-charge-auditor...

Question 3

Where the auditor has decided to rely upon internal controls, he or she will then

Accepted Answer

A)  eliminate the need to gather evidence in that area. 
B)  test the effectiveness of the controls in that area. 
C)  proceed to expand the sample sizes in that area. 
D)  negotiate with management to determine which controls will be tested in that area.

Question 4

Management assertions are

Accepted Answer

A)  directly related to auditing standards. 
B)  directly related to accounting standards. 
C)  indirectly related to auditing standards. 
D)  indirectly related to accounting standards.

Question 5

A financial statement audit typically consists of three sections. Identify the three sections and discuss the major activities performed by the auditor in each section.

Accepted Answer

The answer of A financial statement audit typically consists of...

Question 6

In comparing management fraud with employee fraud, the auditor's risk of failing to discover the fraud is greater for

Accepted Answer

A)  employee fraud because of the larger number of employees in the organization. 
B)  employee fraud because of the higher crime rate among blue collar workers. 
C)  management fraud because of management's ability to override existing internal controls. 
D)  management fraud because managers are inherently smarter than employees.

Question 7

Radio Supplies Limited sells parts and components to organizations that repair radios and other forms of audio equipment. It has many parts on its inventory listing at cost that were purchased up to fifteen years ago. Some of these parts have not seen any movement in the last ten years. The general balance-related audit objective affected by this activity is

Accepted Answer

A)  completeness. 
B)  accuracy. 
C)  valuation. 
D)  existence.

Exam 5: Audit Responsibilities and Objectives

The audit process has three categories of audit phases: risk assessment, risk response, and reporting. Which of the following are part of the risk assessment process?

Where the auditor has decided to rely upon internal controls, he or she will then

Management assertions are

A financial statement audit typically consists of three sections. Identify the three sections and discuss the major activities performed by the auditor in each section.

In comparing management fraud with employee fraud, the auditor's risk of failing to discover the fraud is greater for