Question 1

Which of the following would most likely not be included in the evidence mix for an integrated audit of a public company's financial statements and internal control over financial reporting?

Accepted Answer

A) sophisticated internal controls 
B) extensive substantive analytical procedures 
C) extensive tests of details of balances 
D) low inherent risk

Question 2

Which of the following audit tests form the basis for an auditor's report on internal control over financial reporting?

Accepted Answer

A) analytical procedures 
B) tests of transactions 
C) tests of controls 
D) tests of details of balances

Question 3

You are auditing Rodgers and Company.After performing substantive analytical procedures you conclude that,for the accounts tested,the client's balance appears reasonable.This may indicate that

Accepted Answer

A) details test of balances can be eliminated for those accounts. 
B) certain tests of details of balances may be eliminated for those accounts. 
C) control tests may be eliminated for those accounts. 
D) control tests may be reduced for those accounts.

Question 4

Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor's use of tests of details of balances.Which of the following is True?

Accepted Answer

A) They are likely to be performed prior to the client's end of the fiscal year. 
B) They are likely to eliminate the need for tests of details of balances. 
C) They are likely to have no impact on the planned tests of details of balances. 
D) They are likely to be used only in the audit of internal control.

Question 5

The auditor must communicate significant deficiencies in internal control only after the entire audit is complete to ensure the auditor has a sufficient understanding of the circumstances surrounding the deficiency.

Accepted Answer

A) True 
 B)False

Question 6

The ________ is the combination of the types of tests to obtain sufficient appropriate evidence for a cycle.There are likely to be variations in the mix from cycle to cycle depending on the circumstances of the audit.

Accepted Answer

A) testing mix 
B) evidence mix 
C) audit process mix 
D) procedures mix

Question 7

If internal controls are tested and are considered effective,the auditor generally will increase both substantive tests of transactions and tests of details of balances.

Accepted Answer

A) True 
 B)False

Question 8

Tests of controls provide evidence about the likelihood for misstatements in a client's financial statements.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would not be considered further audit procedures?

Accepted Answer

A) tests of controls 
B) analytical procedures 
C) tests of details of balances 
D) risk assessment procedures

Question 10

Which of the following statements is not True?

Accepted Answer

A) Analytical procedures emphasize the overall reasonableness of transactions and balances. 
B) Tests of controls are concerned with evaluating whether controls are sufficiently effective to justify reducing control risk and thereby reducing analytical review procedures. 
C) Substantive tests of transactions emphasize the verification of transactions recorded in the journals and then posted in the general ledger. 
D) Tests of details of balances emphasize the ending balances in the general ledger.

Question 11

Shown below (1 through 5)are the five types of tests which auditors use to determine whether financial statements are fairly stated.Which three are substantive tests?
1) risk assessment procedures
2) tests of controls
3) substantive tests of transactions
4) substantive analytical procedures
5) tests of details of balances

Accepted Answer

A) 1,2,and 3 
B) 3,4,and 5 
C) 2,3,and 5 
D) 2,3,and 4

Question 12

The auditor has determined that a key control in the audit of the sales and collection cycle is that recorded sales are supported by authorized shipping documents and approved customer orders.What typical test of controls should be used in this situation?

Accepted Answer

A) Examine a sample of duplicate sales invoices to determine that each on is supported by an authorized shipping document and approved customer order. 
B) Observe whether shipping documents are forwarded daily to billing and observe when they are billed. 
C) Examine a sample of sales invoices and agree prices to the authorized computer price list. 
D) Use audit software to trace postings from the batch of sales transactions to the subsidiary and general ledgers.

Question 13

A deficiency uncovered in the audit of internal control is explained by which of the following in relation to a financial statement misstatement?

Accepted Answer

A) the amount of the misstatement 
B) the likelihood of the misstatement 
C) the amount,likelihood,and classification of the misstatement 
D) the amount and the classification of the misstatement

Question 14

Tests of controls should be performed after substantive tests of transactions.

Accepted Answer

A) True 
 B)False

Question 15

If the auditor finds extensive control test deviations and significant misstatements while performing substantive tests of transactions and substantive analytical procedures,

Accepted Answer

A) the cost of the audit should decrease. 
B) the auditor will conclude that internal controls are effective. 
C) extensive tests of details of balances will need to be performed. 
D) all of the above

Question 16

The auditor performs tests of controls and substantive procedures to obtain assurance that all audit objectives are achieved for information and amounts included in those disclosures.

Accepted Answer

A) True 
 B)False

Question 17

Auditors must perform tests of controls separately from substantive tests of transactions.

Accepted Answer

A) True 
 B)False

Question 18

There are eight types of audit evidence: physical examination,confirmation,inspection,observation,inquiries of the client,reperformance,analytical procedures,and recalculation.For each of the following types of audit tests,indicate the type(s)of evidence that can be obtained through the test: (1)tests of controls,(2)substantive tests of transactions,(3)analytical procedures,and (4)tests of details of balances.

Accepted Answer

The answer of There are eight types of audit evidence:...

Question 19

Presentation and disclosure related audit objectives would be performed in which phase of the audit process?

Accepted Answer

A) plan and design audit approach 
B) perform audit tests for controls and transactions 
C) perform analytical procedures and tests of balances 
D) complete the audit and issue the audit report

Question 20

Which of the following is generally not included in the "evidence mix"?

Accepted Answer

A) tests of controls 
B) substantive tests of transactions 
C) risk assessment procedures 
D) tests of details of balances

Exam 13: Overall Audit Strategy and Audit Program

Which of the following would most likely not be included in the evidence mix for an integrated audit of a public company's financial statements and internal control over financial reporting?

Which of the following audit tests form the basis for an auditor's report on internal control over financial reporting?

You are auditing Rodgers and Company.After performing substantive analytical procedures you conclude that,for the accounts tested,the client's balance appears reasonable.This may indicate that

Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor's use of tests of details of balances.Which of the following is True?

The auditor must communicate significant deficiencies in internal control only after the entire audit is complete to ensure the auditor has a sufficient understanding of the circumstances surrounding the deficiency.

The ________ is the combination of the types of tests to obtain sufficient appropriate evidence for a cycle.There are likely to be variations in the mix from cycle to cycle depending on the circumstances of the audit.

If internal controls are tested and are considered effective,the auditor generally will increase both substantive tests of transactions and tests of details of balances.

Tests of controls provide evidence about the likelihood for misstatements in a client's financial statements.

Which of the following would not be considered further audit procedures?

Which of the following statements is not True?

The auditor has determined that a key control in the audit of the sales and collection cycle is that recorded sales are supported by authorized shipping documents and approved customer orders.What typical test of controls should be used in this situation?

A deficiency uncovered in the audit of internal control is explained by which of the following in relation to a financial statement misstatement?

Tests of controls should be performed after substantive tests of transactions.

If the auditor finds extensive control test deviations and significant misstatements while performing substantive tests of transactions and substantive analytical procedures,

The auditor performs tests of controls and substantive procedures to obtain assurance that all audit objectives are achieved for information and amounts included in those disclosures.

Auditors must perform tests of controls separately from substantive tests of transactions.

Presentation and disclosure related audit objectives would be performed in which phase of the audit process?

Which of the following is generally not included in the "evidence mix"?