Question 1

The choice of which types of tests to use and how extensively they need to be performed must be the same for all audits.

Accepted Answer

A) True 
 B)False

Question 2

In order to promote audit efficiency, the auditor considers cost in selecting audit tests to perform. Which of the following audit tests would be the most costly?

Accepted Answer

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

Question 3

Risk assessment procedures are performed to assess the risk of material misstatement in the financial statements.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following further audit procedures are used to determine whether all six transaction-related audit objectives have been achieved for each class of transactions?

Accepted Answer

A)  tests of controls 
B)  risk assessment procedures 
C)  substantive tests of transactions 
D)  preliminary analytical procedures

Question 5

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 6

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 7

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

Question 8

Like tests of controls, analytical procedures only indicate the likelihood of misstatements affecting the dollar value of the financial statements.

Accepted Answer

A) True 
 B)False

Question 9

Discuss the purposes of (1) substantive tests of transactions, (2) tests of controls, and (3) tests of details of balances. Give an example of each.

Accepted Answer

The answer of Discuss the purposes of (1) substantive tests...

Question 10

The auditor would design which of the following audit tests to detect possible monetary errors in the financial statements?

Accepted Answer

A)  control tests 
B)  substantive analytical procedures 
C)  risk assessment procedures 
D)  tests of operating effectiveness of controls over revenue and cash

Question 11

A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a

Accepted Answer

A)  test of controls. 
B)  substantive test. 
C)  test of attributes. 
D)  monetary unit sampling test.

Question 12

When controls are effective and control risk is assessed as low, auditors put heavy emphasis on tests of balances.

Accepted Answer

A) True 
 B)False

Question 13

Subsequent events represent events that occasionally occur after the balance sheet date, but before the issuance of the financial statements and the auditor's report, that have an effect on the financial statements.

Accepted Answer

A) True 
 B)False

Question 14

The document that details the specific audit procedures for each type of test is the

Accepted Answer

A)  audit strategy. 
B)  audit program. 
C)  audit procedure. 
D)  audit risk model.

Question 15

Which of the following types of evidence is not available when using substantive tests of transactions?

Accepted Answer

A)  inspection 
B)  confirmation 
C)  inquiries of the client 
D)  reperformance

Question 16

When the auditor has completed the tests of details of balances and enters phase IV of the audit process, she or he must still perform audit procedures for which of the following?

Accepted Answer

A)  contingent liabilities and employee compensation 
B)  contingent liabilities and subsequent events 
C)  subsequent events and contractual commitments 
D)  subsequent events and unrecorded liabilities

Question 17

Risk assessment procedures are performed by auditors during an audit in order to

Accepted Answer

A)  determine the risk of material misstatement in the financial statements. 
B)  determine the amount of testing of internal control. 
C)  determine the extent of testing of details of balances. 
D)  determine the extent of testing of transactions.

Question 18

Auditors use substantive analytical procedures and tests of details of balances to satisfy planned control risk.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

For automated controls, the auditor's procedures to determine whether the automated control has been implemented cannot also serve as the test of that control.

Accepted Answer

A) True 
 B)False

Exam 13: Overall Audit Strategy and Audit Program

The choice of which types of tests to use and how extensively they need to be performed must be the same for all audits.

In order to promote audit efficiency, the auditor considers cost in selecting audit tests to perform. Which of the following audit tests would be the most costly?

Risk assessment procedures are performed to assess the risk of material misstatement in the financial statements.

Which of the following further audit procedures are used to determine whether all six transaction-related audit objectives have been achieved for each class of transactions?

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

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

Like tests of controls, analytical procedures only indicate the likelihood of misstatements affecting the dollar value of the financial statements.

Discuss the purposes of (1) substantive tests of transactions, (2) tests of controls, and (3) tests of details of balances. Give an example of each.

The auditor would design which of the following audit tests to detect possible monetary errors in the financial statements?

A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a

When controls are effective and control risk is assessed as low, auditors put heavy emphasis on tests of balances.

Subsequent events represent events that occasionally occur after the balance sheet date, but before the issuance of the financial statements and the auditor's report, that have an effect on the financial statements.

The document that details the specific audit procedures for each type of test is the

Which of the following types of evidence is not available when using substantive tests of transactions?

When the auditor has completed the tests of details of balances and enters phase IV of the audit process, she or he must still perform audit procedures for which of the following?

Risk assessment procedures are performed by auditors during an audit in order to

Auditors use substantive analytical procedures and tests of details of balances to satisfy planned control risk.

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

For automated controls, the auditor's procedures to determine whether the automated control has been implemented cannot also serve as the test of that control.