Question 1

Key item testing is an example of a technique used when conducting substantive procedures.

Accepted Answer

A) True 
 B)False

Question 2

Substantive testing can be conducted using which of the following procedures?

Accepted Answer

A)  enquiry 
B)  confirmation 
C)  analytical review 
D)  all of the above

Question 3

Analytical procedures may not be used:

Accepted Answer

A)  as primary tests of an account balance. 
B)  in testing internal controls. 
C)  to provide at least some minimal level of support for the conclusion. 
D)  as corroborative tests in combination with other procedures.

Question 4

Comparing sales commissions or bonuses with related sales provides what level of evidence?

Accepted Answer

A)  corroborative 
B)  absolute 
C)  minimal 
D)  persuasive

Question 5

The timing of substantive procedures is directly influenced by the level of control risk.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a type of analytical procedure?

Accepted Answer

A)  confirmation analysis 
B)  ratio analysis 
C)  break-even analysis 
D)  trend analysis

Question 7

Larry French is trying to determine the extent of testing his team will have to perform in order to determine whether controls are working. How will he decide how much testing to
Perform?

Accepted Answer

A)  He will utilize statistical sampling. 
B)  He will use his professional judgment. 
C)  He will use last year's results as a basis for this year's tests. 
D)  None of the above.

Question 8

Which of the following statements is correct?

Accepted Answer

A)  Misstatements can only arise from fraud. 
B)  Misstatements can only arise from error. 
C)  Misstatements can arise from error or fraud. 
D)  None of the above.

Question 9

Fluctuations in financial data identified by the auditor when planning the audit may be caused by:

Accepted Answer

A)  dependent relationships. 
B)  seasonal patterns. 
C)  external decisions directly impacting the business. 
D)  all of the above.

Question 10

Comparing the number of days purchases in trade payables with prior years would provide
persuasive evidence of accounts payable.

Accepted Answer

A) True 
 B)False

Question 11

Control risk is assessed to be low when there are no internal controls tested or relied upon by
the auditor.

Accepted Answer

A) True 
 B)False

Question 12

Manny Regimbald is concerned about the audit of a high risk client, the Lewiston Stampeders. He believes that there is a high likelihood that because his audit team is
Inexperienced that the testing procedures will not detect a material misstatement. This is a(n)

Accepted Answer

A)  audit risk. 
B)  control risk. 
C)  detection risk. 
D)  none of the above.

Question 13

Corroborative evidence confirms audit findings from other procedures.

Accepted Answer

A) True 
 B)False

Question 14

The audit program serves as the instructions for the audit team members to complete the
required testing.

Accepted Answer

A) True 
 B)False

Question 15

Inherent risk is:

Accepted Answer

A)  assessed as high when there are no internal controls tested or relied upon by the auditor. 
B)  assessed as low when there are good internal controls in place. 
C)  the risk of a misstatement occurring irrespective of any internal controls put in place by management. 
D)  the risk that the auditor's testing procedures will not detect a material misstatement.

Exam 9: Execution of the Auditperforming Substantive Procedures

Key item testing is an example of a technique used when conducting substantive procedures.

Substantive testing can be conducted using which of the following procedures?

Analytical procedures may not be used:

Comparing sales commissions or bonuses with related sales provides what level of evidence?

The timing of substantive procedures is directly influenced by the level of control risk.

Which of the following is not a type of analytical procedure?

Larry French is trying to determine the extent of testing his team will have to perform in order to determine whether controls are working. How will he decide how much testing to Perform?

Which of the following statements is correct?

Fluctuations in financial data identified by the auditor when planning the audit may be caused by:

Comparing the number of days purchases in trade payables with prior years would provide persuasive evidence of accounts payable.

Control risk is assessed to be low when there are no internal controls tested or relied upon by the auditor.

Manny Regimbald is concerned about the audit of a high risk client, the Lewiston Stampeders. He believes that there is a high likelihood that because his audit team is Inexperienced that the testing procedures will not detect a material misstatement. This is a(n)

Corroborative evidence confirms audit findings from other procedures.

The audit program serves as the instructions for the audit team members to complete the required testing.

Inherent risk is: