Question 1

The lack of significant change in an account balance from one year to the next does not necessarily mean that the auditor can assume the balance is reasonable.

Accepted Answer

A) True 
 B)False

Question 2

Umberto Levinson has performed a test of controls of a flower shop. He is trying to determine the timing of substantive procedures at year end. Which factor will determine the timing of his audit procedures?

Accepted Answer

A)  timing of the year-end work 
B)  audit risk 
C)  inherent risk 
D)  control risk

Question 3

Variables estimation sampling is used

Accepted Answer

A)  when the auditor does not expect any errors in an account balance. 
B)  to obtain a level of confidence that key attributes for the sample tested can be inferred to be in existence for the entire population. 
C)  when the auditor conducts tests of controls. 
D)  if the auditor expects more than a few errors in an account balance.

Question 4

Common examples of substantive procedures related to key items testing and representative sampling include

Accepted Answer

A)  tests of income statement accounts for account classification. 
B)  tests of client prepared schedules. 
C)  tests of underlying data to be used as part of the analytical procedures. 
D)  all of the above

Question 5

Overall significant account conclusion statements are captured on

Accepted Answer

A)  audit programs. 
B)  lead sheets. 
C)  confirmation requests. 
D)  minutes of board of directors' meetings.

Question 6

The levels of evidence obtained when performing substantive procedures includes

Accepted Answer

A)  minimal. 
B)  persuasive. 
C)  general. 
D)  all of the above

Question 7

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 8

Maury Lions is ready to undertake substantive procedures at an educational institution. Which of the following factors will influence his substantive tests?

Accepted Answer

A)  the nature of the test 
B)  the type of evidence required 
C)  the complexity of the client's data capturing systems 
D)  all of the above

Question 9

When an auditor identifies unexpected misstatements or errors, he/she will

Accepted Answer

A)  re-evaluate the effectiveness of internal controls and overall assessment of risk. 
B)  plan to conduct predominately substantive tests. 
C)  increase the level of tests of internal controls. 
D)  none of the above

Question 10

Audit sampling is the application of audit procedures to less than 100 per cent of items within a population.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Judgmental misstatements can arise from

Accepted Answer

A)  the auditor conducting substantive tests inappropriate to the account being tested. 
B)  differences in the interpretation or application of accounting policies. 
C)  selecting a sample that is not representative of the population. 
D)  none of the above

Question 13

Analytical procedures that provide persuasive or corroborative evidence contribute minimal support for the audit conclusion.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Matilda Papas has been asked to lead her audit team in the audit of the Toronto Raptors basketball team. She performed a review of their risks and found that the team's risks tend to be driven by the nature of certain significant accounts or business activities that the Raptors pursue. This risk is

Accepted Answer

A)  audit risk. 
B)  inherent risk. 
C)  control risk. 
D)  detection risk.

Question 16

Corroborative evidence

Accepted Answer

A)  supplements the results from analytical procedures. 
B)  confirms audit findings from other procedures. 
C)  confirms the auditor's evaluation of internal controls. 
D)  none of the above

Question 17

Which of the following factors should not influence the extent and timing of when substantive procedures are performed?

Accepted Answer

A)  the type of audit opinion that the client would like the auditor to issue 
B)  the complexity of the client's data capturing systems 
C)  the level of assurance necessary 
D)  the type of evidence required

Question 18

Which of the following is not an event which causes a fluctuation in the accounting data?

Accepted Answer

A)  changes in the payroll rates 
B)  the introduction of a new sales item 
C)  changes to the organizational chart of the entity 
D)  increased costs of inventory

Question 19

Roll-forward procedures are performed

Accepted Answer

A)  to update the audit findings from the time of the interim procedures through to year end. 
B)  to detect fraud in various balance sheet accounts. 
C)  before the end of the financial year. 
D)  none of the above

Question 20

An auditor's ability to perform substantive procedures at an interim date is dependent on

Accepted Answer

A)  the evaluation of audit risk. 
B)  convenience. 
C)  the materiality of the account to be tested. 
D)  an effective control environment.

Exam 8: Execution of the Audit Performing Substantive Procedures

The lack of significant change in an account balance from one year to the next does not necessarily mean that the auditor can assume the balance is reasonable.

Umberto Levinson has performed a test of controls of a flower shop. He is trying to determine the timing of substantive procedures at year end. Which factor will determine the timing of his audit procedures?

Variables estimation sampling is used

Common examples of substantive procedures related to key items testing and representative sampling include

Overall significant account conclusion statements are captured on

The levels of evidence obtained when performing substantive procedures includes

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

Maury Lions is ready to undertake substantive procedures at an educational institution. Which of the following factors will influence his substantive tests?

When an auditor identifies unexpected misstatements or errors, he/she will

Audit sampling is the application of audit procedures to less than 100 per cent of items within a population.

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

Judgmental misstatements can arise from

Analytical procedures that provide persuasive or corroborative evidence contribute minimal support for the audit conclusion.

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

Matilda Papas has been asked to lead her audit team in the audit of the Toronto Raptors basketball team. She performed a review of their risks and found that the team's risks tend to be driven by the nature of certain significant accounts or business activities that the Raptors pursue. This risk is

Corroborative evidence

Which of the following factors should not influence the extent and timing of when substantive procedures are performed?

Which of the following is not an event which causes a fluctuation in the accounting data?

Roll-forward procedures are performed

An auditor's ability to perform substantive procedures at an interim date is dependent on