Question 1

Which of the following examplof substantive procedurwould often be performed prior to year-end?

Accepted Answer

A)  confirming the client's bank balance 
B)  attending the client's annual inventory count 
C)  testing additions and disposals to the fixed asset register 
D)  performing confirmations of accounts receivable

Question 2

Comparing the number of days purchasin trade payablwith prior years would provide persuasive evidence of accounts payable.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The primary purpose of vouching is to ensure that:

Accepted Answer

A)  the balances or transactions are not understated. 
B)  sufficient information is disclosed in the notes to the financial statements. 
C)  the balances or transactions are not overstated. 
D)  all transactions have been recorded.

Question 5

Corroborative evidence confirms audit findings from other procedures.

Accepted Answer

A) True 
 B)False

Question 6

Analytical procedurmay 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 7

RaiAlexseev was getting ready to perform analytical procedurat Vulcan Spice Mills. She had made the following notin her audit file: 
1.Review allowance for doubtful accounts.
 2.Don't forget to bring calculator to work.
 3.Figure out the probability of $5,000,000 salcommissions threshold of last year. 
4.Perform variance analysis. 
Required: Can you summarize the steps Raiwill have to go through using analytical procedurbefore she can draw any conclusions about the subject matter?

Accepted Answer

The answer of RaiAlexseev was getting ready to perform analytical...

Question 8

Performing substantive procedurprior to year-end, in the absence of specific effective controls, may be acceptable when:

Accepted Answer

A)  the auditor is able to conclude overall that the client's control environment is effective. 
B)  the likelihood of errors or fraud is high. 
C)  the likelihood of errors or fraud is low. 
D)  both a and c.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Stella Zhang has been performing analytical procedurtechniquas a substantive test. The techniquthat can be used to perform analytical procedurare:

Accepted Answer

A)  preparation of common sized financial statements. 
B)  breakeven analysis. 
C)  ratio analysis. 
D)  all of the above.

Question 11

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 12

Misstatements can only arise from fraud.

Accepted Answer

A) True 
 B)False

Question 13

Explain the difference between vouching and tracing.

Accepted Answer

The answer of Explain the difference between vouching and tracing....

Question 14

Discuss the factors that influence the extent and timing of substantive procedures.

Accepted Answer

The answer of Discuss the factors that influence the extent...

Question 15

There are certain audit procedurthat are required to be performed according to various auditing standards. Identify specific examplof such procedurand explain why the procedurare mandatory.

Accepted Answer

The answer of There are certain audit procedurthat are required...

Question 16

Which of the following statements is correct?

Accepted Answer

A)  If detection risk is high, significant substantive procedures are necessary to reduce detection risk. 
B)  There is an inverse relation between the auditor's assessed risk of material misstatement and detection risk. 
C)  There is no relation between the auditor's assessed risk of material misstatement and detection risk. 
D)  If detection risk is low, only a small number of substantive procedures are necessary to reduce the detection risk.

Question 17

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 18

Variablestimation 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 19

Maury Lions is ready to undertake substantive procedurat 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 20

Tobias Appel is trying to ensure that he can review controls over purchasing transactions. In addition he would like to substantiate the dollar amounts he is reviewing. What type of procedurcan he perform that will provide evidence as to whether a control is effective as well as if an item is being recorded properly?

Accepted Answer

A)  statistical sampling 
B)  dual purpose tests 
C)  test of balances 
D)  test of controls

Exam 8: Execution of the Audit Performing Substantive Procedur

Which of the following examplof substantive procedurwould often be performed prior to year-end?

Comparing the number of days purchasin trade payablwith prior years would provide persuasive evidence of accounts payable.

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

The primary purpose of vouching is to ensure that:

Corroborative evidence confirms audit findings from other procedures.

Analytical procedurmay not be used:

Performing substantive procedurprior to year-end, in the absence of specific effective controls, may be acceptable when:

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

Stella Zhang has been performing analytical procedurtechniquas a substantive test. The techniquthat can be used to perform analytical procedurare:

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

Misstatements can only arise from fraud.

Explain the difference between vouching and tracing.

Discuss the factors that influence the extent and timing of substantive procedures.

There are certain audit procedurthat are required to be performed according to various auditing standards. Identify specific examplof such procedurand explain why the procedurare mandatory.

Which of the following statements is correct?

Which of the following statements is correct?

Variablestimation sampling is used:

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