Question 1

Before concluding on the effectiveness of a control, an auditor must determine:

Accepted Answer

A) The required degree of company compliance with control procedures. 
B) The maximum possible dollar amount that would not affect a user's decision based on the financial statements. 
C) The actual degree of company compliance with control procedures. 
D) The nature, extent and timing of planned substantive procedures. 
A) The required degree of company compliance with control procedures. 
B) The maximum possible dollar amount that would not affect a user's decision based on the financial statements. 
C) The actual degree of company compliance with control procedures. 
D) The nature, extent and timing of planned substantive procedures.

Question 2

Which of the following is true regarding the financial assertions?

Accepted Answer

A) All assertions can be proved using only substantive procedures, but it would be too costly. 
B) Some assertions are virtually impossible to prove without some evaluation of control effectiveness. 
C) Some assertions can be proved using only an evaluation of control effectiveness. 
D) The evaluation of control effectiveness is only used because it is more efficient than using only substantive procedures. 
A) All assertions can be proved using only substantive procedures, but it would be too costly. 
B) Some assertions are virtually impossible to prove without some evaluation of control effectiveness. 
C) Some assertions can be proved using only an evaluation of control effectiveness. 
D) The evaluation of control effectiveness is only used because it is more efficient than using only substantive procedures.

Question 3

An auditor has uncovered suspicious expense reimbursements paid to the Chief Executive
Officer of its audit client.The auditor should:

Accepted Answer

A) Discuss the matter with the Chief Executive Officer. 
B) Report the matter in writing to the Chief Financial Officer. 
C) Report the matter in writing to the Audit Committee. 
D) Report the matter in writing to the Federal Government. 
A) Discuss the matter with the Chief Executive Officer. 
B) Report the matter in writing to the Chief Financial Officer. 
C) Report the matter in writing to the Audit Committee. 
D) Report the matter in writing to the Federal Government.

Question 4

Intent is something that the auditor can observe and use in deciding whether a misstatement is an error or a fraud.

Accepted Answer

A) True 
 B)False

Question 5

All audit engagements require some minimal reliance on internal controls.

Accepted Answer

A) True 
 B)False

Question 6

What internal control objective is affected by cut off errors? Why are they of such concern to auditors?

Accepted Answer

The control objective of proper period r

Question 7

A clean audit is normally associated with weak controls.

Accepted Answer

A) True 
 B)False

Question 8

Validity refers to:

Accepted Answer

A) Ensuring that transactions are not omitted from accounting records. 
B) Ensuring that recorded transactions should have been recorded. 
C) Ensuring that all recorded transactions have been approved before recording. 
D) Ensuring that all recorded transactions have been recorded at the right dollar amount. 
A) Ensuring that transactions are not omitted from accounting records. 
B) Ensuring that recorded transactions should have been recorded. 
C) Ensuring that all recorded transactions have been approved before recording. 
D) Ensuring that all recorded transactions have been recorded at the right dollar amount.

Question 9

If there have been no changes to a control which a previous audit has found to be working effectively:

Accepted Answer

A) An auditor must still test the controls and not place reliance on the prior year's testing. 
B) An auditor must still test the controls but not to the same extent as the prior year's testing. 
C) An auditor can rely on the prior year's work and not test controls in the current year. 
D) An auditor can rely on the prior year's work but should test the controls every few years. 
A) An auditor must still test the controls and not place reliance on the prior year's testing. 
B) An auditor must still test the controls but not to the same extent as the prior year's testing. 
C) An auditor can rely on the prior year's work and not test controls in the current year. 
D) An auditor can rely on the prior year's work but should test the controls every few years.

Question 10

A "walk through" test is:

Accepted Answer

A) A means of ensuring that transactions are processed as described in the control system flowchart. 
B) A test of physical security over access to computer rooms. 
C) A computer assisted technique for processing client data on a different system. 
D) An audit procedure carried out at the planning stage of an audit. 
A) A means of ensuring that transactions are processed as described in the control system flowchart. 
B) A test of physical security over access to computer rooms. 
C) A computer assisted technique for processing client data on a different system. 
D) An audit procedure carried out at the planning stage of an audit.

Question 11

Which of the following statements is true?

Accepted Answer

A) Testing of controls is the most cost efficient way of designing each audit. 
B) Substantive testing is the most cost efficient way of designing each audit. 
C) As the work of testing of controls increases, the cost of substantive work increases. 
D) There is a point where further testing of controls becomes more expensive than performing substantive test. 
A) Testing of controls is the most cost efficient way of designing each audit. 
B) Substantive testing is the most cost efficient way of designing each audit. 
C) As the work of testing of controls increases, the cost of substantive work increases. 
D) There is a point where further testing of controls becomes more expensive than performing substantive test.

Question 12

Key controls are those:

Accepted Answer

A) Over significant risks. 
B) Over physical access. 
C) On which the auditor intends to rely. 
D) Designed by the audit committee to prevent management fraud. 
A) Over significant risks. 
B) Over physical access. 
C) On which the auditor intends to rely. 
D) Designed by the audit committee to prevent management fraud.

Question 13

Control tests and substantive tests of balances are easily distinguishable.

Accepted Answer

A) True 
 B)False

Question 14

The objective of control procedures is to process transactions correctly.

Accepted Answer

A) True 
 B)False

Question 15

Identify three general categories of misstatements and give an example of each.

Accepted Answer

Any three of the following:
i.Invalid tr

Question 16

Control tests should be applied to samples of transactions and control procedures:

Accepted Answer

A) Which occurred during the interim audit so that they provide direct auditor's knowledge. 
B) Selected by management as being representative of all transactions processed. 
C) Throughout the period being audited. 
D) Which occur primarily close to reporting period ends such as year end or quarter end. 
A) Which occurred during the interim audit so that they provide direct auditor's knowledge. 
B) Selected by management as being representative of all transactions processed. 
C) Throughout the period being audited. 
D) Which occur primarily close to reporting period ends such as year end or quarter end.

Question 17

Control activities are often designed to speed processing of transactions.

Accepted Answer

A) True 
 B)False

Question 18

One control benefit of an IT system is that it:

Accepted Answer

A) Is efficient at processing large, unusual or non-recurring transactions. 
B) Can monitor the effectiveness of automated controls. 
C) Adjusts rapidly to changing business processes. 
D) Reduces the risk of controls being overridden. 
A) Is efficient at processing large, unusual or non-recurring transactions. 
B) Can monitor the effectiveness of automated controls. 
C) Adjusts rapidly to changing business processes. 
D) Reduces the risk of controls being overridden.

Before concluding on the effectiveness of a control, an auditor must determine:

Which of the following is true regarding the financial assertions?

An auditor has uncovered suspicious expense reimbursements paid to the Chief Executive Officer of its audit client.The auditor should:

Intent is something that the auditor can observe and use in deciding whether a misstatement is an error or a fraud.

All audit engagements require some minimal reliance on internal controls.

What internal control objective is affected by cut off errors? Why are they of such concern to auditors?

A clean audit is normally associated with weak controls.

Validity refers to:

If there have been no changes to a control which a previous audit has found to be working effectively:

A "walk through" test is:

Which of the following statements is true?

Key controls are those:

Control tests and substantive tests of balances are easily distinguishable.

The objective of control procedures is to process transactions correctly.

Identify three general categories of misstatements and give an example of each.

Control tests should be applied to samples of transactions and control procedures:

Control activities are often designed to speed processing of transactions.

One control benefit of an IT system is that it:

Introduction to Auditing

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Production and Payroll Process

Finance and Investment Process

Completing the Audit

Other Public Accounting Services and Reports

Fraud Awareness Auditing

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Exam 9: Control Assessment and Testing

Before concluding on the effectiveness of a control, an auditor must determine:

Which of the following is true regarding the financial assertions?

An auditor has uncovered suspicious expense reimbursements paid to the Chief Executive Officer of its audit client.The auditor should:

Intent is something that the auditor can observe and use in deciding whether a misstatement is an error or a fraud.

All audit engagements require some minimal reliance on internal controls.

What internal control objective is affected by cut off errors? Why are they of such concern to auditors?

A clean audit is normally associated with weak controls.

Validity refers to:

If there have been no changes to a control which a previous audit has found to be working effectively:

A "walk through" test is:

Which of the following statements is true?

Key controls are those:

Control tests and substantive tests of balances are easily distinguishable.

The objective of control procedures is to process transactions correctly.

Identify three general categories of misstatements and give an example of each.

Control tests should be applied to samples of transactions and control procedures:

Control activities are often designed to speed processing of transactions.

One control benefit of an IT system is that it:

Introduction to Auditing

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Production and Payroll Process

Finance and Investment Process

Completing the Audit

Other Public Accounting Services and Reports

Fraud Awareness Auditing

Filters