Question 1

Match between columns
                        Premises: Obtaining information from the client in response to specific questions.
An examination of written information to determine facts pertinent to the audit.
A comparison of information in two different locations.
Addition of a column of numbers to determine if the total is the same as the client's.
A use of the senses to assess certain activities.
A less detailed examination of a document or record to determine if there is something unusual warranting further investigation.
A calculation done by the auditor independent of the client.
Following details of transactions from original documents to journals.
A determination of assets on hand at a given time.

Accepted Answer

The Answer of Trace and Inquire and Compare and Examine is...

Question 2

Reclassification entries are made in the statements to present accounting information properly, even when the general ledger balances are correct.

Accepted Answer

A) True 
 B)False

Question 3

When analytical procedures reveal unusual fluctuations in an account balance, the auditor will probably perform fewer tests of details for that account and increase the tests of controls related to the account.

Accepted Answer

A) True 
 B)False

Question 4

________ is the auditor's examination of the client's documents and records to substantiate that the information is included in the financial statements.

Accepted Answer

A) Inspection 
B) Recalculation 
C) Observation 
D) Verification 
A) Inspection 
B) Recalculation 
C) Observation 
D) Verification

Question 5

Which of the following statements is most correct regarding the primary purpose of audit procedures?

Accepted Answer

A) To detect all errors or fraudulent activities as well as illegal activities 
B) To comply with auditing standards promulgated by the PCAOB for publicly held clients 
C) To gather corroborative audit evidence about management's assertions regarding the client's financial statements 
D) To determine the amount of errors in the balance sheet accounts in order to adjust the accounts to actual 
A) To detect all errors or fraudulent activities as well as illegal activities 
B) To comply with auditing standards promulgated by the PCAOB for publicly held clients 
C) To gather corroborative audit evidence about management's assertions regarding the client's financial statements 
D) To determine the amount of errors in the balance sheet accounts in order to adjust the accounts to actual

Question 6

The SEC requires the auditors of public companies to retain e-mail correspondence related to the audit.

Accepted Answer

A) True 
 B)False

Question 7

Distinguish between internal documentation and external documentation as types of audit evidence.Give two examples of each.Which type is considered more reliable?

Accepted Answer

Internal documentation involves the audi

Question 8

An example of an external document that provides reliable information for the auditor is:

Accepted Answer

A) employees' time reports. 
B) bank statements. 
C) purchase order for company purchases. 
D) carbon copies of checks. 
A) employees' time reports. 
B) bank statements. 
C) purchase order for company purchases. 
D) carbon copies of checks.

Question 9

Which of the following is not a characteristic of the reliability of evidence?

Accepted Answer

A) Effectiveness of client internal controls 
B) Education of auditor 
C) Independence of information provider 
D) Timeliness 
A) Effectiveness of client internal controls 
B) Education of auditor 
C) Independence of information provider 
D) Timeliness

Question 10

When the auditor uses the audit procedure vouching she is primarily concerned with which of the following audit objectives when testing classes of transactions?

Accepted Answer

A) Occurrence 
B) Completeness 
C) Authorization 
D) Classification 
A) Occurrence 
B) Completeness 
C) Authorization 
D) Classification

Question 11

The reliability of evidence refers to the degree to which evidence is considered believable or trustworthy.There are six factors that affect the reliability of audit evidence.One factor is the independence of the provider; i.e., evidence obtained from a source outside the client company is more reliable than that obtained within.Identify and discuss any two of the remaining five factors:

Accepted Answer

The remaining four factors that affect t

Question 12

Determine which of the following is most correct regarding the reliability of audit evidence.

Accepted Answer

A) Information that is indirectly obtained from external sources is the most reliable audit evidence. 
B) Reliability of audit evidence is dependent upon the evidence being subjective. 
C) Reliability of evidence refers to the amount of evidence obtained. 
D) If internal controls are effective, evidence obtained is more reliable than when the controls are not effective. 
A) Information that is indirectly obtained from external sources is the most reliable audit evidence. 
B) Reliability of audit evidence is dependent upon the evidence being subjective. 
C) Reliability of evidence refers to the amount of evidence obtained. 
D) If internal controls are effective, evidence obtained is more reliable than when the controls are not effective.

Question 13

Which of the following is not one of the four decisions about what evidence to gather and how much of it to accumulate?

Accepted Answer

A) Which audit procedures to use 
B) Which accounts must agree to the general ledger 
C) When to perform the procedures 
D) What sample size to select for a given procedure 
A) Which audit procedures to use 
B) Which accounts must agree to the general ledger 
C) When to perform the procedures 
D) What sample size to select for a given procedure

Question 14

The permanent files included as part of audit documentation do not normally include:

Accepted Answer

A) a copy of the current and prior years' audit programs. 
B) copies of articles of incorporation, bylaws and contracts. 
C) information related to the understanding of internal control. 
D) results of analytical procedures from prior years. 
A) a copy of the current and prior years' audit programs. 
B) copies of articles of incorporation, bylaws and contracts. 
C) information related to the understanding of internal control. 
D) results of analytical procedures from prior years.

Question 15

An auditor can use engagement management software to facilitate tracking audit progress.

Accepted Answer

A) True 
 B)False

Question 16

An important benefit of industry comparisons is as:

Accepted Answer

A) an aid to understanding the client's business. 
B) an indicator of errors. 
C) an indicator of fraud. 
D) a least-cost indicator for audit procedures. 
A) an aid to understanding the client's business. 
B) an indicator of errors. 
C) an indicator of fraud. 
D) a least-cost indicator for audit procedures.

Question 17

When making decisions about evidence for a given audit, the auditor's goal is to obtain a sufficient amount of timely, reliable evidence that is relevant to the information being verified.In addition, the goal of audit efficiency is to gather and evaluate the information:

Accepted Answer

A) no matter the cost involved in obtaining such evidence. 
B) even if cost is irrelevant to the auditor, because they bill the client for costs incurred. 
C) at the lowest possible total cost. 
D) at the cost suggested in the engagement letter. 
A) no matter the cost involved in obtaining such evidence. 
B) even if cost is irrelevant to the auditor, because they bill the client for costs incurred. 
C) at the lowest possible total cost. 
D) at the cost suggested in the engagement letter.

Question 18

The permanent audit file would usually include the following:

Accepted Answer

A) client's working trial balance 
B) summary of the risk assessment procedures performed 
C) organizational chart of the company's employees 
D) summary of the auditors test of controls for the current years audit 
A) client's working trial balance 
B) summary of the risk assessment procedures performed 
C) organizational chart of the company's employees 
D) summary of the auditors test of controls for the current years audit

Question 19

Which items affect the sufficiency of evidence when choosing a sample?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 20

Audit documentation:

Accepted Answer

A) should identify the items tested when the audit procedures involve sampling of transactions or balances. 
B) does not aid in the preparation of the tax return since accounting and tax rules differ. 
C) is another term for the audit program. 
D) should not be given to anyone outside the audit firm, even if a subpoena has been issued. 
A) should identify the items tested when the audit procedures involve sampling of transactions or balances. 
B) does not aid in the preparation of the tax return since accounting and tax rules differ. 
C) is another term for the audit program. 
D) should not be given to anyone outside the audit firm, even if a subpoena has been issued.

Exam 7: Audit Evidence

Reclassification entries are made in the statements to present accounting information properly, even when the general ledger balances are correct.

When analytical procedures reveal unusual fluctuations in an account balance, the auditor will probably perform fewer tests of details for that account and increase the tests of controls related to the account.

________ is the auditor's examination of the client's documents and records to substantiate that the information is included in the financial statements.

Which of the following statements is most correct regarding the primary purpose of audit procedures?

The SEC requires the auditors of public companies to retain e-mail correspondence related to the audit.

Distinguish between internal documentation and external documentation as types of audit evidence.Give two examples of each.Which type is considered more reliable?

An example of an external document that provides reliable information for the auditor is:

Which of the following is not a characteristic of the reliability of evidence?

When the auditor uses the audit procedure vouching she is primarily concerned with which of the following audit objectives when testing classes of transactions?

Determine which of the following is most correct regarding the reliability of audit evidence.

Which of the following is not one of the four decisions about what evidence to gather and how much of it to accumulate?

The permanent files included as part of audit documentation do not normally include:

An auditor can use engagement management software to facilitate tracking audit progress.

An important benefit of industry comparisons is as:

When making decisions about evidence for a given audit, the auditor's goal is to obtain a sufficient amount of timely, reliable evidence that is relevant to the information being verified.In addition, the goal of audit efficiency is to gather and evaluate the information:

The permanent audit file would usually include the following:

Which items affect the sufficiency of evidence when choosing a sample?

Audit documentation:

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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