Question 1

Analytical procedures

Accepted Answer

A)  focus on the ending balances for income statement accounts. 
B)  are only performed during the planning stage of the audit. 
C)  are required to be performed when auditing an account balance. 
D)  provide substantive evidence. 
A)  focus on the ending balances for income statement accounts. 
B)  are only performed during the planning stage of the audit. 
C)  are required to be performed when auditing an account balance. 
D)  provide substantive evidence.

Question 2

Tests of controls are generally costlier to perform than analytical procedures.

Accepted Answer

A) True 
 B)False

Question 3

Substantive tests of transactions affect control risk but do not affect planned detection risk.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would most likely not be included in the evidence mix for an integrated audit of a public company's financial statements and internal control over financial reporting?

Accepted Answer

A)  sophisticated internal controls 
B)  extensive substantive analytical procedures 
C)  extensive tests of details of balances 
D)  low inherent risk 
A)  sophisticated internal controls 
B)  extensive substantive analytical procedures 
C)  extensive tests of details of balances 
D)  low inherent risk

Question 5

Discuss the major activities and procedures performed by the auditor in the plan and design of the audit approach.

Accepted Answer

The major activities performed in the pl

Question 6

Several factors influence the auditor's choice of the types of tests to select, including

Accepted Answer

A)  the availability of the types of evidence. 
B)  the relative costs of each type of test. 
C)  the effectiveness of the internal controls. 
D)  all of the above. 
A)  the availability of the types of evidence. 
B)  the relative costs of each type of test. 
C)  the effectiveness of the internal controls. 
D)  all of the above.

Question 7

One of the most challenging parts of auditing is properly applying the factors that affect tests of details of balances.

Accepted Answer

A) True 
 B)False

Question 8

At what point in the audit process are tests of details most appropriately designed?

Accepted Answer

A)  plan and design audit approach 
B)  perform audit tests of controls and substantive tests of transactions 
C)  perform substantive analytical procedures and tests of details of balances 
D)  complete the audit and issue the audit report 
A)  plan and design audit approach 
B)  perform audit tests of controls and substantive tests of transactions 
C)  perform substantive analytical procedures and tests of details of balances 
D)  complete the audit and issue the audit report

Question 9

Presentation and disclosure objectives are primarily addressed in the tests of details of balances phase of the audit.

Accepted Answer

A) True 
 B)False

Question 10

When an auditor believes that analytical procedures indicate a reasonable possibility of misstatement, the auditor usually would

Accepted Answer

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

Question 11

A system walkthrough is primarily used to help the auditor

Accepted Answer

A)  test the ending account balances. 
B)  test the details of transactions. 
C)  determine whether internal controls have been properly implemented. 
D)  determine whether the audit engagement should be accepted. 
A)  test the ending account balances. 
B)  test the details of transactions. 
C)  determine whether internal controls have been properly implemented. 
D)  determine whether the audit engagement should be accepted.

Question 12

Because of the high cost of tests of details of balances, auditors do not perform this type of testing unless fraud is suspected.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following audit tests is usually the least costly to perform?

Accepted Answer

A)  substantive analytical procedures 
B)  tests of controls 
C)  tests of balances 
D)  substantive tests of transactions 
A)  substantive analytical procedures 
B)  tests of controls 
C)  tests of balances 
D)  substantive tests of transactions

Question 14

Shown below (1 through 5) are the five types of tests which auditors use to determine whether financial statements are fairly stated. Which three are substantive tests?
1) risk assessment procedures
2) tests of controls
3) substantive tests of transactions
4) substantive analytical procedures
5) tests of details of balances

Accepted Answer

A)  1, 2, and 3 
B)  3, 4, and 5 
C)  2, 3, and 5 
D)  2, 3, and 4 
A)  1, 2, and 3 
B)  3, 4, and 5 
C)  2, 3, and 5 
D)  2, 3, and 4

Question 15

Collectively, procedures performed to obtain an understanding of the entity and its environment, including internal controls, represent the auditor's risk assessment procedures.

Accepted Answer

A) True 
 B)False

Question 16

An exception in a test of control provides only an indication of the likelihood of monetary misstatements in the financial statements because tests of controls do not reveal whether monetary misstatements have actually occurred.

Accepted Answer

A) True 
 B)False

Question 17

Procedures to obtain an understanding of internal control generally provide sufficient appropriate evidence that a control is operating effectively.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true?

Accepted Answer

A)  Tests of details of balances focus on the ending general ledger balances for both balance sheet and income statement accounts. 
B)  Tests of details of balances focus on the transactions during the period for both balance sheet and income statement accounts. 
C)  Tests of details of balances focus on the auditor's understanding of internal controls. 
D)  Tests of details of balances focus on comparisons of recorded amounts to expectations developed by the auditor. 
A)  Tests of details of balances focus on the ending general ledger balances for both balance sheet and income statement accounts. 
B)  Tests of details of balances focus on the transactions during the period for both balance sheet and income statement accounts. 
C)  Tests of details of balances focus on the auditor's understanding of internal controls. 
D)  Tests of details of balances focus on comparisons of recorded amounts to expectations developed by the auditor.

Question 19

Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor's use of tests of details of balances. Which of the following is true?

Accepted Answer

A)  They are likely to be performed prior to the client's end of the fiscal year. 
B)  They are likely to eliminate the need for tests of details of balances. 
C)  They are likely to have no impact on the planned tests of details of balances. 
D)  They are likely to be used only in the audit of internal control. 
A)  They are likely to be performed prior to the client's end of the fiscal year. 
B)  They are likely to eliminate the need for tests of details of balances. 
C)  They are likely to have no impact on the planned tests of details of balances. 
D)  They are likely to be used only in the audit of internal control.

Exam 13: Overall Audit Strategy and Audit Program

Analytical procedures

Tests of controls are generally costlier to perform than analytical procedures.

Substantive tests of transactions affect control risk but do not affect planned detection risk.

Which of the following would most likely not be included in the evidence mix for an integrated audit of a public company's financial statements and internal control over financial reporting?

Discuss the major activities and procedures performed by the auditor in the plan and design of the audit approach.

Several factors influence the auditor's choice of the types of tests to select, including

One of the most challenging parts of auditing is properly applying the factors that affect tests of details of balances.

At what point in the audit process are tests of details most appropriately designed?

Presentation and disclosure objectives are primarily addressed in the tests of details of balances phase of the audit.

When an auditor believes that analytical procedures indicate a reasonable possibility of misstatement, the auditor usually would

A system walkthrough is primarily used to help the auditor

Because of the high cost of tests of details of balances, auditors do not perform this type of testing unless fraud is suspected.

Which of the following audit tests is usually the least costly to perform?

Collectively, procedures performed to obtain an understanding of the entity and its environment, including internal controls, represent the auditor's risk assessment procedures.

An exception in a test of control provides only an indication of the likelihood of monetary misstatements in the financial statements because tests of controls do not reveal whether monetary misstatements have actually occurred.

Procedures to obtain an understanding of internal control generally provide sufficient appropriate evidence that a control is operating effectively.

Which of the following is true?

Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor's use of tests of details of balances. Which of the following is true?

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Materiality

Assessing the Risk of Material Misstatement

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Audit of the Sales and Collection Cycle: Tests of Controls

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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