Question 1

The auditor gathers audit evidence to test management's assertions.

Accepted Answer

A) True 
 B)False

Question 2

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit. Information to develop this estimate can be obtained from all of the following except:

Accepted Answer

A) tracing transactions through the system to determine whether procedures are being applied as prescribed. 
B) comparison of financial data with data for comparable prior periods, anticipated results (e.g., budgets and forecasts)and similar data for the industry in which the entity operates. 
C) study of the relationships of elements of financial data that would be expected to conform to a predictable pattern based upon the entity's experience. 
D) study of the relationships of financial data with relevant nonfinancial data. 
A) tracing transactions through the system to determine whether procedures are being applied as prescribed. 
B) comparison of financial data with data for comparable prior periods, anticipated results (e.g., budgets and forecasts)and similar data for the industry in which the entity operates. 
C) study of the relationships of elements of financial data that would be expected to conform to a predictable pattern based upon the entity's experience. 
D) study of the relationships of financial data with relevant nonfinancial data.

Question 3

The completeness assertion refers to ensuring that transactions and events that should have been recorded actually have been recorded.

Accepted Answer

A) True 
 B)False

Question 4

Discuss the reliability of the types of audit evidence and identify the level of reliability for each type of evidence.

Accepted Answer

Inspection of the tangible assets, reper

Question 5

Audit documentation prepared on audits of public entities is the property of the:

Accepted Answer

A) Shareholders. 
B) Auditor. 
C) Management of the entity being audited. 
D) SEC. 
A) Shareholders. 
B) Auditor. 
C) Management of the entity being audited. 
D) SEC.

Question 6

The relevance of audit evidence or specific audit procedures depends on the assertion being tested.

Accepted Answer

A) True 
 B)False

Question 7

The audit working papers belong to:

Accepted Answer

A) The company under audit. 
B) The government. 
C) The audit firm. 
D) They are public record documents. 
A) The company under audit. 
B) The government. 
C) The audit firm. 
D) They are public record documents.

Question 8

A confirmation is used to:

Accepted Answer

A) verify the inventory count is correct. 
B) verify that a control is being observed. 
C) verify a representation from a third party. 
D) verify that a specific trend is correct. 
A) verify the inventory count is correct. 
B) verify that a control is being observed. 
C) verify a representation from a third party. 
D) verify that a specific trend is correct.

Question 9

Analytical procedures used in planning an audit should focus on identifying:

Accepted Answer

A) material weaknesses in internal control. 
B) the predictability of financial data from individual transactions. 
C) the various assertions that are embodied in the financial statements. 
D) areas that may represent specific risks relevant to the audit. 
A) material weaknesses in internal control. 
B) the predictability of financial data from individual transactions. 
C) the various assertions that are embodied in the financial statements. 
D) areas that may represent specific risks relevant to the audit.

Question 10

Which of the following types of audit evidence is the most persuasive?

Accepted Answer

A) Prenumbered internal purchase order forms. 
B) Auditee worksheets supporting cost allocations. 
C) Bank statements obtained from the auditee. 
D) Auditee personnel responses to auditor inquiries. 
A) Prenumbered internal purchase order forms. 
B) Auditee worksheets supporting cost allocations. 
C) Bank statements obtained from the auditee. 
D) Auditee personnel responses to auditor inquiries.

Question 11

Why is appropriateness important for audit evidence? What qualities must evidence have to be considered appropriate?

Accepted Answer

Appropriateness is a measure of the qual

Question 12

Name the three types of analytical procedures and provide a definition and example for each.

Accepted Answer

The three types of analytical procedures

Question 13

Explain the occurrence and completeness assertions. How does failure to meet each assertion affect the financial statements?

Accepted Answer

The occurrence assertion relates to whet

Question 14

Which of the following ratios would an engagement partner most likely calculate when reviewing the balance sheet in the overall review stage of an audit?

Accepted Answer

A) Quick assets divided by accounts payable. 
B) Accounts receivable divided by inventory. 
C) Interest payable divided by interest receivable. 
D) Total debt divided by stockholders' equity. 
A) Quick assets divided by accounts payable. 
B) Accounts receivable divided by inventory. 
C) Interest payable divided by interest receivable. 
D) Total debt divided by stockholders' equity.

Question 15

The cutoff assertion relates to whether transactions and events have been recorded in the correct accounting period.

Accepted Answer

A) True 
 B)False

Question 16

Audit evidence includes only written information used by the auditor in arriving at an opinion about the fairness of financial statements.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?

Accepted Answer

A) Relationships involving balance sheet accounts. 
B) Transactions subject to management discretion. 
C) Relationships involving income statement accounts. 
D) Data subject to audit testing in the prior year. 
A) Relationships involving balance sheet accounts. 
B) Transactions subject to management discretion. 
C) Relationships involving income statement accounts. 
D) Data subject to audit testing in the prior year.

Question 18

All of the following are typically in the current file except:

Accepted Answer

A) adjusting journal entries. 
B) copies of the audit report. 
C) chart of accounts. 
D) lead schedules. 
A) adjusting journal entries. 
B) copies of the audit report. 
C) chart of accounts. 
D) lead schedules.

Question 19

According to the text, what are the three functions of working papers?

Accepted Answer

Audit documentation (or working papers)h

Question 20

The classification assertion refers to transactions and events being recorded in the correct accounting period.

Accepted Answer

A) True 
 B)False

Exam 5: Evidence and Documentation

The auditor gathers audit evidence to test management's assertions.

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit. Information to develop this estimate can be obtained from all of the following except:

The completeness assertion refers to ensuring that transactions and events that should have been recorded actually have been recorded.

Discuss the reliability of the types of audit evidence and identify the level of reliability for each type of evidence.

Audit documentation prepared on audits of public entities is the property of the:

The relevance of audit evidence or specific audit procedures depends on the assertion being tested.

The audit working papers belong to:

A confirmation is used to:

Analytical procedures used in planning an audit should focus on identifying:

Which of the following types of audit evidence is the most persuasive?

Why is appropriateness important for audit evidence? What qualities must evidence have to be considered appropriate?

Name the three types of analytical procedures and provide a definition and example for each.

Explain the occurrence and completeness assertions. How does failure to meet each assertion affect the financial statements?

Which of the following ratios would an engagement partner most likely calculate when reviewing the balance sheet in the overall review stage of an audit?

The cutoff assertion relates to whether transactions and events have been recorded in the correct accounting period.

Audit evidence includes only written information used by the auditor in arriving at an opinion about the fairness of financial statements.

Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?

All of the following are typically in the current file except:

According to the text, what are the three functions of working papers?

The classification assertion refers to transactions and events being recorded in the correct accounting period.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

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