Question 1

The typical functions of the personnel and payroll cycle would not include

Accepted Answer

A)  labor relations. 
B)  report of attendance and work performed. 
C)  allocation to cost of goods sold. 
D)  payroll accounting. 
A)  labor relations. 
B)  report of attendance and work performed. 
C)  allocation to cost of goods sold. 
D)  payroll accounting.

Question 2

An audit team would most likely examine the detail support for which of the following charges?

Accepted Answer

A)  Payroll expense. 
B)  Cost of goods sold. 
C)  Supplies expense. 
D)  Legal expense. 
A)  Payroll expense. 
B)  Cost of goods sold. 
C)  Supplies expense. 
D)  Legal expense.

Question 3

"Recorded vouchers (accounts payable entries)in the voucher register (e.g.,purchases journal)supported by completed voucher documentation" is a specific example of which management assertion?

Accepted Answer

A)  Classification. 
B)  Occurrence. 
C)  Completeness. 
D)  Cutoff. 
A)  Classification. 
B)  Occurrence. 
C)  Completeness. 
D)  Cutoff.

Question 4

The inherent risk that accounts payable may be omitted or otherwise understated typically is

Accepted Answer

A)  low. 
B)  high. 
C)  moderate. 
D)  indeterminate. 
A)  low. 
B)  high. 
C)  moderate. 
D)  indeterminate.

Question 5

A voucher package is used to

Accepted Answer

A)  document receipt of inventory. 
B)  document completion of services. 
C)  document a purchase contract. 
D)  provide a source document for recording the purchase of a good or service. 
A)  document receipt of inventory. 
B)  document completion of services. 
C)  document a purchase contract. 
D)  provide a source document for recording the purchase of a good or service.

Question 6

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

Accepted Answer

A)  payments to employees are computed at authorized rates. 
B)  employees work the number of hours for which they are paid. 
C)  separation of duties exists between the preparation and distribution of the payroll. 
D)  internal controls relating to unclaimed payroll checks are operating effectively. 
A)  payments to employees are computed at authorized rates. 
B)  employees work the number of hours for which they are paid. 
C)  separation of duties exists between the preparation and distribution of the payroll. 
D)  internal controls relating to unclaimed payroll checks are operating effectively.

Question 7

The payroll department approves payroll hours prior to processing the payroll.

Accepted Answer

A) True 
 B)False

Question 8

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Accepted Answer

A)  examining authorization forms for new employees. 
B)  comparing payroll registers with original batch transmittal data. 
C)  authorizing payroll rate changes for all employees. 
D)  hiring all subordinate payroll department employees. 
A)  examining authorization forms for new employees. 
B)  comparing payroll registers with original batch transmittal data. 
C)  authorizing payroll rate changes for all employees. 
D)  hiring all subordinate payroll department employees.

Question 9

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

Accepted Answer

A) True 
 B)False

Question 10

For the copy of the purchase order that goes to the receiving department,it is best to

Accepted Answer

A)  leave off the description of the goods ordered. 
B)  leave off the quantity of the goods ordered. 
C)  leave off the name of the vendor. 
D)  have the receiving department forward all copies of the purchase order to accounts payable. 
A)  leave off the description of the goods ordered. 
B)  leave off the quantity of the goods ordered. 
C)  leave off the name of the vendor. 
D)  have the receiving department forward all copies of the purchase order to accounts payable.

Question 11

The auditor decided to test accounts payable by sending open-ended (blank)confirmations to selected vendors.The auditor's best approach in selecting the vendor accounts to confirm is to

Accepted Answer

A)  select vendor accounts with large balances. 
B)  select vendor accounts at random in order to apply a statistical sampling procedure. 
C)  select vendor accounts based on the number of purchases from vendors during the year. 
D)  select vendor accounts that are past due. 
A)  select vendor accounts with large balances. 
B)  select vendor accounts at random in order to apply a statistical sampling procedure. 
C)  select vendor accounts based on the number of purchases from vendors during the year. 
D)  select vendor accounts that are past due.

Question 12

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Accepted Answer

A)  clock cards. 
B)  the voucher system. 
C)  cash in bank. 
D)  accrued payroll. 
A)  clock cards. 
B)  the voucher system. 
C)  cash in bank. 
D)  accrued payroll.

Question 13

Which of the following fraud detection steps could not be performed by CAATs?

Accepted Answer

A)  Look for photocopies in invoice files. 
B)  Look for vendor invoices in numerical order. 
C)  Look for vendor invoices slightly below the approval threshold. 
D)  Look for duplicate vendor numbers. 
A)  Look for photocopies in invoice files. 
B)  Look for vendor invoices in numerical order. 
C)  Look for vendor invoices slightly below the approval threshold. 
D)  Look for duplicate vendor numbers.

Question 14

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

Accepted Answer

A)  Property tax expense. 
B)  Payroll expense. 
C)  Research and development. 
D)  Legal expense. 
A)  Property tax expense. 
B)  Payroll expense. 
C)  Research and development. 
D)  Legal expense.

Question 15

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Accepted Answer

A)  cutoff tests indicate a substantial amount of accrued payroll expense. 
B)  the assessed level of control risk relative to payroll transactions is low. 
C)  analytical procedures indicate unusual fluctuations in recurring payroll entries. 
D)  accrued payroll expense consists primarily of unpaid commissions. 
A)  cutoff tests indicate a substantial amount of accrued payroll expense. 
B)  the assessed level of control risk relative to payroll transactions is low. 
C)  analytical procedures indicate unusual fluctuations in recurring payroll entries. 
D)  accrued payroll expense consists primarily of unpaid commissions.

Question 16

An entity's internal control structure requires for every check request that there be an approved voucher,supported by a prenumbered purchase order and a prenumbered receiving report.To determine whether checks are being issued for unauthorized expenditures,an auditor most likely would select items for testing from the population of all

Accepted Answer

A)  purchase orders. 
B)  canceled checks. 
C)  receiving reports. 
D)  approved vouchers. 
A)  purchase orders. 
B)  canceled checks. 
C)  receiving reports. 
D)  approved vouchers.

Question 17

Which of the following would be an indicator of potential fraud?

Accepted Answer

A)  Photocopies of invoices in the voucher file. 
B)  Vendor invoices in numerical order. 
C)  Vendors with only post office box addresses. 
D)  All of the above indicate potential fraud. 
A)  Photocopies of invoices in the voucher file. 
B)  Vendor invoices in numerical order. 
C)  Vendors with only post office box addresses. 
D)  All of the above indicate potential fraud.

Question 18

Which of the following procedures is least likely to be performed before the balance-sheet date?

Accepted Answer

A)  Observation of inventory. 
B)  Review of internal control over cash disbursements. 
C)  Search for unrecorded liabilities. 
D)  Confirmation of receivables. 
A)  Observation of inventory. 
B)  Review of internal control over cash disbursements. 
C)  Search for unrecorded liabilities. 
D)  Confirmation of receivables.

Question 19

A list of all purchases might exist only in a ____________________________________ file rather than a _____________________________________.
Question also found in study guide

Accepted Answer

computer t

Question 20

Julie works in accounts payable.Her job is to prepare the voucher package and submit the completed voucher to the treasurer's office for payment.When the voucher is paid by the Treasurer's department it is returned to Julie (without the check)for filing.
The company receives invoices from Mona's Office Supply.When Julie receives the voucher package back from the Treasurer,Julie scans the invoice from Mona's Office Supply and changes the address so that a duplicate payment is sent to a Mail Boxes Etc.store where Julie rents a mail box under the name Mini's Official Supplies.With the slightly altered invoice (no other changes are made),Julie submits the voucher package a second time.Julie also has a bank account with the name Mini's Official Supplies.When Julie receives the check for Mona's Office Supply,Julie deposits it in her Mini's Official Supplies bank account and then used an ATM card to withdraw the cash.
A)Define the internal control weakness that allowed the situation to exist - if any;
B)One (and only one)specific internal controls that should be in place to prevent or detect the problem; and
C)One (and only one)test of control audit procedure.
D)One (and only one)substantive audit procedure that may detect the situation described.
No credit will be given for generic controls (e.g.policies and procedures; separation of duties without specifics; discuss with management).Be specific
Students may give any of the following
There is no mention of the voucher package being marked "Paid" or in some other way be marked so that documents cannot be reused.
Have the company mark each document "Paid" so they cannot be reused
• Observation of treasurer payment procedures
• Inquiry of the treasurer regarding payment procedures
• Inspect paid voucher packages for indication of payment on documents
• Scan cash disbursements journal for duplicate payments
• Perform analytical procedures on office supplies
• Check vendor payment addresses with mailbox stores' addresses
• Vouch payments to receiving reports and physical supplies

Accepted Answer

Weakness: Control: C

The typical functions of the personnel and payroll cycle would not include

An audit team would most likely examine the detail support for which of the following charges?

"Recorded vouchers (accounts payable entries)in the voucher register (e.g.,purchases journal)supported by completed voucher documentation" is a specific example of which management assertion?

The inherent risk that accounts payable may be omitted or otherwise understated typically is

A voucher package is used to

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

The payroll department approves payroll hours prior to processing the payroll.

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

For the copy of the purchase order that goes to the receiving department,it is best to

The auditor decided to test accounts payable by sending open-ended (blank)confirmations to selected vendors.The auditor's best approach in selecting the vendor accounts to confirm is to

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Which of the following fraud detection steps could not be performed by CAATs?

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Which of the following would be an indicator of potential fraud?

Which of the following procedures is least likely to be performed before the balance-sheet date?

A list of all purchases might exist only in a file rather than a _. Question also found in study guide

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 8: Acquisition and Expenditure Cycle

The typical functions of the personnel and payroll cycle would not include

An audit team would most likely examine the detail support for which of the following charges?

"Recorded vouchers (accounts payable entries)in the voucher register (e.g.,purchases journal)supported by completed voucher documentation" is a specific example of which management assertion?

The inherent risk that accounts payable may be omitted or otherwise understated typically is

A voucher package is used to

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

The payroll department approves payroll hours prior to processing the payroll.

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

For the copy of the purchase order that goes to the receiving department,it is best to

The auditor decided to test accounts payable by sending open-ended (blank)confirmations to selected vendors.The auditor's best approach in selecting the vendor accounts to confirm is to

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Which of the following fraud detection steps could not be performed by CAATs?

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Which of the following would be an indicator of potential fraud?

Which of the following procedures is least likely to be performed before the balance-sheet date?

A list of all purchases might exist only in a ____________________________________ file rather than a _____________________________________. Question also found in study guide

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

A list of all purchases might exist only in a file rather than a _. Question also found in study guide