Question 1

Which of the following procedures would an auditor most likely perform in planning a financial statement audit?

Accepted Answer

A)  Inquiring of the client's legal counsel concerning pending litigation. 
B)  Comparing the financial statements to anticipated results. 
C)  Examining computer-generated exception reports to verify the effectiveness of internal controls. 
D)  Searching for unauthorized transactions that may aid in detecting unrecorded liabilities. 
A)  Inquiring of the client's legal counsel concerning pending litigation. 
B)  Comparing the financial statements to anticipated results. 
C)  Examining computer-generated exception reports to verify the effectiveness of internal controls. 
D)  Searching for unauthorized transactions that may aid in detecting unrecorded liabilities. B

Question 2

A __________________________________________ program contains specification of audit procedures for gathering direct evidence on ______________________________________ about _____________________________ and _____________________________ in financial statements.

Accepted Answer

substantive audit; management's assertions; amounts; disclosures

Question 3

Spreadsheet software would be most useful for which of the following audit activities?

Accepted Answer

A)  Testing internal controls over computerized accounting applications. 
B)  Preparing an audit plan. 
C)  Preparing a comparison of current-year expenses with those from the previous year. 
D)  Drafting a planning memorandum. 
A)  Testing internal controls over computerized accounting applications. 
B)  Preparing an audit plan. 
C)  Preparing a comparison of current-year expenses with those from the previous year. 
D)  Drafting a planning memorandum. C

Question 4

D.Jackson,CPA,audited Washington Company's financial statements for the year ended December 31,2007.On November 1,2008,Washington notified Jackson that it was changing auditors and that Jackson's services were being terminated.On November 5,2008,Washington invited Lincoln,CPA,to make a proposal for an engagement to audit its financial statements for the year ended December 31,2008.
Required:
What procedures concerning Jackson should Lincoln perform before accepting the engagement?

Accepted Answer

a.Lincoln should explain to Washington t

Question 5

Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?

Accepted Answer

A)  The entity has no formal written code of conduct. 
B)  The integrity of entity's management is suspect. 
C)  Procedures requiring separation of duties are subject to management override. 
D)  Management fails to modify prescribed controls for changes in conditions. 
A)  The entity has no formal written code of conduct. 
B)  The integrity of entity's management is suspect. 
C)  Procedures requiring separation of duties are subject to management override. 
D)  Management fails to modify prescribed controls for changes in conditions.

Question 6

The concept of materiality is not used by auditors as a guide to

Accepted Answer

A)  Planning the audit plan. 
B)  Evaluating the evidence. 
C)  Applying the responsibilities principle. 
D)  Making decisions about the audit report. 
A)  Planning the audit plan. 
B)  Evaluating the evidence. 
C)  Applying the responsibilities principle. 
D)  Making decisions about the audit report.

Question 7

When planning an audit,which of the following is not a factor that affects auditors' decisions about the quantity,type,and content of audit documentation?

Accepted Answer

A)  The auditors' need to document compliance with generally accepted auditing standards. 
B)  The existence of new sales contracts important for the client's business. 
C)  The auditors' judgment about their independence with regard to the client. 
D)  The auditors' judgments about materiality. 
A)  The auditors' need to document compliance with generally accepted auditing standards. 
B)  The existence of new sales contracts important for the client's business. 
C)  The auditors' judgment about their independence with regard to the client. 
D)  The auditors' judgments about materiality.

Question 8

Auditors should design the written audit plan so that

Accepted Answer

A)  All material transactions will be selected for substantive testing. 
B)  Substantive tests prior to the balance sheet date will be minimized. 
C)  The audit procedures selected will achieve specific audit objectives. 
D)  Each account balance will be tested under either tests of controls or tests of transactions. 
A)  All material transactions will be selected for substantive testing. 
B)  Substantive tests prior to the balance sheet date will be minimized. 
C)  The audit procedures selected will achieve specific audit objectives. 
D)  Each account balance will be tested under either tests of controls or tests of transactions.

Question 9

For each of the descriptions in Column A,match the correct word or words from ColumnB.

Accepted Answer

The answer of For each of the descriptions in Column...

Question 10

The most important facet of the current audit evidence files is the requirement that they show the auditor's decision-making process and conclusions reached.

Accepted Answer

A) True 
 B)False

Question 11

When management can exercise discretion over an accounting treatment,auditors tend to exercise more care and use a more stringent materiality criterion.

Accepted Answer

A) True 
 B)False

Question 12

An important element of a public accounting firm's system of quality control is the decision about client acceptance and retention.

Accepted Answer

A) True 
 B)False

Question 13

An auditor's purpose in auditing the information contained in the pension footnote most likely is to obtain evidence concerning management's assertion about

Accepted Answer

A)  Rights and obligations. 
B)  Existence. 
C)  Presentation and disclosure. 
D)  Valuation. 
A)  Rights and obligations. 
B)  Existence. 
C)  Presentation and disclosure. 
D)  Valuation.

Question 14

The ____________________________________________________ is the amount by which a particular account may be misstated and cause the financial statements to be materially misleading.

Accepted Answer

tolerable

Question 15

In testing the completeness assertion for a liability account,an auditor ordinarily works from the

Accepted Answer

A)  Financial statements to the potentially unrecorded items. 
B)  Potentially unrecorded items to the financial statements. 
C)  Accounting records to the supporting evidence. 
D)  Trial balance to the subsidiary ledger. 
A)  Financial statements to the potentially unrecorded items. 
B)  Potentially unrecorded items to the financial statements. 
C)  Accounting records to the supporting evidence. 
D)  Trial balance to the subsidiary ledger.

Question 16

Explain the bottom-up approach and the top-down approach to quantifying overall materiality.

Accepted Answer

In the bottom-up approach to judging mat

Question 17

Generally accepted auditing standards require that auditors always prepare and use

Accepted Answer

A)  A written planning memorandum explaining the auditors' understanding of the client's business. 
B)  A written client consent to discuss audit matters with prospective auditors. 
C)  A written audit plan. 
D)  The written time budgets and schedules for performing each audit. 
A)  A written planning memorandum explaining the auditors' understanding of the client's business. 
B)  A written client consent to discuss audit matters with prospective auditors. 
C)  A written audit plan. 
D)  The written time budgets and schedules for performing each audit.

Question 18

The independent auditors' audit design prepared prior to the start of fieldwork is appropriately considered documentation of

Accepted Answer

A)  Planning. 
B)  Supervision. 
C)  Information evaluation. 
D)  Quality assurance. 
A)  Planning. 
B)  Supervision. 
C)  Information evaluation. 
D)  Quality assurance.

Question 19

_____________________________ is the auditor's record of compliance with generally accepted auditing standards.

Accepted Answer

The answer of _____________________________ is the auditor's record of compliance...

Question 20

For continuing audits,specific information about the client is available in ____________________________________________________.

Accepted Answer

prior audi

Which of the following procedures would an auditor most likely perform in planning a financial statement audit?

A __________________ program contains specification of audit procedures for gathering direct evidence on about _ and _______________ in financial statements.

Spreadsheet software would be most useful for which of the following audit activities?

Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?

The concept of materiality is not used by auditors as a guide to

When planning an audit,which of the following is not a factor that affects auditors' decisions about the quantity,type,and content of audit documentation?

Auditors should design the written audit plan so that

For each of the descriptions in Column A,match the correct word or words from ColumnB.

The most important facet of the current audit evidence files is the requirement that they show the auditor's decision-making process and conclusions reached.

When management can exercise discretion over an accounting treatment,auditors tend to exercise more care and use a more stringent materiality criterion.

An important element of a public accounting firm's system of quality control is the decision about client acceptance and retention.

An auditor's purpose in auditing the information contained in the pension footnote most likely is to obtain evidence concerning management's assertion about

The ____________________________________________________ is the amount by which a particular account may be misstated and cause the financial statements to be materially misleading.

In testing the completeness assertion for a liability account,an auditor ordinarily works from the

Explain the bottom-up approach and the top-down approach to quantifying overall materiality.

Generally accepted auditing standards require that auditors always prepare and use

The independent auditors' audit design prepared prior to the start of fieldwork is appropriately considered documentation of

_____________________________ is the auditor's record of compliance with generally accepted auditing standards.

For continuing audits,specific information about the client is available in ____________________________________________________.

Auditing and Assurance Services

Professional Standards

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 3: Engagement Planning

Which of the following procedures would an auditor most likely perform in planning a financial statement audit?

A __________________________________________ program contains specification of audit procedures for gathering direct evidence on ______________________________________ about _____________________________ and _____________________________ in financial statements.

Spreadsheet software would be most useful for which of the following audit activities?

Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?

The concept of materiality is not used by auditors as a guide to

When planning an audit,which of the following is not a factor that affects auditors' decisions about the quantity,type,and content of audit documentation?

Auditors should design the written audit plan so that

For each of the descriptions in Column A,match the correct word or words from ColumnB.

The most important facet of the current audit evidence files is the requirement that they show the auditor's decision-making process and conclusions reached.

When management can exercise discretion over an accounting treatment,auditors tend to exercise more care and use a more stringent materiality criterion.

An important element of a public accounting firm's system of quality control is the decision about client acceptance and retention.

An auditor's purpose in auditing the information contained in the pension footnote most likely is to obtain evidence concerning management's assertion about

The ____________________________________________________ is the amount by which a particular account may be misstated and cause the financial statements to be materially misleading.

In testing the completeness assertion for a liability account,an auditor ordinarily works from the

Explain the bottom-up approach and the top-down approach to quantifying overall materiality.

Generally accepted auditing standards require that auditors always prepare and use

The independent auditors' audit design prepared prior to the start of fieldwork is appropriately considered documentation of

_____________________________ is the auditor's record of compliance with generally accepted auditing standards.

For continuing audits,specific information about the client is available in ____________________________________________________.

Auditing and Assurance Services

Professional Standards

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

A __________________ program contains specification of audit procedures for gathering direct evidence on about _ and _______________ in financial statements.