Question 1

In the preparation of an audit plan,which of the following items is not essential?

Accepted Answer

A)  A review of material from prior audits. 
B)  The preparation of a budget identifying the costs of resources needed. 
C)  An understanding of controls established by management. 
D)  Assessment of inherent risk. 
A)  A review of material from prior audits. 
B)  The preparation of a budget identifying the costs of resources needed. 
C)  An understanding of controls established by management. 
D)  Assessment of inherent risk.

Question 2

The use of computer-assisted auditing techniques has significantly changed auditing objectives.

Accepted Answer

A) True 
 B)False

Question 3

Looking at vendors' invoices for particular information is an example of

Accepted Answer

A)  Physical observation. 
B)  Confirmation. 
C)  Inspection of documents. 
D)  Scanning. 
A)  Physical observation. 
B)  Confirmation. 
C)  Inspection of documents. 
D)  Scanning.

Question 4

_____________________________ is a procedure that generally involves the collection of oral evidence from independent parties and client officials.

Accepted Answer

The answer of _____________________________ is a procedure that generally involves...

Question 5

Which of the following is used to maintain control of the audit and ensure that it is completed on a timely basis?

Accepted Answer

A)  Engagement letter. 
B)  Termination letter. 
C)  Time budget. 
D)  Analytical procedures. 
A)  Engagement letter. 
B)  Termination letter. 
C)  Time budget. 
D)  Analytical procedures.

Question 6

C.Hill,CPA,has been retained to audit the financial statements of Monday Co.Monday's predecessor auditor was K.Post,CPA,whom Monday has notified by that its services have been terminated.Under these circumstances,which party should initiate the communications between Hill and Post?

Accepted Answer

A)  Hill, the auditor. 
B)  Post, the predecessor auditor. 
C)  Monday's controller or CFO. 
D)  The chair of Monday's board of directors. 
A)  Hill, the auditor. 
B)  Post, the predecessor auditor. 
C)  Monday's controller or CFO. 
D)  The chair of Monday's board of directors.

Question 7

Engagement letters are not necessary for continuing clients.

Accepted Answer

A) True 
 B)False

Question 8

For all audits of financial statements filed with the Securities and Exchange Commission,which of the following is required?

Accepted Answer

A)  A computer specialist. 
B)  A second audit partner. 
C)  Electronic documentation. 
D)  Computer-assisted audit techniques. 
A)  A computer specialist. 
B)  A second audit partner. 
C)  Electronic documentation. 
D)  Computer-assisted audit techniques.

Question 9

In determining whether transactions have been recorded,the direction of the audit testing should start from the

Accepted Answer

A)  General ledger balances. 
B)  Adjusted trial balance. 
C)  Original source documents. 
D)  General journal entries. 
A)  General ledger balances. 
B)  Adjusted trial balance. 
C)  Original source documents. 
D)  General journal entries.

Question 10

For which of the following judgments may an independent auditor share responsibility with an entity's internal auditor who is assessed to be both competent and objective?

Accepted Answer

A)  Assessment of inherent risk, yes; assessment of control risk, yes 
B)  Assessment of inherent risk, yes; assessment of control risk, no 
C)  Assessment of inherent risk, no; assessment of control risk, yes 
D)  Assessment of inherent risk, no; assessment of control risk, no 
A)  Assessment of inherent risk, yes; assessment of control risk, yes 
B)  Assessment of inherent risk, yes; assessment of control risk, no 
C)  Assessment of inherent risk, no; assessment of control risk, yes 
D)  Assessment of inherent risk, no; assessment of control risk, no

Question 11

During the initial planning phase of an audit,a CPA most likely would

Accepted Answer

A)  Test specific internal control activities that are likely to prevent fraud. 
B)  Evaluate the reasonableness of the client's accounting estimates of inventory obsolescence. 
C)  Discuss the timing of the audit procedures with the client's management. 
D)  Inquire of the client's attorney as to whether any unrecorded claims are probable of assertion. 
A)  Test specific internal control activities that are likely to prevent fraud. 
B)  Evaluate the reasonableness of the client's accounting estimates of inventory obsolescence. 
C)  Discuss the timing of the audit procedures with the client's management. 
D)  Inquire of the client's attorney as to whether any unrecorded claims are probable of assertion.

Question 12

Which of the following provides the best method of obtaining an understanding of a continuing client's business for planning an audit?

Accepted Answer

A)  Performing tests of details of transactions and balances. 
B)  Reviewing prior year audit documentation and the permanent file for the client. 
C)  Reading specialized industry journals. 
D)  Reevaluating the client's internal control environment. 
A)  Performing tests of details of transactions and balances. 
B)  Reviewing prior year audit documentation and the permanent file for the client. 
C)  Reading specialized industry journals. 
D)  Reevaluating the client's internal control environment.

Question 13

Management's responsibility in a computer system would not include

Accepted Answer

A)  Ensuring that the documentation of the system is complete and up to date. 
B)  Maintaining a system of transaction processing that includes an audit trail. 
C)  Assessing the control risk. 
D)  Making computer resources and knowledgeable personnel available for questions. 
A)  Ensuring that the documentation of the system is complete and up to date. 
B)  Maintaining a system of transaction processing that includes an audit trail. 
C)  Assessing the control risk. 
D)  Making computer resources and knowledgeable personnel available for questions.

Question 14

Do the following regarding auditors' concepts of overall "materiality" considered at the planning stage (i.e.,"planning materiality").
a.Define or describe independent auditors' concept of "planning materiality."
b.Name (but do not describe or explain)three common relationships or considerations used by auditors when assessing the dollar amount considered to be material.

Accepted Answer

a.Planning materiality is the largest am

Question 15

The major cycles that auditors typically group accounts by do not include

Accepted Answer

A)  Revenue and collection. 
B)  Production and conversion. 
C)  Finance and investment. 
D)  Assets and liabilities. 
A)  Revenue and collection. 
B)  Production and conversion. 
C)  Finance and investment. 
D)  Assets and liabilities.

Question 16

Which of the following is an advantage of computer-assisted audit techniques (CAATs)?

Accepted Answer

A)  The CAATs programs are all written in one computer language. 
B)  The software can be used for audits of clients that use differing computer equipment and file formats. 
C)  The use of CAATs has reduced the need for the auditor to study input controls for computer-related procedures. 
D)  The use of CAATs can be substituted for a relatively large part of the required testing. 
A)  The CAATs programs are all written in one computer language. 
B)  The software can be used for audits of clients that use differing computer equipment and file formats. 
C)  The use of CAATs has reduced the need for the auditor to study input controls for computer-related procedures. 
D)  The use of CAATs can be substituted for a relatively large part of the required testing.

Question 17

An audit plan contains

Accepted Answer

A)  Specifications of audit standards relevant to the financial statements being audited. 
B)  Specifications of procedures the auditors believe appropriate for the financial statements under audit. 
C)  Documentation of the assertions under audit, the evidence obtained, and the conclusions reached. 
D)  Reconciliation of the account balances in the financial statements with the account balances in the client's general ledger. 
A)  Specifications of audit standards relevant to the financial statements being audited. 
B)  Specifications of procedures the auditors believe appropriate for the financial statements under audit. 
C)  Documentation of the assertions under audit, the evidence obtained, and the conclusions reached. 
D)  Reconciliation of the account balances in the financial statements with the account balances in the client's general ledger.

Question 18

CAATs software may be utilized to read,compute,and operate on machine-readable records.

Accepted Answer

A) True 
 B)False

Question 19

An auditor would most likely be use word processing software for what purpose?

Accepted Answer

A)  Performing analytical procedures. 
B)  Preparing a trial balance. 
C)  Preparing an audit plan. 
D)  Obtaining a sample selection. 
A)  Performing analytical procedures. 
B)  Preparing a trial balance. 
C)  Preparing an audit plan. 
D)  Obtaining a sample selection.

Question 20

The _____________________________ of the client's computer operations should be considered in audit ____________________________.

Accepted Answer

complexity

In the preparation of an audit plan,which of the following items is not essential?

The use of computer-assisted auditing techniques has significantly changed auditing objectives.

Looking at vendors' invoices for particular information is an example of

_____________________________ is a procedure that generally involves the collection of oral evidence from independent parties and client officials.

Which of the following is used to maintain control of the audit and ensure that it is completed on a timely basis?

C.Hill,CPA,has been retained to audit the financial statements of Monday Co.Monday's predecessor auditor was K.Post,CPA,whom Monday has notified by that its services have been terminated.Under these circumstances,which party should initiate the communications between Hill and Post?

Engagement letters are not necessary for continuing clients.

For all audits of financial statements filed with the Securities and Exchange Commission,which of the following is required?

In determining whether transactions have been recorded,the direction of the audit testing should start from the

For which of the following judgments may an independent auditor share responsibility with an entity's internal auditor who is assessed to be both competent and objective?

During the initial planning phase of an audit,a CPA most likely would

Which of the following provides the best method of obtaining an understanding of a continuing client's business for planning an audit?

Management's responsibility in a computer system would not include

The major cycles that auditors typically group accounts by do not include

Which of the following is an advantage of computer-assisted audit techniques (CAATs)?

An audit plan contains

CAATs software may be utilized to read,compute,and operate on machine-readable records.

An auditor would most likely be use word processing software for what purpose?

The _ of the client's computer operations should be considered in audit .

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

In the preparation of an audit plan,which of the following items is not essential?

The use of computer-assisted auditing techniques has significantly changed auditing objectives.

Looking at vendors' invoices for particular information is an example of

_____________________________ is a procedure that generally involves the collection of oral evidence from independent parties and client officials.

Which of the following is used to maintain control of the audit and ensure that it is completed on a timely basis?

C.Hill,CPA,has been retained to audit the financial statements of Monday Co.Monday's predecessor auditor was K.Post,CPA,whom Monday has notified by that its services have been terminated.Under these circumstances,which party should initiate the communications between Hill and Post?

Engagement letters are not necessary for continuing clients.

For all audits of financial statements filed with the Securities and Exchange Commission,which of the following is required?

In determining whether transactions have been recorded,the direction of the audit testing should start from the

For which of the following judgments may an independent auditor share responsibility with an entity's internal auditor who is assessed to be both competent and objective?

During the initial planning phase of an audit,a CPA most likely would

Which of the following provides the best method of obtaining an understanding of a continuing client's business for planning an audit?

Management's responsibility in a computer system would not include

The major cycles that auditors typically group accounts by do not include

Which of the following is an advantage of computer-assisted audit techniques (CAATs)?

An audit plan contains

CAATs software may be utilized to read,compute,and operate on machine-readable records.

An auditor would most likely be use word processing software for what purpose?

The _____________________________ of the client's computer operations should be considered in audit ____________________________.

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

The _ of the client's computer operations should be considered in audit .