Question 1

Auditing standards require the auditors to ask that client consent be given to permit the _________________________ auditors to speak.

Accepted Answer

The answer of Auditing standards require the auditors to ask...

Question 2

Which of the following is not a category of audit documentation?

Accepted Answer

A)  Temporary files. 
B)  Permanent files. 
C)  Audit administrative files. 
D)  Current documentation files. 
A)  Temporary files. 
B)  Permanent files. 
C)  Audit administrative files. 
D)  Current documentation files.

Question 3

Which of the following is not considered an accounting estimate?

Accepted Answer

A)  Allowance for loan losses. 
B)  Credit sales. 
C)  Net realizable value of inventory. 
D)  Percentage-of-completion revenue to be recorded. 
A)  Allowance for loan losses. 
B)  Credit sales. 
C)  Net realizable value of inventory. 
D)  Percentage-of-completion revenue to be recorded.

Question 4

An audit engagement letter should normally include which of the following matters of agreement between the auditor and the client?

Accepted Answer

A)  Schedules and analyses to be prepared by the client's employees. 
B)  Methods of statistical sampling the auditor will use. 
C)  Specification of litigation in progress against the client. 
D)  Client representations about availability of all minutes of meetings of the board of directors. 
A)  Schedules and analyses to be prepared by the client's employees. 
B)  Methods of statistical sampling the auditor will use. 
C)  Specification of litigation in progress against the client. 
D)  Client representations about availability of all minutes of meetings of the board of directors.

Question 5

A primary advantage of using CAATs in the audit of an advanced computerized system is that it enables the auditor to

Accepted Answer

A)  Substantiate the accuracy of data through self-checking digits and hash totals. 
B)  Utilize the speed and accuracy of the computer. 
C)  Verify the performance of machine operations that leave visible evidence of occurrence. 
D)  Gather and store large quantities of supportive audit evidence in machine-readable form. 
A)  Substantiate the accuracy of data through self-checking digits and hash totals. 
B)  Utilize the speed and accuracy of the computer. 
C)  Verify the performance of machine operations that leave visible evidence of occurrence. 
D)  Gather and store large quantities of supportive audit evidence in machine-readable form.

Question 6

In designing written audit plans,an auditor should establish specific audit objectives that relate primarily to the

Accepted Answer

A)  Timing of audit procedures. 
B)  Cost-benefit of gathering techniques. 
C)  Selected audit techniques. 
D)  Financial statement assertions. 
A)  Timing of audit procedures. 
B)  Cost-benefit of gathering techniques. 
C)  Selected audit techniques. 
D)  Financial statement assertions.

Question 7

____________________________________________________________ include programs that may be utilized to read,compute,and operate on machine-readable records.

Accepted Answer

Computer-a

Question 8

Which of the following is not a way in which auditors use the concept of overall materiality?

Accepted Answer

A)  As a guide to planning the audit plan. 
B)  As a guide to the evaluation of evidence. 
C)  As a guide for making decisions about the audit report. 
D)  As a guide for assessing control risk. 
A)  As a guide to planning the audit plan. 
B)  As a guide to the evaluation of evidence. 
C)  As a guide for making decisions about the audit report. 
D)  As a guide for assessing control risk.

Question 9

In a computerized information system,uniform processing of transactions

Accepted Answer

A)  Means that transactions will never be processed incorrectly. 
B)  Requires that a company use the same program for all functions. 
C)  Subjects similar transactions to the same processing instructions. 
D)  Always leaves an audit trail. 
A)  Means that transactions will never be processed incorrectly. 
B)  Requires that a company use the same program for all functions. 
C)  Subjects similar transactions to the same processing instructions. 
D)  Always leaves an audit trail.

Question 10

The auditor looked at a bank statement received and held by the client.What kind of audit procedure would this be considered?

Accepted Answer

A)  Recalculation. 
B)  Physical observation. 
C)  Confirmation. 
D)  Examination of documents. 
A)  Recalculation. 
B)  Physical observation. 
C)  Confirmation. 
D)  Examination of documents.

Question 11

The concept of materiality emphasizes the accountants' and managers' point of view,not the users' point of view.

Accepted Answer

A) True 
 B)False

Question 12

Prior to beginning the fieldwork on a new audit engagement in which the audit team does not possess expertise in the industry in which the client operates,the audit team should

Accepted Answer

A)  Reduce audit risk by lowering the preliminary levels of materiality. 
B)  Design special substantive tests to compensate for the lack of industry expertise. 
C)  Engage financial experts familiar with the nature of the industry. 
D)  Obtain knowledge of matters that relate to the nature of the entity's business. 
A)  Reduce audit risk by lowering the preliminary levels of materiality. 
B)  Design special substantive tests to compensate for the lack of industry expertise. 
C)  Engage financial experts familiar with the nature of the industry. 
D)  Obtain knowledge of matters that relate to the nature of the entity's business.

Question 13

A second audit partner is required for audits of financial statements filed with the SEC.

Accepted Answer

A) True 
 B)False

Question 14

When auditing Vandalay Jewelry,Costanza,CPA was not familiar with the quality and cut of the company's precious jewel inventory.To address this shortcoming,Costanza hired Benes,an expert in jewel valuation,to assist in the inventory valuation.Should Costanza refer to Benes's work in the audit report?

Accepted Answer

A)  Yes, the auditors' report should mention the fact that a specialist was used. 
B)  The auditors' report should mention the use of the specialist only when the specialist's findings affect the auditors' conclusions. 
C)  The use of a specialist need not be mentioned if the auditors decide not to take responsibility for the specialist's findings. 
D)  The auditors' report should mention the specialist only if Vandalay agrees with the specialist's findings. 
A)  Yes, the auditors' report should mention the fact that a specialist was used. 
B)  The auditors' report should mention the use of the specialist only when the specialist's findings affect the auditors' conclusions. 
C)  The use of a specialist need not be mentioned if the auditors decide not to take responsibility for the specialist's findings. 
D)  The auditors' report should mention the specialist only if Vandalay agrees with the specialist's findings.

Question 15

A first-time audit requires more work than a repeat engagement.

Accepted Answer

A) True 
 B)False

Question 16

To satisfy the valuation assertion when auditing an investment in another company that is publicly and actively traded,an auditor most likely would seek to

Accepted Answer

A)  Inspect the stock certificates evidencing the investment. 
B)  Examine the audited financial statements of the investee company. 
C)  Review the broker's advice or canceled check for the investment's acquisition. 
D)  Obtain market quotations from The Wall Street Journal or another independent source. 
A)  Inspect the stock certificates evidencing the investment. 
B)  Examine the audited financial statements of the investee company. 
C)  Review the broker's advice or canceled check for the investment's acquisition. 
D)  Obtain market quotations from The Wall Street Journal or another independent source.

Question 17

In testing the existence assertion for an asset,an auditor ordinarily works from the

Accepted Answer

A)  Financial statements to the potentially unrecorded items. 
B)  Potentially unrecorded items to the financial statement. 
C)  Accounting records to the supporting evidence. 
D)  Supporting evidence to the accounting records. 
A)  Financial statements to the potentially unrecorded items. 
B)  Potentially unrecorded items to the financial statement. 
C)  Accounting records to the supporting evidence. 
D)  Supporting evidence to the accounting records.

Question 18

Which of the following would be a step in an internal control program?

Accepted Answer

A)  Obtain an aged trial balance of the accounts receivable. 
B)  Prepare and send confirmations on a sample of customers' accounts receivable. 
C)  Assess the control risk for sales and collections. 
D)  Read sales contracts for evidence of customers' rights of return or price allowance terms. 
A)  Obtain an aged trial balance of the accounts receivable. 
B)  Prepare and send confirmations on a sample of customers' accounts receivable. 
C)  Assess the control risk for sales and collections. 
D)  Read sales contracts for evidence of customers' rights of return or price allowance terms.

Question 19

An auditor's permanent file audit documentation most likely will contain

Accepted Answer

A)  Internal control analysis for the current year. 
B)  The most recent engagement letter. 
C)  Memoranda of conference with management. 
D)  Excerpts of the corporate charter and bylaws. 
A)  Internal control analysis for the current year. 
B)  The most recent engagement letter. 
C)  Memoranda of conference with management. 
D)  Excerpts of the corporate charter and bylaws.

Question 20

An auditor most likely would inspect additions to the audit client's Property,Plant,and Equipment account to obtain evidence concerning management's assertions about

Accepted Answer

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

Auditing standards require the auditors to ask that client consent be given to permit the _________________________ auditors to speak.

Which of the following is not a category of audit documentation?

Which of the following is not considered an accounting estimate?

An audit engagement letter should normally include which of the following matters of agreement between the auditor and the client?

A primary advantage of using CAATs in the audit of an advanced computerized system is that it enables the auditor to

In designing written audit plans,an auditor should establish specific audit objectives that relate primarily to the

____________________________________________________________ include programs that may be utilized to read,compute,and operate on machine-readable records.

Which of the following is not a way in which auditors use the concept of overall materiality?

In a computerized information system,uniform processing of transactions

The auditor looked at a bank statement received and held by the client.What kind of audit procedure would this be considered?

The concept of materiality emphasizes the accountants' and managers' point of view,not the users' point of view.

Prior to beginning the fieldwork on a new audit engagement in which the audit team does not possess expertise in the industry in which the client operates,the audit team should

A second audit partner is required for audits of financial statements filed with the SEC.

A first-time audit requires more work than a repeat engagement.

To satisfy the valuation assertion when auditing an investment in another company that is publicly and actively traded,an auditor most likely would seek to

In testing the existence assertion for an asset,an auditor ordinarily works from the

Which of the following would be a step in an internal control program?

An auditor's permanent file audit documentation most likely will contain

An auditor most likely would inspect additions to the audit client's Property,Plant,and Equipment account to obtain evidence concerning management's assertions about

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

Auditing standards require the auditors to ask that client consent be given to permit the _________________________ auditors to speak.

Which of the following is not a category of audit documentation?

Which of the following is not considered an accounting estimate?

An audit engagement letter should normally include which of the following matters of agreement between the auditor and the client?

A primary advantage of using CAATs in the audit of an advanced computerized system is that it enables the auditor to

In designing written audit plans,an auditor should establish specific audit objectives that relate primarily to the

____________________________________________________________ include programs that may be utilized to read,compute,and operate on machine-readable records.

Which of the following is not a way in which auditors use the concept of overall materiality?

In a computerized information system,uniform processing of transactions

The auditor looked at a bank statement received and held by the client.What kind of audit procedure would this be considered?

The concept of materiality emphasizes the accountants' and managers' point of view,not the users' point of view.

Prior to beginning the fieldwork on a new audit engagement in which the audit team does not possess expertise in the industry in which the client operates,the audit team should

A second audit partner is required for audits of financial statements filed with the SEC.

A first-time audit requires more work than a repeat engagement.

To satisfy the valuation assertion when auditing an investment in another company that is publicly and actively traded,an auditor most likely would seek to

In testing the existence assertion for an asset,an auditor ordinarily works from the

Which of the following would be a step in an internal control program?

An auditor's permanent file audit documentation most likely will contain

An auditor most likely would inspect additions to the audit client's Property,Plant,and Equipment account to obtain evidence concerning management's assertions about

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