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

Question 2

Which of the following use of computer-assisted audit techniques (CAATs)would most likely be considered a search for fraudulent activities?

Accepted Answer

A) Selecting customers' accounts receivable for confirmation 
B) Recalculating inventory extensions 
C) Scanning accounts receivable balances for amounts over the credit limit 
D) Comparing a list of vendor addresses to employee address files 
A) Selecting customers' accounts receivable for confirmation 
B) Recalculating inventory extensions 
C) Scanning accounts receivable balances for amounts over the credit limit 
D) Comparing a list of vendor addresses to employee address files

Question 3

The characteristics that distinguish computer processing from manual processing would not include

Accepted Answer

A) a decrease of management supervision of operations. 
B) automatic initiation and execution of transactions. 
C) the possible concentration of control activities. 
D) a high potential for unauthorized access to data. 
A) a decrease of management supervision of operations. 
B) automatic initiation and execution of transactions. 
C) the possible concentration of control activities. 
D) a high potential for unauthorized access to data.

Question 4

During a financial statement audit an internal auditor may provide direct assistance to the independent CPA in performing. $$\begin{array} { l c c } 
& \text { Tests of controls } & \text { Substantive Tests } \
\text { A. } & \text { Yes } & \text { Yes } \
\text { B. } & \text { Yes } & \text { No } \
\text { C. } & \text { No } & \text { Yes } \
\text { D. } & \text { No } & \text { No }
\end{array}$$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 5

Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?

Accepted Answer

A) Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for 
B) Receiving the client's unopened mail for a reasonable period of time after year-end to search for unrecorded vendor's invoices 
C) Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports 
D) Confirming accounts payable balances with known vendors and suppliers who have zero balances at year-end 
A) Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for 
B) Receiving the client's unopened mail for a reasonable period of time after year-end to search for unrecorded vendor's invoices 
C) Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports 
D) Confirming accounts payable balances with known vendors and suppliers who have zero balances at year-end

Question 6

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 7

Identify the two types of audit plans and indicate the purpose of each.

Accepted Answer

The two types of audit plans are (1)the

Question 8

Match between columns
                        Premises: Proceeding forward through the accounting and control system from the evidence to the financial statements.
Audit of details of transactions and balances.
Audit procedure that provides compelling evidence of existence.
Documentation prepared by independent parties and sent to the client.
A list of audit procedures.
Direct correspondence with independent parties.

Accepted Answer

The Answer of External-internal evidence and Vouching and Substantive procedures is...

Question 9

Which of the following statements is most accurate regarding sufficient and appropriate documentation?

Accepted Answer

A) Accounting estimates are not considered sufficient and appropriate documentation. 
B) Sufficient and appropriate documentation should include evidence that the audit working papers have been reviewed. 
C) If additional evidence is required to document significant findings or issues,the original evidence is not considered sufficient and appropriate and therefore should be deleted from the working papers. 
D) Audit documentation is the property of the client,and sufficient and appropriate copies should be retained by the auditor for at least five years. 
A) Accounting estimates are not considered sufficient and appropriate documentation. 
B) Sufficient and appropriate documentation should include evidence that the audit working papers have been reviewed. 
C) If additional evidence is required to document significant findings or issues,the original evidence is not considered sufficient and appropriate and therefore should be deleted from the working papers. 
D) Audit documentation is the property of the client,and sufficient and appropriate copies should be retained by the auditor for at least five years.

Question 10

The basic auditing application of the personal computer as an audit tool would not include

Accepted Answer

A) spreadsheet analysis. 
B) sample planning,selection,and evaluation. 
C) continuous monitoring of a client's internal control system. 
D) analytical review. 
A) spreadsheet analysis. 
B) sample planning,selection,and evaluation. 
C) continuous monitoring of a client's internal control system. 
D) analytical review.

Question 11

Before accepting an engagement to audit a new client,a CPA is required to obtain

Accepted Answer

A) an assessment of fraud risk factors likely to cause material misstatements. 
B) an understanding of the prospective client's industry and business. 
C) the prospective client's signature to a written engagement letter. 
D) the prospective client's consent to make inquiries of the predecessor,if any. 
A) an assessment of fraud risk factors likely to cause material misstatements. 
B) an understanding of the prospective client's industry and business. 
C) the prospective client's signature to a written engagement letter. 
D) the prospective client's consent to make inquiries of the predecessor,if any.

Question 12

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

Accepted Answer

A) Make inquiries of the client's lawyer concerning pending litigation. 
B) Perform cutoff tests of cash receipts and disbursements. 
C) Compare financial information with nonfinancial operating data. 
D) Recalculate the prior year's accruals and deferrals. 
A) Make inquiries of the client's lawyer concerning pending litigation. 
B) Perform cutoff tests of cash receipts and disbursements. 
C) Compare financial information with nonfinancial operating data. 
D) Recalculate the prior year's accruals and deferrals.

Question 13

Before accepting an engagement to audit a new client,an auditor is required to

Accepted Answer

A) make inquiries of the predecessor auditor after obtaining the consent of the prospective client. 
B) obtain the prospective client's signature to the engagement letter. 
C) prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan. 
D) discuss the management representation letter with the prospective client's audit committee. 
A) make inquiries of the predecessor auditor after obtaining the consent of the prospective client. 
B) obtain the prospective client's signature to the engagement letter. 
C) prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan. 
D) discuss the management representation letter with the prospective client's audit committee.

Question 14

When assessing internal auditors' objectivity,an independent auditor should

Accepted Answer

A) consider the policies that prohibit the internal auditors from auditing areas where they were recently assigned. 
B) review the internal auditors' reports to determine that their conclusions are consistent with the work performed. 
C) verify that the internal auditors' assessment of control risk is comparable to the independent auditor's assessment. 
D) evaluate the quality of the internal auditors' working paper documentation and their recent audit recommendations. 
A) consider the policies that prohibit the internal auditors from auditing areas where they were recently assigned. 
B) review the internal auditors' reports to determine that their conclusions are consistent with the work performed. 
C) verify that the internal auditors' assessment of control risk is comparable to the independent auditor's assessment. 
D) evaluate the quality of the internal auditors' working paper documentation and their recent audit recommendations.

Question 15

An auditor most likely would review an entity's periodic accounting for the numerical sequence of shipping documents and invoices to support management's financial statement assertion of

Accepted Answer

A) rights and obligations. 
B) completeness. 
C) presentation and disclosure. 
D) existence or occurrence. 
A) rights and obligations. 
B) completeness. 
C) presentation and disclosure. 
D) existence or occurrence.

Question 16

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 17

A primary advantage of using computer-assisted audit techniques (CAATs)packages to audit the financial statements of a client that uses computerized information systems is that the auditor may

Accepted Answer

A) access information stored on computer files even with a limited understanding of the client's hardware and software features. 
B) consider increasing the use of substantive tests of transactions in place of analytical procedures. 
C) substantiate the accuracy of data by using self-checking digits and hash totals. 
D) reduce the level of required tests of controls to a relatively small amount. 
A) access information stored on computer files even with a limited understanding of the client's hardware and software features. 
B) consider increasing the use of substantive tests of transactions in place of analytical procedures. 
C) substantiate the accuracy of data by using self-checking digits and hash totals. 
D) reduce the level of required tests of controls to a relatively small amount.

Question 18

Which of the following factors most likely would cause an auditor not to accept a new audit engagement?

Accepted Answer

A) An inadequate understanding of the entity's internal controls 
B) The close proximity to the end of the entity's fiscal year 
C) Concluding that the entity's management probably lacks integrity 
D) The inability to perform preliminary analytical procedures before assessing control risk 
A) An inadequate understanding of the entity's internal controls 
B) The close proximity to the end of the entity's fiscal year 
C) Concluding that the entity's management probably lacks integrity 
D) The inability to perform preliminary analytical procedures before assessing control risk

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

Which of the following use of computer-assisted audit techniques (CAATs)would most likely be considered a search for fraudulent activities?

The characteristics that distinguish computer processing from manual processing would not include

During a financial statement audit an internal auditor may provide direct assistance to the independent CPA in performing. Tests of controls Substantive Tests A. Yes Yes B. Yes No C. No Yes D. No No

Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?

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?

Identify the two types of audit plans and indicate the purpose of each.

Which of the following statements is most accurate regarding sufficient and appropriate documentation?

The basic auditing application of the personal computer as an audit tool would not include

Before accepting an engagement to audit a new client,a CPA is required to obtain

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

Before accepting an engagement to audit a new client,an auditor is required to

When assessing internal auditors' objectivity,an independent auditor should

An auditor most likely would review an entity's periodic accounting for the numerical sequence of shipping documents and invoices to support management's financial statement assertion of

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

A primary advantage of using computer-assisted audit techniques (CAATs)packages to audit the financial statements of a client that uses computerized information systems is that the auditor may

Which of the following factors most likely would cause an auditor not to accept a new audit engagement?

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 Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 3: Engagement Planning

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

Which of the following use of computer-assisted audit techniques (CAATs)would most likely be considered a search for fraudulent activities?

The characteristics that distinguish computer processing from manual processing would not include

During a financial statement audit an internal auditor may provide direct assistance to the independent CPA in performing. Tests of controls Substantive Tests A. Yes Yes B. Yes No C. No Yes D. No No

Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?

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?

Identify the two types of audit plans and indicate the purpose of each.

Which of the following statements is most accurate regarding sufficient and appropriate documentation?

The basic auditing application of the personal computer as an audit tool would not include

Before accepting an engagement to audit a new client,a CPA is required to obtain

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

Before accepting an engagement to audit a new client,an auditor is required to

When assessing internal auditors' objectivity,an independent auditor should

An auditor most likely would review an entity's periodic accounting for the numerical sequence of shipping documents and invoices to support management's financial statement assertion of

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

A primary advantage of using computer-assisted audit techniques (CAATs)packages to audit the financial statements of a client that uses computerized information systems is that the auditor may

Which of the following factors most likely would cause an auditor not to accept a new audit engagement?

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 Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters