Exam 5: Audit Evidence and Documentation

Analytical procedures are substantive procedures that may be used to provide evidence about specific accounts and classes of transactions. a.Describe three major types of comparisons the auditor might make in performing analytical procedures. b.At what stages of the audit are analytical procedures performed and what purpose do they serve at each stage?

A schedule set up to combine similar general ledger accounts,the total of which appears on the working trial balance as a single amount,is referred to as a:

An independent auditor finds that the Simmer Corporation occupies office space,at no charge,in an office building owned by a shareholder.This finding indicates the existence of:

Which of the following best describes the problem with the use of published industry averages for analytical procedures?

Which of the following expressions is least likely to be included in a client's representation letter?

During an audit engagement pertinent data are prepared and included in the audit working papers.The working papers primarily are considered to be:

CPA wishes to use a representation letter as a substitute for performing other audit procedures.Doing so:

Which of the following is generally true about the sufficiency of audit evidence?

Which of the following is not a typical analytical procedure?

In preparing for an audit of the retail footwear division of a major retail organization,the auditor gathered the following information about the organization's stores: All Northeast Southwest Mid-Central Stores Region Region Region \ 736,000 \ 840,000 \ 760,000 \ 630,000 Average sales per store \ 375,000 \ 420,000 \ 325,000 \ 395,000 Average cost of goods sold per store 48 13 18 17 Number of stores 1,800 2,200 1,850 1,550 Average square feet per store \ 137,000 \ 152,000 \ 140,000 \ 122,000 Average sales per full-time employee \ 98,000 \ 102,000 \ 82,000 \ 112,000 Average wage related expense per store \ 35,000 \ 285,000 \ 320,000 \ 115,000 Which of the following statements is not correct regarding the auditor's further analysis?

Which of the following best describes the reason that auditors are concerned with the detection of related party transactions?

Concerning retention of working papers,the Sarbanes-Oxley Act:

In preparing for an audit of the retail footwear division of a major retail organization,the auditor gathered the following information about the organization's stores: All Northeast Southwest Mid-Central Stores Region Region Region \ 736,000 \ 840,000 \ 760,000 \ 630,000 Average sales per store \ 375,000 \ 420,000 \ 325,000 \ 395,000 Average cost of goods sold per store 48 13 18 17 Number of stores 1,800 2,200 1,850 1,550 Average square feet per store \ 137,000 \ 152,000 \ 140,000 \ 122,000 Average sales per full-time employee \ 98,000 \ 102,000 \ 82,000 \ 112,000 Average wage related expense per store \ 35,000 \ 285,000 \ 320,000 \ 115,000 Management is concerned about the lower level of profitability in the Mid-Central Region.Which of the following would be a reasonable possible explanation(s)of the lower profitability for the Mid-Central Region? I.The lower number of stores in the Mid-Central Region. II.Sales employees are not as productive in generating sales as those in other regions. III.The Mid-Central Region has a lower gross margin.

Which of the following would not necessarily be considered a related party transaction?

Which of the following is required documentation in an audit?

Audit working papers are an integral part of an examination in accordance with generally accepted auditing standards. a.Describe three major functions of the audit working papers. b.Distinguish between the permanent working paper file and the current working paper file.

The professional standards consider calculating depreciation expense a "routine" transaction.

An auditor should expect that fair value is the price that would be received to sell an asset in an orderly transaction between the market participants at the:

An auditor plans to apply substantive tests to the details of asset and liability accounts as of an interim date rather than as of the balance sheet date.The auditor should be aware that this practice

In preparing for an audit of the retail footwear division of a major retail organization,the auditor gathered the following information about the organization's stores: All Northeast Southwest Mid-Central Stores Region Region Region \ 736,000 \ 840,000 \ 760,000 \ 630,000 Average sales per store \ 375,000 \ 420,000 \ 325,000 \ 395,000 Average cost of goods sold per store 48 13 18 17 Number of stores 1,800 2,200 1,850 1,550 Average square feet per store \ 137,000 \ 152,000 \ 140,000 \ 122,000 Average sales per full-time employee \ 98,000 \ 102,000 \ 82,000 \ 112,000 Average wage related expense per store \ 35,000 \ 285,000 \ 320,000 \ 115,000 Based on the previous information,which of the following preliminary conclusions can the auditor use as a basis for further investigations?