Question 1

Which of the following items would most likely be kept in the permanent file?

Accepted Answer

A) A signed and completed bank confirmation. 
B) The signed engagement letter. 
C) Minutes from a special committee meeting outlining the auditee's response to major regulatory changes. 
D) The audit plan and specific audit programs. 
A) A signed and completed bank confirmation. 
B) The signed engagement letter. 
C) Minutes from a special committee meeting outlining the auditee's response to major regulatory changes. 
D) The audit plan and specific audit programs.

Question 2

To provide efficient,reliable evidence,confirmations should be ________.

Accepted Answer

A) created by the client and sent to third parties to be returned to the client 
B) created by the auditor and sent to third parties to be returned to the client 
C) created by the auditor and sent to third parties to be returned to the auditor 
D) created by the client and sent to third parties to be returned to the auditor 
A) created by the client and sent to third parties to be returned to the client 
B) created by the auditor and sent to third parties to be returned to the client 
C) created by the auditor and sent to third parties to be returned to the auditor 
D) created by the client and sent to third parties to be returned to the auditor

Question 3

The overall audit strategy is documented in the ________.

Accepted Answer

A) engagement letter 
B) management letter 
C) audit program 
D) planning memorandum 
A) engagement letter 
B) management letter 
C) audit program 
D) planning memorandum

Question 4

An audit program lists the procedure "select a sample of 20 entries in the sales journal and trace to duplicate sales invoices and related shipping documents" as a test of the completeness assertion for inventory.This procedure:

Accepted Answer

A) Provides low reliability evidence due to the small sample size. 
B) Provides neither appropriate,nor sufficient audit evidence. 
C) Provides relevant and reliable audit evidence. 
D) Provides inappropriate audit evidence for assertion being audited. 
A) Provides low reliability evidence due to the small sample size. 
B) Provides neither appropriate,nor sufficient audit evidence. 
C) Provides relevant and reliable audit evidence. 
D) Provides inappropriate audit evidence for assertion being audited.

Question 5

Define and discuss the evidence gathering technique of inspection.

Accepted Answer

i.Inspection consists of looking at asse

Question 6

Tracing is a document examination procedure used to test the existence/occurrence assertion.

Accepted Answer

A) True 
 B)False

Question 7

Where would a copy of an auditee's long-term lease for a building most likely be kept?

Accepted Answer

A) In the planning file. 
B) In the permanent file. 
C) In the administration file. 
D) In the audit evidence file. 
A) In the planning file. 
B) In the permanent file. 
C) In the administration file. 
D) In the audit evidence file.

Question 8

There are two kinds of audit programs: (1)balance-audit programs and (2)cycle-audit programs.

Accepted Answer

A) True 
 B)False

Question 9

Since audit papers are the property of the auditor,what was fundamentally wrong about Arthur Andersen's decision to shred working papers related to the Enron audit.

Accepted Answer

Andersen's reputation declined in Januar

Question 10

Identify the three main types of audit programs and indicate the purpose of each.

Accepted Answer

The three types of audit programs are th

Question 11

One example of a formal authoritative document is a ________.

Accepted Answer

A) Customer purchase order 
B) loan agreement 
C) vendor invoice 
D) loan application 
A) Customer purchase order 
B) loan agreement 
C) vendor invoice 
D) loan application

Question 12

An auditor selects audit procedures that will provide ________.

Accepted Answer

A) the most evidence 
B) the most persuasive evidence 
C) the most reliable and relevant evidence that can be obtained,in a cost-effective manner 
D) the most relevant information to the audit assertion 
A) the most evidence 
B) the most persuasive evidence 
C) the most reliable and relevant evidence that can be obtained,in a cost-effective manner 
D) the most relevant information to the audit assertion

Question 13

The audit program prepared by the independent auditors prior to the start of fieldwork is considered appropriate 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 14

An auditor should re-perform calculations on a random basis to check for accuracy.Usually,if one component has been calculated properly,the auditor can rely that the other components have also been computed properly.

Accepted Answer

A) True 
 B)False

Question 15

Control tests give direct evidence about the financial amounts reported in the financial statements.

Accepted Answer

A) True 
 B)False

Question 16

Contrast the qualitative aspects of evidence in terms of reliability.

Accepted Answer

i.An auditor's direct,personal knowledge

Question 17

A first-time audit requires more work than a continuing client.Identify some of the issues involved in the first audit of a company that do not occur in an ongoing engagement.

Accepted Answer

If an organization has been operating fo

Question 18

Prior year audit working papers may indicate misstatements likely to reoccur in the current year.

Accepted Answer

A) True 
 B)False

Question 19

A key determinant of the objectivity of the work of an internal audit team is _____.

Accepted Answer

A) The extent to which the internal auditors will share responsibility for the audit opinion. 
B) The number of former members of the audit firm's staff that work on the internal audit team. 
C) The internal auditors' quality control system. 
D) Whether or not the internal auditors report directly to the audit committee. 
A) The extent to which the internal auditors will share responsibility for the audit opinion. 
B) The number of former members of the audit firm's staff that work on the internal audit team. 
C) The internal auditors' quality control system. 
D) Whether or not the internal auditors report directly to the audit committee.

Question 20

Destroying working papers may prevent auditors from proving due care if they are sued for negligence.

Accepted Answer

A) True 
 B)False

Exam 8: Audit Evidence and Assurance

Which of the following items would most likely be kept in the permanent file?

To provide efficient,reliable evidence,confirmations should be ________.

The overall audit strategy is documented in the ________.

An audit program lists the procedure "select a sample of 20 entries in the sales journal and trace to duplicate sales invoices and related shipping documents" as a test of the completeness assertion for inventory.This procedure:

Define and discuss the evidence gathering technique of inspection.

Tracing is a document examination procedure used to test the existence/occurrence assertion.

Where would a copy of an auditee's long-term lease for a building most likely be kept?

There are two kinds of audit programs: (1)balance-audit programs and (2)cycle-audit programs.

Since audit papers are the property of the auditor,what was fundamentally wrong about Arthur Andersen's decision to shred working papers related to the Enron audit.

Identify the three main types of audit programs and indicate the purpose of each.

One example of a formal authoritative document is a ________.

An auditor selects audit procedures that will provide ________.

The audit program prepared by the independent auditors prior to the start of fieldwork is considered appropriate documentation of ________.

An auditor should re-perform calculations on a random basis to check for accuracy.Usually,if one component has been calculated properly,the auditor can rely that the other components have also been computed properly.

Control tests give direct evidence about the financial amounts reported in the financial statements.

Contrast the qualitative aspects of evidence in terms of reliability.

A first-time audit requires more work than a continuing client.Identify some of the issues involved in the first audit of a company that do not occur in an ongoing engagement.

Prior year audit working papers may indicate misstatements likely to reoccur in the current year.

A key determinant of the objectivity of the work of an internal audit team is _____.

Destroying working papers may prevent auditors from proving due care if they are sued for negligence.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Control Assessment and Testing

Audit Sampling

The Revenues, receivables, and Receipts Process and Cash Account Balance

The Purchases, payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, including Fraud Auditing

Filters