Which of the following is not done during the client selection and retention pahse of planning?
A. obtain an undertanding of internal controls
Which of the following is not included in the engagement letter?
B. representations that the financial statements were prepared in accordance with generally accepted accounting practices
In deciding whether to use the work of internal auditors, external auditors must evaluate the internal auditors'
D. objectivity and competence
Analytical procedures are performed in the following order
B. develop an expectation; define a significant difference; calculate
predictions and compare them to the recorded amount; investigate
Which of the following is not true regarding planning in an electronic environment?
B. the procedures used are not changed
For which of the following judgments may an indpendent auditor share responsibility with an entity's internal auditor who is assessed to be both competent and objective?
assessment of inherent risk assessment of control risk
C. no no
In testing the existence assertion for an asset, an auditor ordinarily works from the
B. accounting records to the supporting evidence
In the preparation of an audit program, which of the following items is not essential?
C. the preparation of a budget identifying the costs of resources needed
Auditors try to identify predictable relationships when using analytical procedures. Relationships involving transactions from which of the following accounts most likely would yield the highest level of evidence?
B. payroll expense
The benefits of using CAATs include all of the following except:
D. reduced need for professional judgment
Analytical procedures are generally used to produce evidence from:
D. relationships among current financial balances and prior balanced, forecasts, and nonfinancial data
Auditors perform analytical procedures in the planning stage of an audit for the purpose of:
A. identifying unusual conditions that deserve more auditing effort
Which of the following match-up types of analytical procedures and sources of information makes the most sense?
type of analytical procedure -- source of information
A. comparison of current account balances with expected balances -- company's budgets and forecasts
Anyalytical procedures can be used in which of the following ways?
D. all of the above
Anyalytical procedures used when planning an audit should concentrate on:
D. accounts and relationships that may represent specific potential problems and risks in the financial statements
When a successor auditor initiates communications with a predecessor auditor, the successor should expect:
D. all of the above
Generally accepted auditing standards require that auditors always prepare and use:
C. a written audit program
When planning an audit, which of the following is not a factor that affects auditors' decisions about the quantity, type and content of audit documentation?
C. the auditors' judgment about their independence with regard to the client
An audit working paper that shows the detailed evidence and procedures regarding the balance in the acumulated depreciation account for the year under audit will be found in the:
B. current file evidence audit documentation
An auditor's permanent file audit documentation most likely will contact:
C. excerpts of the corporate charter and bylaws
Which of the following is not a benefit claimed for the practice of determining materiality in the initial planning stage of starting an audit?
B. being able to decide early what kind of audit opinion to give
Spreadsheet software would be most useful for which of the following audit activities?
B. preparing a comparison of current year expenses with those from the previous year
Which of the following is an advatage of computer assisted audit tools and techniques (CAATTs)?
A. the software can be used for audits of clients that use differing computer equipment and file formats
A primary advatnage of using computer assisted audit tools and techniques in the audit of the advanced computer system is that it enables the auditor to:
B. utilize the speed and accuracy of the computer
When a company that sells its products for a (gross) profit increases its sales by 15% and its cost of goods by 7%, the cost of goods sold ratio will:
c remain unchanged
An audit engagement letter should normally include the following mater of agreement betweeen the auditor and the client:
B. schedules and analyses to be prepared by the client's employees
An auditor most likely would analyze inventory turnover rates to obtain evidence concerning management's assertions about:
B. valuation or allocation
Which of the following factors most likely would cause an auditor not to accept a new audit engagement?
C. concluding that the entity's management probably lacks integrity
To obtain an understanding of a continuing client's business in planning an audit, an auditor most likely would
B. review prior year working papers and the permant file for the client
Generally accepted auditing standards states that analytical procedures:
D. should be applied in the planning and final review stages of the audit and can be used as a substantive test during the audit