Burke AUD Midterm

  1. that the manager generally has more information about the true financial position and results of operations of the entity then does the absentee owner refers to
    information asymmetry
  2. consider the following statements
    under Sarbanes-Oxley, public company accounting oversight board is authorized to set auditing standards to be followed by those who audit financial statements for companies which a publicly traded

    under Sarbanes-Oxley audits of public companies involved both the audit of the company's financial statements and an audit of the company's internal controls

    both statement one in statement to are true
  3. a company's internal auditors assists on the audit of the company's financial statements being performed by members of an outside CPA firm. Name the type of engagement and the most likely criteria on which the financial statements are based
    financial, generally accepted accounting principles
  4. the risk that the auditor will not detect a misstatement that exists in the relevant assertion that could be material either individually or in aggregated with other misstatements is referred to as
    detection risk
  5. consider the following statements

    GAAS standardsof fieldwork relate to the actual conduct of the audit

    gas standards of fieldwork involved auditors qualifications and the quality of his or her work
    statement one is true, statement to is false
  6. and auditor watches company personnel take the physical inventory. What type of audit evidence is involved
  7. as a test of sales for completeness, and auditor selects 50 sales invoices and vouches them to the respective shipping document. One factor involving the appropriateness of audit evidence has been violated
  8. in class in discussing the audit risk model we considered several cases as follows case one audit risk equals .05 inherent risk equals .60 control risk equals .30 detection risk equals points 278

    case two audit risk equals .1, inherent risk equals .6, control risk equals .3, what is detection risk of case to compared with case one
    .556, less audit work
  9. consider the following statements

    one conceptually to decrease the level of detection risk the auditor would do additional substantial substantive testing i.e. more detect detailed testing and/or analytical procedures

    second conceptually as the assessed level of control risk decreases, there is less of a need to lower detection risk to maintain the same overall level of acceptable audit risk
    statement one is true, statement to is true
  10. consider the following statements

    first materiality has both quantitative and qualitative considerations

    second when considering a preliminary judgment of materiality if the auditor sets a higher dollar amount for materiality, rather than a low dollar amount, more evidence i.e. substantial testing is required
    statement one is true, statement to is false
  11. consider the following statements

    first for income statement accounts evidence is considered to be more timely the more closely pertains to transactions or events during the.

    Second for balance sheet accounts evidence is considered to be more timely the more closely relates to the balance sheet date
    statement one is true, statement two to his true
  12. consider following statements

    first auditing standards require that the possible successor auditor initiate a conversation with the predecessor auditor

    second since internal auditors are employees of the company being audited, internal auditors can never assist external auditors in performing the financial audit
    statement one is true, statement to is false
  13. which of the following is not considered one of the three conditions indicative of fraud i.e. fraud risk triangle
  14. the misappropriation i.e. theft of assets is called
  15. which type of accounts receivable is requested to be returned to the CPA firmeven if the recipient i.e. customer who owes money to the company agrees with the amount shown on the confirmation
    positive confirmation
  16. when there are many accounts with small balances which type of Accounts Receivable might be appropriate? As discussed testing which should assertion is most likely to be the reason for this?
    Negative, existence
  17. with respect to perform alternative procedures is a confirmation is not returned, what type of confirmation had been sent, and what might be the alternative procedure?
    Positive confirmation, considering subsequent cash receipts
  18. inherent risk and control risk to differ from detection risk and that they
    exist independently of the financial statement audit
  19. audits of financial statements are designed to obtain assurance of detecting misstatement due to
    errors yes, fraudulent financial reporting yes, misappropriation of assets yes
  20. which of the following statements best describes the auditors responsibility to detect conditions relating to financial stress of employees or inverse relationships between a company and its employees
    the auditor is not required to plan the audit to discover these conditions but you consider them if year she becomes aware of them during the audit
  21. which of the following factors most likely would cause a CPA to not accept a new audit Gateway
    the prospective client is unwilling to make all financial records available to the CPA
  22. before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessors
    understanding as to the reasons for the change of auditors
  23. with respect to planning an audit which of the following statements is always true
    is acceptable to perform a portion of the audit of a continuing audit client at interim dates
  24. while assessing the risks of material misstatement auditors identify risks, relate risk to what could go wrong, consider the magnitude of risks and
    consider the likelihood that the risks a result in material misstatements
  25. which of the following factors are included in an entities control environment
    audit committee yes, integrity and ethical values yes, organizational yes
  26. the objective of tests of details of transactions performed as tests of controls is to
    evaluate whether controls operated effectively
  27. a material weakness is a significant deficiencies or combination of Sydney significant deficiencies the results in more than a remote likelihood that misstatement of at least one amount will not be prevented or detected
    a material amount
  28. which of the following is most likely to indicate a significant deficiency relating to the client antifraud programs
    audit committee passivity when considering oversight functions
  29. which of the following controls most likely would reduce the risk of diversion of customer C-spine entities employees
    a bank lockbox system
  30. with properly designed internal control the same employee most likely would match vendors invoices with receiving reports and also
    recompute the calculations on vendors invoices
  31. which of the following controls most likely addresses the completeness assertion of for inventory
    receiving reports are prenumbered and periodically reconciled
  32. the audit working paper the reflects the major components of an on amount reported in the financial statements is the
    lead schedule
  33. in testing existence assertion for in asset and auditor ordinarily works from the
    accounting records to the supporting evidence
  34. a systematic process of one objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertaining the degree of correspondence between those assertions and establish criteria and communicating the results to interested users
  35. and expressed her and lied representation by management about information is reflected in the financial statements
    financial statement assertions
  36. independent professional servicethat improve the quality of information, or its context, for decision-makers
    assurance service
  37. the magnitude of an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced
  38. a service when a practitioner is engaged to issue, or does issue, a report on subject matter
    attest service
  39. transactions that have been recorded actually took place
  40. all disclosures that should have been included in the financial statements have been included
  41. receivables are determined using net realizable value
    valuation and allocation
  42. transactions and events have been recorded in the correct accounting.
  43. Accounts Payable and other liabilities expected to be paid using current assets have been shown as current liabilities in the classified balance sheet
  44. All assets liabilities and equity interests that should have been recorded have been recorded
  45. assets liabilities and equity interests exist
  46. discuss the adequacy of the allowance for doubtful accounts with the credit manager
  47. watch client personnel take the companies physical inventory
  48. reviewing the general ledger for unusual adjusting entries
  49. walking through an understanding by redoing companies internal controls to determine whether they are effective or not
  50. compare information on the receiving report of inventory with the related Accounts Payable bill for accuracy
    inspection of records or documents
  51. examine stock certificates of companies owned by the audit client is a test of marketable securities for existence
    inspection of tangible assets
  52. send letters to customers asking them about how much they oh the company
  53. foot the cost of inventory on an inventory listing to determine if it is added correctly
Card Set
Burke AUD Midterm
AUD Midterm