Audit Exam 2 MC

  1. Which of the following is not done during the client selectino and retention phase of planning?




    B. obtain an understanding of internal controls
  2. Which of the following is not included in the engagement letter?




    D. representations that the financial statements were prepared in accordance with GAAP
  3. In deciding whether to use the work of internal auditors, external auditors must evaluate the internal auditors'




    B. objectivity and competence
  4. Analytical procedures are performed in the following order




    A. develop an expectation, define a significant difference, calculate predictions and compare them to the recorded amount, investigate significant differences
  5. Which of the following is not true regarding planning in an electronic environment?




    D. the procedures used are not changed
  6. For which of the following judgements may an independent auditor share responsibility with an entity's internal auditor who is assessed to be both competent and objective?




    A. Neither assessment of inherent risk or control risk

    Judgements such as assessment of inherent and control risk should not be shared with the client's internal auditors
  7. In testing the existence assertion for an asset, an auditor ordinarily works from the




    A. accounting records to the supporting evidence
  8. 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

    the audit team would typically not rely on the budget in its determination of appropriate audit procedures
  9. 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

    balance sheet accoiunts tend to be the more unpredictable because auditors are comparing one day with another 365 days earlier, compared to income stmt accounts that are an aggregation of 365 days
  10. An advantage of an internal control questionnaire is




    C. ease of completion
  11. In addition to gaining an understanding of the internal controls for a private company, an external auditor, at minimum, would be expected to




    C.

    Although auditors would examine organization charts as part of gaining an understanding of the entities control environment, their focus would be the formal lines of communication.
  12. An auditor would most likely be concerned with internal control policies and procedures that provide reasonable assurance about




    B.

    Auditors are most concerned with policies and procedures affecting the entity's ability to process and summarize financial data.
  13. Which of the following factors are included in an entity's control environment?

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    D.

    all three factors are part of the entity's control environment
  14. To be recognized, revenues must be




    D.
  15. A form signed by the carrier to verify goods are shipped is called the




    D.

    This is prepared by the recipients after goods are shipped and received.
  16. Approval of credit sales by the credit department supports the assertion of




    D.

    This helps ensure the receivable will be collectible
  17. Confirming accounts receivable primarily supports the assertion of




    C.

    the receivable may have been factored and sold and the customer would not know
  18. The most reliable evidence comes from




    B.

    a blank confirmation is the most reliable because the customer has to look up the amount to fill in the blank
  19. Which of the following responses to a confirmation request at December 31 is most likely to indicate a misstatement?




    A.

    This would have been after the confirmation date
  20. A "voucher" is a




    D.
  21. A "blind purchase order" is a




    A.
  22. Which of the following account is not included in the acquisition and expenditure cycle?




    A.
  23. Canceling invoices with a "paid" stamp after payment is a control that relates to which assertion?




    D.
  24. Which of the following is not a step in the search for unrecorded liabilities?




    B.
  25. Which of the following fraud signs could be detected by a CAAT?




    D.
  26. Auditors usually focus on which assertion when auditing current liabilities?




    D.

    frauds are more likely to invovle unrecorded liabilities
  27. If goods ordered under a binding purchase commitment permanently decline in value below the agreed on purchase prices, a company should




    C.
  28. The purchasing department




    A.

    the purchasing department should not have access to the actual goods
  29. Auditors perform analytical procedures in the planning stage of an audit for the purpose of




    A.
  30. When initiating communications with predecessor auditors, prospective auditors should expect




    D.
  31. An auditor's permanent file audit documentation most likely will contain




    D.
  32. An audit engagement letter should be normally include which of the following matters of agreement between the auditor and the client?




    C.
  33. Which of the following engagement planning procedures would most likely assist the auditor in identifying related party transactions before the balance sheet date?




    C.
  34. Which of the following is an application control?




    A.
  35. In most audits of large entities, control risk assessment contributes to audit efficiency, which means that




    B.
  36. Revenues are normally considered to have been earned when




    D.
  37. Write-offs of doubtful accounts shouild be approved by




    B.
Author
stricklandt09
ID
74253
Card Set
Audit Exam 2 MC
Description
mc for exam 2
Updated