Which of the following statements, extracted from a client's lawyer's letter concerning litigation, claims, and assessments, would be most likely to cause the auditor to request clarification?"We believe that the action can be settled for less than the damages claimed."After identifying related party transactions, an auditor most likely wouldDetermine whether the transactions were approved by the board of directors or other appropriate officialsWhen an auditor decides to confirm accounts receivable balances rather than individual invoices, it most likely would be beneficial to include with the confirmationsClient-prepared statements of account that show the details of the account balancesWhich of the following most likely would give the most assurance concerning the valuation assertion of accounts receivable?Assessing the allowance for uncollectible accounts for reasonablenessIn confirming a client's accounts receivable in prior years, an auditor found that there were many differences between the recorded account balances and the confirmation replies. These differences, which were not misstatements, required substantial time to resolve. In defining the sampling unit for the current year's audit, the auditor most likely would chooseIndividual invoicesWhich of the following circumstances most likely would cause an auditor to believe that material misstatements may exist in an entity's financial statements?Accounts receivable confirmation requests yield significantly fewer responses than expectedAn auditor discovered that a client's accounts receivable turnover is substantially lower for the current year than for the prior yearFictitious credit sales have been recorded during the yearAn auditor's tests of controls for completeness for the revenue cycle usually include determining whetherAn invoice is prepared for each shipping documentAn auditor most likely would inspect loan agreements under which an entity's inventories are pledged to support management's financial statement assertion ofRights and obligationsWhich of the following procedures would be most appropriate for testing the completeness assertion as it applies to inventory?Performing cut-off procedures for shipping and receivingWhich of the following auditing procedures most likely would provide assurance about a manufacturing entity's inventory valuation?Testing the entity's computation of standard overhead ratesTo obtain assurance that all inventory items in a client's inventory listing are valid, an auditor most likely would traceItems in the inventory listing to inventory tags and the auditor's recorded count sheetsWhich of the following management assertions is an auditor most likely testing if the audit objective states that all inventory on hand is reflected in the ending inventory balance?Inventory is completeIn testing long-term investments, an auditor ordinarily would use analytical procedures to ascertain the reasonableness of theCompleteness of recorded investment incomeAn auditor is testing the reasonableness of dividend income from investments in publicly held companies. The auditor most likely would compute the amount that should have been received and recorded by the client byElectronically accessing the details of dividend records on the InternetTo satisfy the valuation assertion when auditing an investment accounted for by the equity method, an auditor most likely wouldExamine the audited financial statements of the investee companyWhich of the following procedures should an auditor perform concerning litigation claims?Which of the following procedures should an auditor perform concerning litigation, claims, and assessments? Obtain a list from management that discloses all unasserted claims that it considers to be probable of assertion.
Which of the following procedure would an auditor most likely perform?Which of the following procedures would an auditor most likely perform in planning a financial statement audit? Comparing the financial statements with anticipated results.
Which of the following audit procedures would most likely assist an auditor?Which of the following audit procedures is most likely to assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern? - Review management's plans to dispose of assets. - Consider management's plans to reduce or delay expenditures.
What are the audit procedures that are conducted by the auditors?Typically, five types of audit procedures are normally used by auditors to obtain audit evidence. Those five audit procedures include Analytical review, inquiry, observation, inspection, and recalculation.
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