When audit conclusions are challenged, the auditor?s factual rebuttal is best facilitated by:Cross-referencing of the working papers.Summaries in the audit program.Pro forma working papers.Explicit procedures in the audit program.Cross-referencing of the working papers.When determining the retention period for the work papers of a contract audit, it is best to:Review the corporate policy manual developed by the records management area for the section regarding business records.Seek the assistance of the legal department to ensure compliance with contract provisions.Follow the contractor’s own record retention policies.Check with the corporate accounting department since accounting records are involved.Seek the assistance of the legal department to ensure compliance with contract provisions.Working papers are the property of the auditor. Good control of working papers:Requires retention of working papers for at least three years.Prevents surrender to a summons issued by a governmental agency.Requires that only the auditor who created the working paper change electronic working papers.Precludes showing working papers to auditees.Requires that only the auditor who created the working paper change electronic working papers.Productivity statistics are provided quarterly to the board of directors. An auditor checked the ratios and other statistics in the four most recent reports. The auditor used scratch paper and copies of the board reports to verify the accuracy of computations and compared the data used in the computations with supporting documents. The auditor wrote a note describing this work for the working papers and then discarded the scratch paper and report copies. The auditor’s note stated: “The ratios and other statistics in the quarterly board reports were checked for the last four quarters, and appropriate supporting documents were examined. All amounts appear to be appropriate.”In this situation:The auditor did not consider whether the information in the board report was compiled efficiently.The auditor’s working papers are not sufficient to facilitate an efficient review of the auditor’s work.The auditor should have included the scratch paper in the working papers.Four quarters is not a large enough sample on which to base a conclusion.
The auditor’s working papers are not sufficient to facilitate an efficient review of the auditor’s work.An internal auditing department has a project under way to determine whether it can go to electronic working papers. Decision criteria will be based primarily on the requirements of internal auditing standards and on the experience of other audit departments.Which of the following long-term effects associated with electronic working papers is most likely to occur after conversion from manual working papers?Working papers must be printed.Reductions in the average time to complete audits.Significant training needs for auditors.More comprehensive working papers.Reductions in the average time to complete audits.Working papers should include:All work papers prepared during a previous audit of the same area.Documentation of the examination and evaluation of the adequacy and effectiveness of the system of internal control.Copies of all source documents examined in the course of the audit.Copies of all procedures that were reviewed during the audit.Documentation of the examination and evaluation of the adequacy and effectiveness of the system of internal control.An audit working paper is complete when:The audit objective has been met.Working papers are properly indexed and cross-indexed.Condensation and careful summarization of detail is present.Operational activity describing the essential basis of the audit has been included.The audit objective has been met.A recent fire in a company’s warehouse has destroyed a large portion of its inventory. Management is in the process of filing an insurance claim and needs to use the internal auditors’ inventory working papers in preparing the claim. According to the IIA Standards, which of the following is correct?Management may use the internal auditors’ inventory working papers in preparing the insurance claim, but the director of internal auditing should approve such use.Management should be precluded from preparing the insurance claim, and such function should be given to the internal auditing department.Management may use the internal auditors’ inventory working papers in preparing the insurance claim, but both the company’s external independent auditors and the director of internal auditing should approve such use.Management may not use any of the internal auditors’ working papers in preparing the insurance claim.Management may use the internal auditors’ inventory working papers in preparing the insurance claim, but the director of internal auditing should approve such use.Working papers serve the following purpose for the internal auditor:Provide the auditee a place to make responses to audit recommendations.Provide the principal evidential support for the internal auditor?s report.Provide a place to summarize overall audit recommendations.Make the audit report more readable by providing a place to append exhibits.Provide the principal evidential support for the internal auditor?s report.A good working paper for a bank reconciliation should include (either directly or through cross-reference) all of the following except:The cash balance per the general ledger as of the reconciliation date.A list of all deposits made during the period in question.A legend explaining all tick marks employed.A list of outstanding checks.A list of all deposits made during the period in question.Working papers have the following characteristic:They are the property of the organization and are available to all company employees.They document the auditing procedures performed, the information obtained, and the conclusions reached.They should be retained permanently in the organization?s records.They become the property of the independent outside auditors when completed.They document the auditing procedures performed, the information obtained, and the conclusions reached.When hiring entry-level internal audit staff, which of the following will mostlikely predict the applicant’s success as an auditor?Ability to fit well socially into a group.Grade point average on college accounting courses.Ability to organize and express thoughts well.Level of detailed knowledge of the company.Ability to organize and express thoughts well.An internal auditing department has been piloting the use of electronic working paper files. Full implementation is expected in the near future. Select adisadvantage of electronic working papers.Cross-referencing is more tedious.They require specific technical training.Critical working papers must still be printed off.Each staff auditor must have a personal computer.They require specific technical training.The primary purpose of an auditor?s working papers is to:Document deficiencies in internal control structure with recommendations to management for improvement.Comply with the auditing standards of the profession.Serve as a means with which to prepare the financial statements.Provide evidence of the planning and execution of audit procedures performed.Provide evidence of the planning and execution of audit procedures performed.To properly control working papers, the auditor should not:Make them available to people who have no authority to use them.Permit access to government auditors.Permit access to external auditors.Share the results of an audit with the auditee.Make them available to people who have no authority to use them.In general, internal auditing working papers should be:Disposed of in accordance with departmental policy.Retained for three years as specified in the IIA Standards.Retained according to the guidelines published by the federal government.Disposed of after the performance of two subsequent audits.Disposed of in accordance with departmental policy.An adequately documented working paper should:Not contain copies of auditee records.Contain examples of all forms and procedures used by the auditee.Be concise but complete.Follow a unique form and arrangement.Be concise but complete.When reviewing audit working papers, the primary responsibility of an audit supervisor is to determine that:Working papers adequately support the audit findings, conclusions, and reports.Standard departmental procedures are adhered to with regard to work paper preparation and technique.Each worksheet is properly identified with a descriptive heading.Working papers are properly referenced and kept in logical groupings.Working papers adequately support the audit findings, conclusions, and reports.You are an audit supervisor, reviewing the working papers of a staff auditor’s overall examination of the firm’s sales function. The pages are not numbered or cross-referenced. Further, the working papers were dropped and reassembled at random before they were brought to you.You decide to put the working papers in the proper order according to the IIAStandards. The first stage of this activity is to identify each page as a part of (1) the preliminary survey, (2) the review of the adequacy of the system of internal control, (3) the review for effectiveness of the system of internal control, or (4) the review for quality of performance.The third page you select is a blank copy of the sales contract form now in use by the firm. Annotated on the form in several places are the words “key control” followed by a brief explanation. You recognize the writing as that of the staff auditor who performed the audit. This document belongs with the following activity:Review for effectiveness of the system.Preliminary survey.Review for quality of performance.Review for adequacy of the system.Review for adequacy of the system.Which of the following should be identified as a deficiency by an audit supervisor when reviewing a set of working papers?An audit finding recorded in the working papers and report draft that omits the criteria used for evaluation.A letter to the auditee outlining the scope of the audit.A memorandum explaining why the time budget for a part of the audit was exceeded.A memorandum explaining why an audit program step was omitted.An audit finding recorded in the working papers and report draft that omits the criteria used for evaluation.Which of the following concepts distinguishes the retention of computerized audit working papers from the traditional hard-copy form?Computerized data files can be used in information technology audit procedures.Audit programs can be standardized to eliminate the need for a preliminary survey at each location.Evidential support for all findings is copied and provided to local management during the closing conference and to each person receiving the final report.Analyses, conclusions, and recommendations are filed on electronic media and are therefore subject to computer system controls and security procedures.Analyses, conclusions, and recommendations are filed on electronic media and are therefore subject to computer system controls and security procedures.A working paper is complete when it:Contains all of the elements of a finding.Satisfies the audit objective for which it is developed.Complies with the auditing department?s format requirements.Is clear, concise, and accurate.Satisfies the audit objective for which it is developed.An internal auditing department has a project under way to determine whether it can go to electronic working papers. Decision criteria will be based primarily on the requirements of internal auditing standards and on the experience of other audit departments.The feasibility study should recognize that internal auditing standards specify that for the design and content of working papers in the form of media other than paper:Consideration should be given to generating backup copies of working papers.The media selected should determine working paper design and content.Conversion to paper should occur no later than the time of final review.Working paper retention should be solely a function of the media used.Consideration should be given to generating backup copies of working papers.Auditors use a variety of indexing and cross-referencing methods in their audit working papers. An internal auditing manager might devise a working paper indexing method tailored to a specific organization’s needs. A government audit agency would devise a method for all organizations under the agency’s jurisdiction. Which of the following bestexplains the reason for this difference in working paper index methods between the two?The internal auditing manager devises a method that simplifies the review process within a particular organization, but the government audit agency devises one uniform method to simplify the review process of the vastly different organizations to be audited.The method of the internal auditing manager is prescribed by the IIAStandards, but law requires the method of the government audit agency.The method of the internal auditing manager is prescribed by the IIAStandards, but the method of the government audit agency is required by the regulatory agency.The internal auditing manager devises that method specified by the organization’s audit committee, but the government audit agency devises one uniform method that is required by law.The internal auditing manager devises a method that simplifies the review process within a particular organization, but the government audit agency devises one uniform method to simplify the review process of the vastly different organizations to be audited.Which of the following statements relating to the retention of audit working papers is an inappropriate policy?Working papers on fraud audits should be retained indefinitely.Working papers should be disposed of when they have no further use.Working paper retention schedules should consider legal and contractual requirements.Legal counsel should approve working paper retention schedules.Working papers on fraud audits should be retained indefinitely.Each individual work paper should, at a minimum, contain:A complete flowchart of the system of internal controls for the area being reviewed.A tick mark legend.An expression of an audit opinion.A descriptive heading.A descriptive heading.You are an audit supervisor, reviewing the working papers of a staff auditor’s overall examination of the firm’s sales function. The pages are not numbered or cross-referenced. Further, the working papers were dropped and reassembled at random before they were brought to you.You decide to put the working papers in the proper order according to the IIAStandards. The first stage of this activity is to identify each page as a part of (1) the preliminary survey, (2) the review of the adequacy of the system of internal control, (3) the review for effectiveness of the system of internal control, or (4) the review for quality of performance.The first page you select documents a compliance test performed during the course of the audit. This page belongs with the following activity:Review for adequacy of the system.Review for effectiveness of the system.Review for quality of performance.Preliminary survey.Review for effectiveness of the system.Auditors use a variety of indexing and cross-referencing methods in their audit work papers. An internal auditing manager might devise a work paper indexing method tailored to a specific organization’s needs. A government audit agency would devise one method for all organizations under the agency’s jurisdiction. Which of the following bestexplains the reason for this difference between the two work paper indexing methods?The internal auditing manager devises a method specified by the organization’s audit committee, but the government audit agency devises one uniform method that is required by law.The method of the internal auditing manager is prescribed by the IIAStandards, but the method of the government audit agency is required by agency policy.The internal auditing manager devises a method that simplifies the review process within a particular organization, but the government audit agency devises one uniform method to simplify the review process of the vastly different organizations to be audited.The method of the internal auditing manager is prescribed by the IIAStandards, but law requires the method of the government audit agency.The internal auditing manager devises a method that simplifies the review process within a particular organization, but the government audit agency devises one uniform method to simplify the review process of the vastly different organizations to be audited.What are the importance of audit working papers?The audit working papers assure that the audit performed was accurate and complete. Working papers are necessary to corroborate the work and findings performed during the audit. The document support and evidence of the findings of the audit which is essential for establishing a future plan of action.
What should working papers contain?Each of the audit working papers should have a proper subject, objective, name of the client, date of the working paper, audit period, sources of evidence, staff who prepare, and staff who review. Reference to relevance working paper should properly cross.
What are the key characteristics of well prepared working papers?Key characteristics of well-prepared working papers include: Working paper formats, working paper files, at the end of an engagement, the files should contain only the final versions of the working papers completed during the engagement, each individual working paper should stand on its own merits.
Which of the following factors influence the form and content of audit working papers?Factors affecting the auditor's judgment about the quantity, type, and content of the working papers for a particular engagement include (a) the nature of the engagement, (b) the nature of the auditor's report, (c) the nature of the financial statements, schedules, or other information on which the auditor is reporting ...
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Which of the following is the most important control requirement for working papers?
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