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QUESTION 6Which of the following procedures would an auditor most likely include in the initial planningphase of a financial statement audit?A.Obtain an understanding of the entity's risk assessment processB.Identify specific internal control activities designed to prevent fraudC.Evaluate the reasonableness of the entity's accounting estimatesD.Perform cutoff tests of the entity's sales and purchases
QUESTION 7A difference of opinion regarding the results of a sample cannot be resolved between theassistant who performed the auditing procedures and the in-charge auditor. The assistant should
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QUESTION 8Which of the following factors most likely would heighten an auditor's concern about the risk offraudulent financial reporting?
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C.Financial management's participation in the initial selection of accounting principlesD.An overly complex organizational structure involving unusual lines of authorityQUESTION 9Which of the following procedures would an auditor most likely perform during the overallreview stage of an audit of an entity's financial statements?
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QUESTION 10Inherent risk and control risk differ from detection risk in that inherent risk and control risk areA.Functions of the client and its environment while detection risk is notB.Changed at the auditor's discretion while detection risk is notC.Considered at the individual account balance level while detection risk is notD.Elements of audit risk while detection risk is not
QUESTION 11Holding other planning considerations equal, a decrease in the amount of misstatements in aclass of transactions that an auditor could tolerate most likely would cause the auditor to
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a. Make a preliminary judgment about materiality. b. Confirm a sample of the entity's accounts payable with known creditors. c. Obtain written representations from management that there are no unrecorded transactions. d. Communicate management's initial selection of accounting policies to the audit committee.
Last Updated on February 3, 2022 by Admin 3
- Inquiring of the client’s legal counsel concerning pending litigation.
- Comparing the financial statements to anticipated results.
- Examining computer generated exception reports to verify the effectiveness of internal controls.
- Searching for unauthorized transactions that may aid in detecting unrecorded liabilities.
Explanation:
Choice “B” is correct. A requirement during planning is to perform analytical procedures, which involve comparisons of recorded amounts to expectations.
Choice “A” is incorrect. Inquiry of the client’s legal counsel is typically performed near the end of fieldwork.
Choice “C” is incorrect. Tests of controls are performed after audit planning is complete.
Choice “D” is incorrect. The search for unrecorded liabilities is generally performed at or after year-end.
- AUD CPA : All Parts