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Audit Chs. 1-7

98 Questions  I  By Pimen103
Audit Chs. 1-7

  
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1.  Which of the following statements included in management's assessment of the effectiveness of internal control over financial reporting would be considered acceptable for issuing an unqualified opinion?
A.
B.
C.
D.
2.  An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of...
A.
B.
C.
D.
3.  Internal control consists of six components.
A.
B.
4.  Due professional care requires...
A.
B.
C.
D.
5.  A dual-purpose test...
A.
B.
C.
D.
6.  Of the following, the most reliable type of evidence typically is...
A.
B.
C.
D.
7.  Which of the following is NOT a requirement of the Sarbanes-Oxley Act?
A.
B.
C.
D.
8.  In determining the extent to which the auditor may use the work of others in the audit of ICFR, the auditor should do all of the following except...
A.
B.
C.
D.
9.  Which of the following procedures most likely would be included as part of an auditor's test of controls?
A.
B.
C.
D.
10.  The risk that an auditor will conclude, based on substantive procedures, that a material error does not exist in an account balance when, in fact, such error does exist is referred to as...
A.
B.
C.
D.
11.  The PCAOB's definition of internal control over financial reporting specifically mentions all of the following control activities, except...
A.
B.
C.
D.
12.  To obtain an understanding of significant processes and relevant subprocesses, auditors would be least likely to use which of the following techniques:
A.
B.
C.
D.
13.  Which assertions may be tested for the "transactions and events" category of management assertions?
A.
B.
C.
D.
14.  Which of the following is correct concerning required auditor communications about fraud?
A.
B.
C.
D.
15.  Why do auditors generally use a sampling approach to evidence gathering?
A.
B.
C.
D.
16.  According to the PCAOB, who is responsible for the reliability of the internal controls over financial reporting process of an entity?
A.
B.
C.
D.
17.  An "integrated audit" as stated in Section 404 of the Sarbanes-Oxley Act means...
A.
B.
C.
D.
18.  A deficiency that implies that there is reasonable possibility of misstatement in the financial statements that is significant but not material is...
A.
B.
C.
D.
19.  The achieved (actual) level of audit risk...
A.
B.
C.
D.
20.  Which of the following statements is false?
A.
B.
C.
D.
21.  Which of the following best describes why publicly-traded corporations follow the practice of having the external auditor appointed by the board of directors or elected by the stockholders?
A.
B.
C.
D.
22.  The documentation of an auditor's understanding of internal controls...
A.
B.
C.
D.
23.  Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?
A.
B.
C.
D.
24.  The three standards of fieldwork are concerned with:
A.
B.
C.
D.
25.  All of the following refer to an internal auditor's competence except...
A.
B.
C.
D.
26.  Auditors are most likely to use the most rigorous audit procedures to examine
A.
B.
C.
D.
27.  Where computer processing is used in significant accounting applications, internal control activities may be defined by classifying control activities into two types: general and...
A.
B.
C.
D.
28.  Which of the following types of documentary evidence should the auditor consider to be the most reliable?
A.
B.
C.
D.
29.  The auditor is most likely to presume that a high risk of a fraud exists if...
A.
B.
C.
D.
30.  A modification of the standard report is required for all of the following conditions, except:
A.
B.
C.
D.
31.  Each of the following might, by itself, form a valid basis for an auditor to reduce substantive testing except for the...
A.
B.
C.
D.
32.  The person in charge of authorizing credit to customers does not properly understand what constitutes a credit risk. This is an example of?
A.
B.
C.
D.
33.  Examples of company-level controls include:
A.
B.
C.
D.
34.  With regard to detecting fraud, auditing standards require auditors to...
A.
B.
C.
D.
35.  Auditors are most likely to gather audit evidence solely using substantive procedures...
A.
B.
C.
D.
36.  Which of the following statements is not true with respect to assurance, attest, and audit services?
A.
B.
C.
D.
37.  A primary purpose of internal controls is to...
A.
B.
C.
D.
38.  The authoritative body designed to promulgate standards concerning an accountant's association with audited financial statements of an entity that is required to file financial statements with the SEC is the...
A.
B.
C.
D.
39.  Management's written representations concerning internal control are:
A.
B.
C.
D.
40.  The permanent audit file usually includes:
A.
B.
C.
D.
41.  Tracing is used primarily to test which of the following assertions about classes of transactions?
A.
B.
C.
D.
42.  The three general standards are concerned with:
A.
B.
C.
D.
43.  The auditor can respond to an increased risk of fraud by doing all of the following except...
A.
B.
C.
D.
44.  In an audit of financial statements in accordance with generally accepted auditing standards, an auditor is required to...
A.
B.
C.
D.
45.  Under the Sarbanes-Oxley Act, the audit committee of a public company has the following requirement(s):
A.
B.
C.
D.
46.  The AICPA's Statements on Auditing Standards can be described as...
A.
B.
C.
D.
47.  As part of gaining an initial understanding of internal control, an auditor is required to do all of the following except:
A.
B.
C.
D.
48.  In order for an external auditor to complete an audit of a publicly traded entity, the entity's management must comply with all of the following except:
A.
B.
C.
D.
49.  Which of the following best describes the concept of audit risk?
A.
B.
C.
D.
50.  Which of the following show the detailed general ledger accounts that make up a financial statement category on the auditor's working trial balance?
A.
B.
C.
D.
51.  Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers. The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the...
A.
B.
C.
D.
52.  Which of the following is the most important qualitative factor that auditors should consider when making materiality judgments?
A.
B.
C.
D.
53.  Which of the following types of audit evidence is the most persuasive?
A.
B.
C.
D.
54.  Which of the following is not a misstatement of the financial statements?
A.
B.
C.
D.
55.  An auditor obtains knowledge about a new client's business and its industry in order to...
A.
B.
C.
D.
56.  In obtaining an understanding of an entity's internal control in a financial statement audit, an auditor is not obligated to...
A.
B.
C.
D.
57.  Which of the following statements about the study of accounting is NOT true?
A.
B.
C.
D.
58.  The independent auditor selects several transactions in each functional area and traces them through the entire system, paying special attention to evidence about whether or not the control activities are in operation. This is an example of a(n)...
A.
B.
C.
D.
59.  Which of the following presumptions is correct about the reliability of audit evidence?
A.
B.
C.
D.
60.  Which of the following statements best describes a relationship between sample size and other elements of auditing?
A.
B.
C.
D.
61.  All of the following represent an increased opportunity to commit fraud except:
A.
B.
C.
D.
62.  A confirmation is used to:
A.
B.
C.
D.
63.  Of the following, which is the least persuasive type of audit evidence?
A.
B.
C.
D.
64.  The risk of material misstatement includes which of the following:
A.
B.
C.
D.
65.  An independent auditor might consider the procedures performed by the internal auditors because...
A.
B.
C.
D.
66.  An investor is reading the financial statements of the Stankey Corporation and observes that the statements are accompanied by an auditor's unqualified report. From this, the investor may conclude that:
A.
B.
C.
D.
67.  An entity's control activities include all of the following except...
A.
B.
C.
D.
68.  The main difference between SAS and AU is:
A.
B.
C.
D.
69.  Which of the following is not a typical analytical procedure?
A.
B.
C.
D.
70.  Which of the following is false?
A.
B.
C.
D.
71.  Section 404 of the Sarbanes-Oxley Act requires the auditor to provide which of the following:
A.
B.
C.
D.
72.  The basic purpose of a financial statement audit is to...
A.
B.
C.
D.
73.  Which of the following is not a primary objective of internal control as established by COSO?
A.
B.
C.
D.
74.  All of the following are inherent risk factors that are pervasive to the financial statements except...
A.
B.
C.
D.
75.  Audit documentation prepared on audits of publicly held clients is the property of the...
A.
B.
C.
D.
76.  Which of the following is not a concept that is included in the scope paragraph of the auditor's report?
A.
B.
C.
D.
77.  An auditor who discovers that a client's employees paid small bribes to municipal officials most likely would withdraw from the engagement if...
A.
B.
C.
D.
78.  Reports on service organizations typically...
A.
B.
C.
D.
79.  Analytical procedures are...
A.
B.
C.
D.
80.  In correct order, general types of audit tests include:
A.
B.
C.
D.
81.  An example of audit evidence with a medium level of reliability is:
A.
B.
C.
D.
82.  The current audit file usually includes:
A.
B.
C.
D.
83.  Effective internal control in a small company that has an insufficient number of employees to permit proper division of responsibilities can best be enhanced by...
A.
B.
C.
D.
84.  The auditor must understand internal control before assessing inherent risk.
A.
B.
85.  You are concerned with unrecorded transactions in the purchasing cycle. Which audit procedure are you most likely to use when auditing purchases?
A.
B.
C.
D.
86.  Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed within an attitude of...
A.
B.
C.
D.
87.  In the context of an audit of internal controls, the auditor must document all of the following except...
A.
B.
C.
D.
88.  The five step process in the audit of ICFR includes...
A.
B.
C.
D.
89.  Tolerable misstatements is...
A.
B.
C.
D.
90.  Proper segregation of functional responsibilities in an effective system of internal control calls for separation of the functions of...
A.
B.
C.
D.
91.  Which of the following is not an audit procedure that is commonly used in performing tests of controls?
A.
B.
C.
D.
92.  Vouching is used primarily to test which of the following assertions about classes of transaction?
A.
B.
C.
D.
93.  In the context of an audit of financial statements, substantive procedures are audit procedures that...
A.
B.
C.
D.
94.  Which of the following procedures would an auditor most likely include in the initial planning of a financial statement audit?
A.
B.
C.
D.
95.  Prior to issuing a report on internal controls over financial reporting, an auditor is required to:
A.
B.
C.
D.
96.  What is the general character of the work conducted in performing a forensic audit for a company?
A.
B.
C.
D.
97.  A substantive strategy differs from a reliance strategy in that a substantive strategy includes...
A.
B.
C.
D.
98.  In the context of agency theory, information asymmetry refers to the idea that...
A.
B.
C.
D.
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