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Auditing Questions and Answers (Q&A)

What is the main purpose of a letter of representation?
M. Krasinski, Content Writer
Answered: Jul 20, 2018
A letter of representation is also known as a management representation letter. The answer to this is letter A. This will serve as an introduction to company personnel and authorization to...Read More

5 Answers

2435 views
What are the transaction-related audit objectives for the verification of cash receipts?
O. Bickis, Corporate employee
Answered: Dec 17, 2018
When a company employee is responsible for accepting or depositing cash based on the money that was taken in during that day, then there should be an audit. It isn’t because the boss or...Read More

2 Answers

1911 views
What are the three main parts of statistical and non-statistical methods?
O. Bickis, Corporate employee
Answered: Dec 17, 2018
When a scientist is conducting an experiment and gathering data, he or she will need to determine which method they will be collecting it. There are statistical and nonstatistical methods to do...Read More

3 Answers

1627 views
What is an advantage of statistical sampling over non-statistical sampling?
C.Mila
Answered: May 01, 2018
A statistical technique gives an objective measure of hazard, streamlines the example estimate, and is best for a populace of countless exchanges. On the off-chance that the populace individuals...Read More

3 Answers

1434 views
What is the purpose of the preliminary analytical procedures? What types of comparisons are useful when performing preliminary analytical procedures?
John Smith
Answered: Apr 25, 2024
Analytical procedures are performed during the planning phase of the engsagement to assist the auditor in determining the nature, extent, and timing of work to be performed. preliminary analytical...Read More

1 Answer

1172 views
Which audit procedures is best for identifying unrecorded trade accounts payable?
F.Brian
Answered: Jan 19, 2018
The best thing to do, is to review the cash disbursements that are recorded subsequent to the balance sheet date. This is done in order to determine whether the related payables apply to the...Read More

2 Answers

881 views
What are the five types of test auditors use to determine whether financial statements are fairly stated?
John Smith
Answered: Apr 25, 2024
The five types of test auditors use to determine whether financial statements are fairly stated include the following: 1) risk assessment procedures 2) tests of controls 3) substantive tests of...Read More

1 Answer

878 views
What is the purpose of test of controls?
M. Klose, Content Writer
Answered: Feb 14, 2019
Tests of controls are audit procedures to test the operating effectiveness of control policies and procedures in support of a reduced assessed control risk. Auditors have the option to choose to...Read More

2 Answers

846 views
Can you define each of the following terms?
John Smith
Answered: Apr 25, 2024
The terms below are defined as follows: Acceptable risk of assessing control risk too low (ARACR). The risk the auditor is willing to take of accepting a control as effective or a rate of m...Read More

2 Answers

763 views
What is the purpose of an engegement letter? What subjects should be covered in such a letter?
John Smith
Answered: Apr 25, 2024
Sas 108 requires the auditor to document their understanding of the terms of the engagement with the client in an engagement letter. the engagement letter should include the engagements objectives,...Read More

2 Answers

706 views
Which of the following statements about the existence and completeness assertions is not true?
John Smith
Answered: Apr 25, 2024
Existence deals with understatements and completeness deals with overstatements.

1 Answer

654 views
What is the importance of proper credit approval for sales?
John Smith
Answered: Apr 25, 2024
Proper credit approval for sales helps minimize the amount of bad debts and the collection effort for accounts receivable by requiring that each sale be evaluated for collection...Read More

1 Answer

635 views
What is the relationship between materiality and the phrase obtain reasonable assurance used in the auditors report?
Matz Lewis Clark, College student
Answered: Jan 17, 2019
Materiality can be defined in different ways. If it would be used to define matter, it would mean the quality of matter. For a lot of other concepts, materiality would signify the importance of a...Read More

2 Answers

572 views
What is not correct about materiality?
Dodonutt
Answered: Apr 25, 2024
An auditor considers materiality for planning purposes in terms of the largest aggregate level of misstatements that could be material to any one of the financial statements.

LO 9-1 9-2,...Read More

1 Answer

561 views
What is the difference between the terms tolerable misstatement and preliminary judgement about materiality?
John Smith
Answered: Apr 25, 2024
A preliminary judgment about materiality is set for the financial statements as a whole. tolerable misstatement is the maximum amount of misstatement that would be considered material for an...Read More

1 Answer

518 views

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