Auditing - Exam #3 Final - Short Answer
12 Questions
| Total Attempts: 225
With the year coming to a close it is important to ensure that you are up to date with the things you have studies in your auditing class from chapter sixteen to twenty four. The quiz below is designed to help you do just that. Give it a try and see if you need extra tutoring hours.
Questions and Answers
- 1.What major considerations sould the auditor take into account in determining how extensive the review of subsequent events should be?
- 2.Describe matters that the auditor must communicate to audit committees of public companies.
- 3.Explain why a proper cutoff of purchases and sales is heavily dependent on the physical inventory obervation. What information should be obtained during the physical count to make sure that cutoff is accurate?
- 4.List the major analytical procedures for testing the overall reasonableness of inventory. For each test, explain the type of misstatement that could be identified.
- 5.Explain why the emphasis in auditing property, plant and equipment is on the current period acquisitions and disposals rather than on the balances in the account carried forward from the proceding year. Under what circumstances will the emphasis be on the balances carried forward?
- 6.What is the relationship between the audit of property, plant and equipment accounts and the audit of repair and maintenance accounts? Explain how the auditor organizes the audit to take this relationship into consideration.
- 7.Explain why it is common for auditors to send confirmation requests with "zero balances" on the client's accounts payable listing but uncommon to follow the same approach in verifying accounts receivable.
- 8.What major difference between (a) tests of controls and substantive tests of tranactions and (b) tests of details of balances makes attributes sampling inappropriate for tests of details of balances?
- 9.Define monetary unit sampling and explain its importance in auditing. How does it combine the features of attributes and variables sampling?
- 10.Explain what is meant by acceptable risk of incorrect acceptance. What are the major audit factors affecting ARIA?
- 11.Distinguish among tests of details of balances, tests of controls, and substantive tests of transactions for the sales and collection cycle. Explain how the tests of controls and substantive tests of transactions affect the tests of details of balances.
- 12.Explain why the analysis of differences is important in the confirmation of accounts receivable, even if the misstatements in the sample are not material.
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