Why are related party transactions a risk area for auditors? Cram.com makes it easy to … The exercise of 'due professional care' requires that an auditor: The statement that is not correct concerning an audit engagement letter is: For most engagements, the auditor makes a preliminary visit to the entity before its year end. A test of controls for possible disruptions to IT data caused by disasters such as fire or flood is: The relationship between the required understanding of the internal control structure and the preliminary audit strategy is that: Where a test of controls reveals some problems, under what circumstances will the auditor still be able to rely on the control system? The auditor's acceptable risk of incorrect acceptance (ARIA) for the test of details of balances for accounts payable will most likely be after the acquisition, the fraud was discovered and elliot corp. suffered substantial losses. The procedures the auditor does to obtain an understanding of the entity, includes: The auditor has a statutory legal obligation to report on: When an accounting information system is able to identify and record only the valid transactions of the entity that occurred in the current period, the appropriate assertion(s) would be: Data and procedural controls are a type of: Which of the following can best depict the processing of individual classes of transactions, such as sales, cash receipts, purchases, and cash payments? Some special considerations in developing audit programs for initial engagements are: A substantive procedure to obtain evidence as to the presentation and disclosure assertions of inventories in the financial report is: Which of these is most likely to be based on an 'accounting estimate'? When using statistical sampling a method that estimates the population mean is called the: If the auditor is testing for an understatement of accounts payable, the appropriate population from which to draw a sample is: If there is an increase in the total error that the auditor is willing to accept, the effect on the sample size is: What effect would stratification of a population have upon the sample for substantive procedures undertaken by an auditor? An example of a high-risk condition that may provide Incentives/pressures leading to fraudulent financial reporting include: An example of a high-risk condition that may provide a fraudulent financial reporting opportunity includes: What type of risk factor is relevant when misappropriation of assets may occur due to lack of mandatory holidays for employees performing key control functions? D) occurrence. 10 Test Bank at Cram.com. according to the standards of the profession, which of the following activities may be required in exercising due professional care? A) Auditors typically gather audit evidence about one whole financial statement at a time rather than one account at a time. Effective monitoring of internal control involves: When an auditor that performs a transaction walk-through review, the procedure used is: The preliminary assessment of internal control risk will normally be high when: Audit risk is commonly assessed within the components: When the auditor's assessment of inherent risk and control risk is high, the resulting detection risk would be: Which risk is the 'possibility that a material misstatement could occur in an assertion, either individually or when aggregated with other misstatements, assuming there are no related controls'? a. auditors must exercise the level of care, skill, and judgement expected of a reasonably prudent auditor under the circumstances. We ensure that the audit testing procedures comply with the guidance laid out by the AICPA, which means the tests confirm design and operating effectiveness. In terms of determining what is a 'significant deficiency' in internal controls, the auditor considers: Which of these is an option that the auditor has to choose from when assessing control risk in an IT environment? Which risk is controllable by the auditor? Which of the following statements is correct? which of the following acts by a CPA who is in business most likely is a violation of the ethical standards of the profession? Which of the following does not constitute sampling? An auditor would make an initial assessment of control risk at the maximum when: A predominantly substantive approach to audit strategy is based on the assumption that: A decision the auditor needs to consider is whether the actual assessed level of control risk supports the planned level of substantive tests. Hart & Co., CPAs, gave an unqualified opinion on McCovey's financial statements that were included in the registration statement filed with the SEC. INCORRECT No answer given THE ANSWER Third Standard of Fieldwork 2. Humphrey completes the audit and issues an unqualified opinion. Audit working papers include documentation: Audit working papers demonstrate all of the following except: Which of the following is NOT one of the factors that influence the form, content and extent of the working papers? four months later, lauren files for bankruptcy. The timing of tests of controls should be: In considering the internal auditors' organisational status, the auditor would need to take into account which of the following factors? Which of the following have an inverse relationship? The most difficult assertion for the auditors to verify is: Which of the following are categories of business risks? Key Largo Bank would most likely sue Humphrey claiming, lauren hires humphrey, a cpa, to audit her financial statements. … Testing inventory pricing does not include which of these tests? Bij een audit kunnen verschillende aspecten of afdelingen van de organisatie worden doorgelicht om na te gaan welke dingen er minder goed lopen, zodat er maatregelen kunnen volgen om de gebreken op te lossen. Stratification is a way of improving audit efficiency in sampling. An audit compliance test looks at whether your employees comply with the procedures for preventing fraud, embezzlement and theft. to which of the following parties may a CPA partnership provide its audit documentation, without being lawfully subpoenaed or without the client's consent? Print test 69 Multiple choice questions. Audit documentation; 1. C) substantive tests of details of transactions while also testing for compliance with controls. C. Tests of the signatures on canceled checks to board of director's authorizations. key largo bank would most likely sue humphrey claiming, lauren hires humphrey, a cpa, to audit her financial statements. 25. Sammy's management tells Kerry that if the misstatement is corrected or if Kerry issues an opinion that indicates there is a material misstatement, Sammy Corp. will likely have to declare bankruptcy and thousands of employees will lose their jobs. How would this affect the audit plan? d. Audit plan. Tests of … what agency has the ultimate authority in defining independence for public companies? Call us at 215-675-1400, or send us a message if you have additional questions about … When the auditor traces a sales invoice to the accounts receivable ledger, the type of audit evidence being obtained is: When the auditor compares the client's profit performance with other firms within the same industry the auditor is performing: Which audit procedure is most associated with completeness? Be adapted to suit your requirements for taking some of the following would be an appropriate of! 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