AUDIT TEST 2 QUESTIONS WITH 100%
CORRECT ANSWERS [GRADED A+]
LATEST UPDATE
Why do we need to plan? - ✔✔Adequate planning improves efficiency and
effectiveness of the audit.
1. Helps auditor identify and devote approrpriate attention to important
areas of the audit
2. Helps auditor identify and resolve potential problems on a timely basis
3. Helps auditor properly organize and manage the audit engagement
4. Assists in selection of engagement team members with appropriate
levels of capabilities and competence to respond to anticipated risks and
allocating team member responsibilities
5. Facilitates direction and supervision of engagement team members and
review of their work
©morren2025/2026.Year published 2026.
,6. Assists in coordination of work done by auditors of components and
specialists
Audit Strategy - ✔✔Overall big picture view.
Engagement scope, reporting objectives, significant factors.
Audit plan - ✔✔Determine nature, timing, and extent of audit procedures
Engagement scope - ✔✔public traded company, issue opinion on financial
statements, decide which divisions or parts of company will be auditing,
decide if we rely on internal audit to help
Reporting objectives - ✔✔dates—if publicly traded, company has 60 days
from end of fiscal year to report financial info
Significant factors - ✔✔Estimates, complex accounts
Audit plan is more - ✔✔Detailed than the audit strategy
©morren2025/2026.Year published 2026.
,Audit strategy - ✔✔Used to determine audit plan
Engagement scope - ✔✔What is included in the audit?
Locations?
Components audited by other auditors?
Rely on IA function to provide audit evidence?
Entity use any service organizations?
Will IT impact the audit procedures (computer assisted audit techniques)
What evidence to use from previous audits of the company?
Will client personnel and data be available?
Reliance on internal audit depends on - ✔✔Competence and
independence
Use work of IA to: - ✔✔Reduce scope of the audit (increase audit
efficiency)
As the materiality of the financial statement amounts increase and the risk
of material misstatement or degree of subjectivity increases, need for
auditor to perform his or her own tests of assertions - ✔✔Increases
©morren2025/2026.Year published 2026.
, Reporting Objectives - ✔✔Entity's timetable for reporting (when are they
releasing financial statements)
Timing of meetings with management and audit committee
Format and timing of auditor's report, management letters, and
communications to those charged with governance
Communication with auditors of components regarding the timing of their
reports and other communications in connected with the audit of
components
Expected nature and timing of communications among engagement team
members
Significant factors - ✔✔Affect likelihood of misstatements in the financials.
Materiality
©morren2025/2026.Year published 2026.
CORRECT ANSWERS [GRADED A+]
LATEST UPDATE
Why do we need to plan? - ✔✔Adequate planning improves efficiency and
effectiveness of the audit.
1. Helps auditor identify and devote approrpriate attention to important
areas of the audit
2. Helps auditor identify and resolve potential problems on a timely basis
3. Helps auditor properly organize and manage the audit engagement
4. Assists in selection of engagement team members with appropriate
levels of capabilities and competence to respond to anticipated risks and
allocating team member responsibilities
5. Facilitates direction and supervision of engagement team members and
review of their work
©morren2025/2026.Year published 2026.
,6. Assists in coordination of work done by auditors of components and
specialists
Audit Strategy - ✔✔Overall big picture view.
Engagement scope, reporting objectives, significant factors.
Audit plan - ✔✔Determine nature, timing, and extent of audit procedures
Engagement scope - ✔✔public traded company, issue opinion on financial
statements, decide which divisions or parts of company will be auditing,
decide if we rely on internal audit to help
Reporting objectives - ✔✔dates—if publicly traded, company has 60 days
from end of fiscal year to report financial info
Significant factors - ✔✔Estimates, complex accounts
Audit plan is more - ✔✔Detailed than the audit strategy
©morren2025/2026.Year published 2026.
,Audit strategy - ✔✔Used to determine audit plan
Engagement scope - ✔✔What is included in the audit?
Locations?
Components audited by other auditors?
Rely on IA function to provide audit evidence?
Entity use any service organizations?
Will IT impact the audit procedures (computer assisted audit techniques)
What evidence to use from previous audits of the company?
Will client personnel and data be available?
Reliance on internal audit depends on - ✔✔Competence and
independence
Use work of IA to: - ✔✔Reduce scope of the audit (increase audit
efficiency)
As the materiality of the financial statement amounts increase and the risk
of material misstatement or degree of subjectivity increases, need for
auditor to perform his or her own tests of assertions - ✔✔Increases
©morren2025/2026.Year published 2026.
, Reporting Objectives - ✔✔Entity's timetable for reporting (when are they
releasing financial statements)
Timing of meetings with management and audit committee
Format and timing of auditor's report, management letters, and
communications to those charged with governance
Communication with auditors of components regarding the timing of their
reports and other communications in connected with the audit of
components
Expected nature and timing of communications among engagement team
members
Significant factors - ✔✔Affect likelihood of misstatements in the financials.
Materiality
©morren2025/2026.Year published 2026.
