Matching questions
1-326 of 326
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Module 3-LO2.6- Evaluate the ethical behavior needed to comply with rules of
conduct on general auditing standards.
Which of the following standards refers to undertaking professional services that can
be completed with the appropriate level of professional skill?
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Professional Competence
,Module 12-LO8.4-Analyze factors that affect the nature of substantive procedures at
the assertion level, including the use of audit data analytics.
A CPA, who is a staff accountant on an attest engagement, is considering the nature
of substantive procedures to test for slow-moving inventory. ADA was originally used
to identify the slow-moving items.
Which substantive procedure would an auditor use to test the net realizable value of
the inventory?
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Scanning
Module 6-LO4.2-Identify related party transactions and how they affect an auditor’s
risk assessment.
The term _______ refers to an affiliate, principal owner, manager, or other party that is
not independent of the entity.
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related party
An auditor has worked for a CPA firm for years without incident and has never been
accused of misconduct in the past. Recently, however, the CPA was accused of
violating the Integrity and Objectivity Rule.
Which action by the auditor caused this problem?
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, Provided testimony for a plaintiff in a court case where the defendant is
also one of the auditor's clients
Kretsmart specializes in the sale of metal parts used in the process of manufacturing
airplanes. Total assets are $12,600,000, and planning materiality is set at 2% (i.e.,
$252,000). Because of the industry, the company has extremely high levels of
inventory equaling $4.2 million. Performance materiality is set at 4% of inventory
($168,000). Kretsmart argues that bolts and screws do not become obsolete, and their
inventory reserves are set at 5% of inventory ($210,000).
Should the auditors perform testing on the inventory reserves?
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Yes, because performance materiality is lower than planning materiality
and this is an account where misstatement could occur
Module 8-LO6.1-Define internal controls.
Internal control is defined as:
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a process designed to provide reasonable assurance regarding the
achievement of the objectives related to operations, reporting, and
compliance.
Module 5-LO3.7- Apply the concept of materiality.
, Figuly & Wiggins, Inc. is auditing a client that has $100,000 in net income. After
determining the planning materiality as 10% of net income, the auditing team has
discovered several issues.
Which of the following represents qualitatively material information?
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Suspected theft of cash by the controller of $1,250
Module 3-LO2.4- Evaluate the ethical behavior needed to comply with rules of
conduct on integrity and objectivity.
A CPA, who is a staff member on an audit engagement team, has a difference of
opinion from her supervisor regarding the application of an auditing standard. She
concludes that the difference may result in a material misrepresentation. She
discussed her concerns with her supervisor, but the difference of opinion is not
resolved.
Which action should the staff member do next?
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Bring her concerns to the manager on the engagement.
Which method of risk response should be taken when an auditor notices a lack of
separation of duties?
Give this one a try later!
1-326 of 326
Click a definition to match it with a term
Module 3-LO2.6- Evaluate the ethical behavior needed to comply with rules of
conduct on general auditing standards.
Which of the following standards refers to undertaking professional services that can
be completed with the appropriate level of professional skill?
Give this one a try later!
Professional Competence
,Module 12-LO8.4-Analyze factors that affect the nature of substantive procedures at
the assertion level, including the use of audit data analytics.
A CPA, who is a staff accountant on an attest engagement, is considering the nature
of substantive procedures to test for slow-moving inventory. ADA was originally used
to identify the slow-moving items.
Which substantive procedure would an auditor use to test the net realizable value of
the inventory?
Give this one a try later!
Scanning
Module 6-LO4.2-Identify related party transactions and how they affect an auditor’s
risk assessment.
The term _______ refers to an affiliate, principal owner, manager, or other party that is
not independent of the entity.
Give this one a try later!
related party
An auditor has worked for a CPA firm for years without incident and has never been
accused of misconduct in the past. Recently, however, the CPA was accused of
violating the Integrity and Objectivity Rule.
Which action by the auditor caused this problem?
Give this one a try later!
, Provided testimony for a plaintiff in a court case where the defendant is
also one of the auditor's clients
Kretsmart specializes in the sale of metal parts used in the process of manufacturing
airplanes. Total assets are $12,600,000, and planning materiality is set at 2% (i.e.,
$252,000). Because of the industry, the company has extremely high levels of
inventory equaling $4.2 million. Performance materiality is set at 4% of inventory
($168,000). Kretsmart argues that bolts and screws do not become obsolete, and their
inventory reserves are set at 5% of inventory ($210,000).
Should the auditors perform testing on the inventory reserves?
Give this one a try later!
Yes, because performance materiality is lower than planning materiality
and this is an account where misstatement could occur
Module 8-LO6.1-Define internal controls.
Internal control is defined as:
Give this one a try later!
a process designed to provide reasonable assurance regarding the
achievement of the objectives related to operations, reporting, and
compliance.
Module 5-LO3.7- Apply the concept of materiality.
, Figuly & Wiggins, Inc. is auditing a client that has $100,000 in net income. After
determining the planning materiality as 10% of net income, the auditing team has
discovered several issues.
Which of the following represents qualitatively material information?
Give this one a try later!
Suspected theft of cash by the controller of $1,250
Module 3-LO2.4- Evaluate the ethical behavior needed to comply with rules of
conduct on integrity and objectivity.
A CPA, who is a staff member on an audit engagement team, has a difference of
opinion from her supervisor regarding the application of an auditing standard. She
concludes that the difference may result in a material misrepresentation. She
discussed her concerns with her supervisor, but the difference of opinion is not
resolved.
Which action should the staff member do next?
Give this one a try later!
Bring her concerns to the manager on the engagement.
Which method of risk response should be taken when an auditor notices a lack of
separation of duties?
Give this one a try later!
