PSA 520 ACTUAL EXAM QUESTIONS And
CORRECT Answers
The decision about which audit procedures to perform, including whether to use substantive
analytical procedures, is based on the auditor's judgment - CORRECT ANSWERS true
Substantive analytical procedures are generally more applicable to small volumes of
transactions that tend to be predictable over time. PSA 520 A6 - CORRECT ANSWERS false
The determination of the suitability of particular substantive analytical procedures is influenced
by the nature of the assertion and the auditor's assessment of the risk of material
misstatement.
Example: If controls over sales order processing are weak, the auditor may place more reliance
on tests of details rather than on substantive analytical procedures
for assertions related to receivables. - CORRECT ANSWERS true
The need to perform other audit procedures may arise when, for example, management is
unable to provide an explanation with the audit evidence obtained relevant to management's
response, is considered adequate. - CORRECT ANSWERS false
A basic premise underlying analytical procedures is the analysis of the implausible relationships
among both financial and non-financial data. - CORRECT ANSWERS false
Particular substantive analytical procedures may also be considered suitable when tests of
details are performed on the same assertion. - CORRECT ANSWERS true
It may be effective to use analytical data prepared by management, provided the auditor is
satisfied that such data is properly prepared. - CORRECT ANSWERS true
, Different types of analytical procedures provide the same levels of assurance the source of data
or information is the same . - CORRECT ANSWERS false
Analytical procedures also encompass such investigation as is necessary of identified
fluctuations or relationships that are consistent with other relevant information or that differ
from expected values by a significant amount. - CORRECT ANSWERS false
Risk assessment procedures by themselves do not provide sufficient
appropriate audit evidence on which to base the audit opinion. - CORRECT ANSWERS true
As a form of analytical procedure, trend analysis is based on the assumption that performance
will continue in line with previous performance of industry trends unless something unusual is
happening in the contrary. - CORRECT ANSWERS false
Without sufficient understanding of the client, the auditor cannot perform an effective audit. -
CORRECT ANSWERS true
Analytical procedures involve comparison of the client's expectations & recorded amounts in
financial statements and, if necessary, further investigation. - CORRECT ANSWERS true
The number of employees hired & terminated to predict the change in payroll expense from
previous year to current balance is an example of trend analysis. - CORRECT
ANSWERS false
The auditor uses analytical procedures to investigate significant differences between expected
and recorded amounts. - CORRECT ANSWERS true
Analytical procedures are so important that they are required specifically during
CORRECT Answers
The decision about which audit procedures to perform, including whether to use substantive
analytical procedures, is based on the auditor's judgment - CORRECT ANSWERS true
Substantive analytical procedures are generally more applicable to small volumes of
transactions that tend to be predictable over time. PSA 520 A6 - CORRECT ANSWERS false
The determination of the suitability of particular substantive analytical procedures is influenced
by the nature of the assertion and the auditor's assessment of the risk of material
misstatement.
Example: If controls over sales order processing are weak, the auditor may place more reliance
on tests of details rather than on substantive analytical procedures
for assertions related to receivables. - CORRECT ANSWERS true
The need to perform other audit procedures may arise when, for example, management is
unable to provide an explanation with the audit evidence obtained relevant to management's
response, is considered adequate. - CORRECT ANSWERS false
A basic premise underlying analytical procedures is the analysis of the implausible relationships
among both financial and non-financial data. - CORRECT ANSWERS false
Particular substantive analytical procedures may also be considered suitable when tests of
details are performed on the same assertion. - CORRECT ANSWERS true
It may be effective to use analytical data prepared by management, provided the auditor is
satisfied that such data is properly prepared. - CORRECT ANSWERS true
, Different types of analytical procedures provide the same levels of assurance the source of data
or information is the same . - CORRECT ANSWERS false
Analytical procedures also encompass such investigation as is necessary of identified
fluctuations or relationships that are consistent with other relevant information or that differ
from expected values by a significant amount. - CORRECT ANSWERS false
Risk assessment procedures by themselves do not provide sufficient
appropriate audit evidence on which to base the audit opinion. - CORRECT ANSWERS true
As a form of analytical procedure, trend analysis is based on the assumption that performance
will continue in line with previous performance of industry trends unless something unusual is
happening in the contrary. - CORRECT ANSWERS false
Without sufficient understanding of the client, the auditor cannot perform an effective audit. -
CORRECT ANSWERS true
Analytical procedures involve comparison of the client's expectations & recorded amounts in
financial statements and, if necessary, further investigation. - CORRECT ANSWERS true
The number of employees hired & terminated to predict the change in payroll expense from
previous year to current balance is an example of trend analysis. - CORRECT
ANSWERS false
The auditor uses analytical procedures to investigate significant differences between expected
and recorded amounts. - CORRECT ANSWERS true
Analytical procedures are so important that they are required specifically during
