AUE3702: Auditing – Internal
Control and Audit Process
⫸ Analytical procedures are required:
check all that apply
A. as substantive testing procedures
B. at the beginning of the audit
C. at the end of the audit. Answer: B,C
⫸ on every audit engagement, the risk assessment process includes
required __________ sessions in which critical audit areas discussed.
Answer: Brainstorming
⫸ Company discussion boards
A. can be used as a replacement for discussions with client personnel
B. may be used by anonymous whistle-blowers
C. should not be considered a reliable source of company information.
Answer: B
⫸ The misdeeds of people who steal with a pencil or computer terminal
are known as __________ crimes. Answer: white - collar
⫸ An unintentional misstatement or financial statement omission is
referred to as an
,A. error
B. defalcation
C. larceny
D. embezzlement. Answer: A
⫸ Which of the following statements are correct
Check all that apply
A. most business risks are eventually reflected in the financial
statements
B. auditors devote significant time to understanding clients business
risks
C. gaining an understanding of strategies and procedures involves
gathering evidence in areas historically addressed by auditors. Answer:
A,B
⫸ The best indicator of the risk of a material misstatement is:
A. misstatements in previous audits that required adjusting entries
B. a new senior management team
C. a client who changes audit firms every two years. Answer: A
⫸ investigating significant differences at the preliminary stage
Check all that apply
A. provides direct evidence about the number in the financial statements
B. may be considered attention directing
, C. can be used to plan additional audit work
D. help auditors identify risks as an aid in preparing the audit plan.
Answer: B,C,D
⫸ Calculating year to year changes in balance sheet and income
statement accounts is called. Answer: horizontal analysis
⫸ An account or disclosure
A. may be significant even though the balance is below materiality
B. is only significant if it exceeds that materiality level. Answer: A
⫸ When thinking about each of the relevant financial statement
assertions, the auditor should focus on what
A. dollar amount is considered significant
B. can go wrong
C. is being done right. Answer: B
⫸ Items that must be documented in the working papers during the risk
assessment process includes
Check all that apply
A. explanation of why improper revenue recognition is a risk
B. other conditions causing auditors to plan additional procedures
C. discussion with engagement personnel
D. significant decisions during discussion. Answer: B,C,D
Control and Audit Process
⫸ Analytical procedures are required:
check all that apply
A. as substantive testing procedures
B. at the beginning of the audit
C. at the end of the audit. Answer: B,C
⫸ on every audit engagement, the risk assessment process includes
required __________ sessions in which critical audit areas discussed.
Answer: Brainstorming
⫸ Company discussion boards
A. can be used as a replacement for discussions with client personnel
B. may be used by anonymous whistle-blowers
C. should not be considered a reliable source of company information.
Answer: B
⫸ The misdeeds of people who steal with a pencil or computer terminal
are known as __________ crimes. Answer: white - collar
⫸ An unintentional misstatement or financial statement omission is
referred to as an
,A. error
B. defalcation
C. larceny
D. embezzlement. Answer: A
⫸ Which of the following statements are correct
Check all that apply
A. most business risks are eventually reflected in the financial
statements
B. auditors devote significant time to understanding clients business
risks
C. gaining an understanding of strategies and procedures involves
gathering evidence in areas historically addressed by auditors. Answer:
A,B
⫸ The best indicator of the risk of a material misstatement is:
A. misstatements in previous audits that required adjusting entries
B. a new senior management team
C. a client who changes audit firms every two years. Answer: A
⫸ investigating significant differences at the preliminary stage
Check all that apply
A. provides direct evidence about the number in the financial statements
B. may be considered attention directing
, C. can be used to plan additional audit work
D. help auditors identify risks as an aid in preparing the audit plan.
Answer: B,C,D
⫸ Calculating year to year changes in balance sheet and income
statement accounts is called. Answer: horizontal analysis
⫸ An account or disclosure
A. may be significant even though the balance is below materiality
B. is only significant if it exceeds that materiality level. Answer: A
⫸ When thinking about each of the relevant financial statement
assertions, the auditor should focus on what
A. dollar amount is considered significant
B. can go wrong
C. is being done right. Answer: B
⫸ Items that must be documented in the working papers during the risk
assessment process includes
Check all that apply
A. explanation of why improper revenue recognition is a risk
B. other conditions causing auditors to plan additional procedures
C. discussion with engagement personnel
D. significant decisions during discussion. Answer: B,C,D
