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Auditing and Assurance Services, 14e
(Arens) Chapter 13 Overall Audit Plan
and Audit Program
Learning Objective 13-1
1)Shown below (1 through 5) are the five types of tests which auditors use to
determine whether financial statements are fairly stated. Which three are
substantive tests?
1. risk assessment procedures
2. tests of controls
3. tests of transactions
4. analytical procedures
5. tests of details of
balances A) 1, 2, and 3.
B) 3, 4, and
5. C) 2, 3,
and 5. D) 2,
3, and 4.
Answer: B
Terms: Three types of substantive tests which auditors use
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
2)Collectively, procedures performed to obtain an understanding of the entity and its
environment, including internal controls, represent the auditor's:
A) audit
strategy. B) tests
of controls.
C) risk assessment
procedures. D) tests of
transactions. Answer: C
Terms: Procedures performed to obtain understanding of entity and environment, including internal
controls
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
3)Which of the following would not be considered further audit procedures?
A) tests of controls
B)substantive analytical procedures
C) tests of details of balances
D) risk assessment
procedures Answer: D
Terms: Not considered a further audit procedure
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
1
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4)Which of the following procedures would most likely be performed in response to
the auditor's assessment of the risk of monetary misstatements in the financial
statements?
A) Ratio
analysis B)
Tests of
controls
C) Tests of details of
balances D) Risk
assessment procedures
Answer: C
Terms: Procedure performed in response to auditor's assessment of risk of monetary misstatement
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
5)Which of the following further audit procedures are used to determine whether all
six transaction related audit objectives have been achieved for each class of
transactions?
A) tests of controls
B) risk assessment
procedures C)
substantive tests
D) preliminary analytical
procedures Answer: C
Terms: Further audit procedures to determine whether all six transaction related audit objectives
have been achieved
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
6)You are auditing Rodgers and Company. After performing substantive analytical
procedures you conclude that, for the accounts tested, the client's balance appears
reasonable. This may indicate that: A) details test of balances can be eliminated for
those accounts.
B) certain test of balances procedures may be eliminated for
those accounts. C) control tests may be eliminated for those
accounts.
D) control tests may be reduced for those
accounts. Answer: B
Terms: After performing substantive analytic procedures
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
7)The purpose of tests of controls is to provide reasonable assurance that the:
A) accounting treatment of transactions and balances is valid and proper.
B)internal control procedures are functioning as intended.
C) entity has complied with GAAP disclosure requirements.
D) entity has complied with requirements of quality control.
Answer: B
Terms: Purpose of tests of controls
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
2
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8)In the context of an audit of financial statements, substantive tests are audit
procedures that: A) may be eliminated under certain conditions.
B) are designed to discover significant
subsequent events. C) are designed to test for
dollar misstatements.
D) will increase proportionately with the auditor's reliance on
internal control. Answer: C
Terms: Substantive tests are audit procedures
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
9)Which of the following is true?
A) tests of details of balances focus on the ending balances for accounts in the client's ending
trial balance
B)tests of details of balances focus on the transactions during the period
C) tests of details of balances focus on the auditor's understanding of internal controls
D) tests of details of balances focus on comparisons of recorded amounts to expectations
developed by the auditor
Answer: A
Terms: Tests of details of balances focus on
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
10) A system walkthrough is
primarily used to: A) test balances.
B) test details of transactions.
C) gain an understanding of internal
controls. D) determine acceptance of
the client. Answer: C
Terms: System walkthrough
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
11) Risk assessment procedures are performed by auditors during an
audit in order to: A) determine the risk of material misstatement in the
financial statements.
B) determine the amount of testing of internal
control. C) determine the extent of testing of
details of balances. D) determine the extent of
testing of transactions. Answer: A
Terms: Risk assessment procedures
Diff: Moderate
Objective: LO 13-1
AACSB: Reflective thinking skills
Topic: Public
3
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall
To downloaddownload moremore ebooks,ebooks, slides,slides, SMSM andand TBTB visit:visit: http://testbanklancerhtp:/testbanklancer..blogspotblogspot..comcom
Auditing and Assurance Services, 14e
(Arens) Chapter 13 Overall Audit Plan
and Audit Program
Learning Objective 13-1
1)Shown below (1 through 5) are the five types of tests which auditors use to
determine whether financial statements are fairly stated. Which three are
substantive tests?
1. risk assessment procedures
2. tests of controls
3. tests of transactions
4. analytical procedures
5. tests of details of
balances A) 1, 2, and 3.
B) 3, 4, and
5. C) 2, 3,
and 5. D) 2,
3, and 4.
Answer: B
Terms: Three types of substantive tests which auditors use
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
2)Collectively, procedures performed to obtain an understanding of the entity and its
environment, including internal controls, represent the auditor's:
A) audit
strategy. B) tests
of controls.
C) risk assessment
procedures. D) tests of
transactions. Answer: C
Terms: Procedures performed to obtain understanding of entity and environment, including internal
controls
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
3)Which of the following would not be considered further audit procedures?
A) tests of controls
B)substantive analytical procedures
C) tests of details of balances
D) risk assessment
procedures Answer: D
Terms: Not considered a further audit procedure
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
1
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall
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4)Which of the following procedures would most likely be performed in response to
the auditor's assessment of the risk of monetary misstatements in the financial
statements?
A) Ratio
analysis B)
Tests of
controls
C) Tests of details of
balances D) Risk
assessment procedures
Answer: C
Terms: Procedure performed in response to auditor's assessment of risk of monetary misstatement
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
5)Which of the following further audit procedures are used to determine whether all
six transaction related audit objectives have been achieved for each class of
transactions?
A) tests of controls
B) risk assessment
procedures C)
substantive tests
D) preliminary analytical
procedures Answer: C
Terms: Further audit procedures to determine whether all six transaction related audit objectives
have been achieved
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
6)You are auditing Rodgers and Company. After performing substantive analytical
procedures you conclude that, for the accounts tested, the client's balance appears
reasonable. This may indicate that: A) details test of balances can be eliminated for
those accounts.
B) certain test of balances procedures may be eliminated for
those accounts. C) control tests may be eliminated for those
accounts.
D) control tests may be reduced for those
accounts. Answer: B
Terms: After performing substantive analytic procedures
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
7)The purpose of tests of controls is to provide reasonable assurance that the:
A) accounting treatment of transactions and balances is valid and proper.
B)internal control procedures are functioning as intended.
C) entity has complied with GAAP disclosure requirements.
D) entity has complied with requirements of quality control.
Answer: B
Terms: Purpose of tests of controls
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
2
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall
, To
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8)In the context of an audit of financial statements, substantive tests are audit
procedures that: A) may be eliminated under certain conditions.
B) are designed to discover significant
subsequent events. C) are designed to test for
dollar misstatements.
D) will increase proportionately with the auditor's reliance on
internal control. Answer: C
Terms: Substantive tests are audit procedures
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
9)Which of the following is true?
A) tests of details of balances focus on the ending balances for accounts in the client's ending
trial balance
B)tests of details of balances focus on the transactions during the period
C) tests of details of balances focus on the auditor's understanding of internal controls
D) tests of details of balances focus on comparisons of recorded amounts to expectations
developed by the auditor
Answer: A
Terms: Tests of details of balances focus on
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
10) A system walkthrough is
primarily used to: A) test balances.
B) test details of transactions.
C) gain an understanding of internal
controls. D) determine acceptance of
the client. Answer: C
Terms: System walkthrough
Diff: Easy
Objective: LO 13-1
AACSB: Reflective thinking skills
11) Risk assessment procedures are performed by auditors during an
audit in order to: A) determine the risk of material misstatement in the
financial statements.
B) determine the amount of testing of internal
control. C) determine the extent of testing of
details of balances. D) determine the extent of
testing of transactions. Answer: A
Terms: Risk assessment procedures
Diff: Moderate
Objective: LO 13-1
AACSB: Reflective thinking skills
Topic: Public
3
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall
