ACCT 451 QUIZ 2-1 EXAM 35 QQUESTIONS WITH
VERIFIED ANSWERS
it would be efficient to perform tests of controls that would result in a reduction in
planned substantive tests.
because
At this early stage, the auditor develops only a general idea of which tests of
internal controls and which substantive tests will be performed. Prior years'
workpapers are reviewed, general business and economic conditions are
examined, interim financial statements are studied, and the scope of the
engagement is discussed with the client. The timing of the audit is set both with
the client and with audit personnel.
The other items described are all performed well after the initial planning phase
of an audit. - CORRECT ANSWER After obtaining an understanding of the entity
and its environment and assessing the risk of material misstatement, an auditor
decided to perform tests of controls. The auditor most likely decided that:
financial statement assertions
because:
In designing a written audit plan, specific audit objectives should be established.
Audit objectives are related primarily to financial statement assertions, which can
be classified according to the following broad categories:
Occurrence
Completeness
Accuracy
,Cutoff
Classification
Existence
Rights and obligations
Valuation and allocation
Audit procedures that will achieve the audit objectives are detailed in the audit
plan. The timing of audit procedures and the cost-benefit of gathering evidence
are considered in audit planning. Audit techniques are selected in performing the
audit work. - CORRECT ANSWER In designing a written audit plan, an auditor
should establish specific audit objectives that relate primarily to the:
An audit plan setting forth in detail the procedures necessary to accomplish the
engagement's objectives
because
An audit plan setting forth in detail the procedures necessary to accomplish the
engagement objectives is required documentation in an audit performed in
accordance with generally accepted auditing standards. A program is essential to
plan and supervise audit assistants. Documentation of the accounting system and
internal control should be performed; however, the form of documentation is not
specified (flowchart, narrative, questionnaire, memo, etc.). The use of a
documented audit planning memorandum establishing the timing of the audit
procedures and coordination of the assistance of entity personnel is up to the
auditor's judgment. - CORRECT ANSWER Which of the following is required
documentation in an audit in accordance with generally accepted auditing
standards?
, every audit
because
In planning the audit, the auditor should consider the nature, extent, and timing
of work to be performed and should prepare a written audit plan to respond to
the risk of material misstatement for each relevant assertion for each significant
audit area. - CORRECT ANSWER A written audit plan is required to be prepared by
an auditor for:
a working trial balance
because
In general, working papers include documentation (such as a working trial
balance) that the accounting records agree with the reported financial statements
for the year(s) being examined. The working trial balance changes each year and
would not be included in the permanent file.
The permanent files of the working papers include copies of the client's long-term
contracts and agreements and auditor-prepared documentation that will benefit
the audit in future years, such as bond indenture agreements, lease agreements,
and a flowchart of the internal control. - CORRECT ANSWER The permanent file of
an auditor's working papers generally would not include:
the audit evidence gathered supports the auditor's conclusions.
because
The purpose of the audit is to obtain sufficient appropriate audit evidence to
support the auditor's opinion regarding the fair presentation of the financial
VERIFIED ANSWERS
it would be efficient to perform tests of controls that would result in a reduction in
planned substantive tests.
because
At this early stage, the auditor develops only a general idea of which tests of
internal controls and which substantive tests will be performed. Prior years'
workpapers are reviewed, general business and economic conditions are
examined, interim financial statements are studied, and the scope of the
engagement is discussed with the client. The timing of the audit is set both with
the client and with audit personnel.
The other items described are all performed well after the initial planning phase
of an audit. - CORRECT ANSWER After obtaining an understanding of the entity
and its environment and assessing the risk of material misstatement, an auditor
decided to perform tests of controls. The auditor most likely decided that:
financial statement assertions
because:
In designing a written audit plan, specific audit objectives should be established.
Audit objectives are related primarily to financial statement assertions, which can
be classified according to the following broad categories:
Occurrence
Completeness
Accuracy
,Cutoff
Classification
Existence
Rights and obligations
Valuation and allocation
Audit procedures that will achieve the audit objectives are detailed in the audit
plan. The timing of audit procedures and the cost-benefit of gathering evidence
are considered in audit planning. Audit techniques are selected in performing the
audit work. - CORRECT ANSWER In designing a written audit plan, an auditor
should establish specific audit objectives that relate primarily to the:
An audit plan setting forth in detail the procedures necessary to accomplish the
engagement's objectives
because
An audit plan setting forth in detail the procedures necessary to accomplish the
engagement objectives is required documentation in an audit performed in
accordance with generally accepted auditing standards. A program is essential to
plan and supervise audit assistants. Documentation of the accounting system and
internal control should be performed; however, the form of documentation is not
specified (flowchart, narrative, questionnaire, memo, etc.). The use of a
documented audit planning memorandum establishing the timing of the audit
procedures and coordination of the assistance of entity personnel is up to the
auditor's judgment. - CORRECT ANSWER Which of the following is required
documentation in an audit in accordance with generally accepted auditing
standards?
, every audit
because
In planning the audit, the auditor should consider the nature, extent, and timing
of work to be performed and should prepare a written audit plan to respond to
the risk of material misstatement for each relevant assertion for each significant
audit area. - CORRECT ANSWER A written audit plan is required to be prepared by
an auditor for:
a working trial balance
because
In general, working papers include documentation (such as a working trial
balance) that the accounting records agree with the reported financial statements
for the year(s) being examined. The working trial balance changes each year and
would not be included in the permanent file.
The permanent files of the working papers include copies of the client's long-term
contracts and agreements and auditor-prepared documentation that will benefit
the audit in future years, such as bond indenture agreements, lease agreements,
and a flowchart of the internal control. - CORRECT ANSWER The permanent file of
an auditor's working papers generally would not include:
the audit evidence gathered supports the auditor's conclusions.
because
The purpose of the audit is to obtain sufficient appropriate audit evidence to
support the auditor's opinion regarding the fair presentation of the financial
