Aud - ME 3 - WMC Actual Questions and Anwers with
complete solution
What could be difficult to determine because electronic evidence may not be
retrievable after a specific period?
The timing of control and substantive tests
The management of Cain Compant, a nonissuer, engaged Bell, CPA, to audit
Cain's internal control. Bell's report described several material weaknesses and
potential errors and irregularities that could occur. Subsequently, management
included Bell's report in its annual report to the Board of Directors with a
statement that the cost of correcting the weaknesses would exceed the benefits.
Bell should:
Disclaim an opinion as to management's cost-benefit statement
A letter issued on significant deficiencies relating to an entity's internal control
observed during an audit of the financial statements of a non-issuer should
include a:
restriction on the use of the report
also:
-indicate that the purpose of the audit was not to provide assurance on internal control
-include the definition of significant deficiencies
What question is appropriate to include in an internal control questionnaire
concerning the completeness assertion for purchases?
Are purchase orders, receiving reports, and vouchers prenumbered and periodically
accounted for?
The likelihood of assessing control risk too high is the risk that the sample
selected to test controls:
does not support the auditor's planned assessed level of control risk when the true
operating effectiveness of internal control justifies such an assessment
The audit work performed by each assistant should be reviewed to determine
whether it was adequately performed and to evaluate whether the:
results are consistent with the conclusions to be presented in the auditor's report
In using the work of a specialist, an auditor of a nonissuer may refer to the
specialist in the auditor's report if, as a result of the specialist's findings, the
auditor:
modifies the opinion
aka the findings must result in a change to the auditors report
Reporting on internal control to meet the requirements of Government Auditing
Standards differs from reporting under other generally accepted auditing
standards in that Government Auditing Standards requires a:
report describing the scope of the auditor's testing of compliance and of internal control
Does the cost-benefit relationship of obtaining the audit evidence have a direct
impact in determining the sufficiency of evidence gathered during an audit?
No, but it may be a reason for or against performing certain procedures
complete solution
What could be difficult to determine because electronic evidence may not be
retrievable after a specific period?
The timing of control and substantive tests
The management of Cain Compant, a nonissuer, engaged Bell, CPA, to audit
Cain's internal control. Bell's report described several material weaknesses and
potential errors and irregularities that could occur. Subsequently, management
included Bell's report in its annual report to the Board of Directors with a
statement that the cost of correcting the weaknesses would exceed the benefits.
Bell should:
Disclaim an opinion as to management's cost-benefit statement
A letter issued on significant deficiencies relating to an entity's internal control
observed during an audit of the financial statements of a non-issuer should
include a:
restriction on the use of the report
also:
-indicate that the purpose of the audit was not to provide assurance on internal control
-include the definition of significant deficiencies
What question is appropriate to include in an internal control questionnaire
concerning the completeness assertion for purchases?
Are purchase orders, receiving reports, and vouchers prenumbered and periodically
accounted for?
The likelihood of assessing control risk too high is the risk that the sample
selected to test controls:
does not support the auditor's planned assessed level of control risk when the true
operating effectiveness of internal control justifies such an assessment
The audit work performed by each assistant should be reviewed to determine
whether it was adequately performed and to evaluate whether the:
results are consistent with the conclusions to be presented in the auditor's report
In using the work of a specialist, an auditor of a nonissuer may refer to the
specialist in the auditor's report if, as a result of the specialist's findings, the
auditor:
modifies the opinion
aka the findings must result in a change to the auditors report
Reporting on internal control to meet the requirements of Government Auditing
Standards differs from reporting under other generally accepted auditing
standards in that Government Auditing Standards requires a:
report describing the scope of the auditor's testing of compliance and of internal control
Does the cost-benefit relationship of obtaining the audit evidence have a direct
impact in determining the sufficiency of evidence gathered during an audit?
No, but it may be a reason for or against performing certain procedures
