Chapter 5 - Audit Theory and Practice | UPDATE 2025|COMPREHENSIVE
MOST TESTED QUESTIONS AND VERIFIED SOLUTIONS|GET IT 100% ACCURATE!!
. An initial (first-time) audit requires more audit time to complete than a recurring
audit. One of the reasons for this is that
A. New auditors are usually assigned to an initial audit
B.Predecessor auditors need to be consulted.
C.The client's business, industry, and internal control are unfamiliar to the auditor
and need to be carefully studied.
D. A larger proportion of customer accounts receivable need to be confirmed on
an initial audit. - ANSWER-C
. An auditor should design the audit plan so that
A. All material transactions will be selected for substantive testing.
B. Substantive tests prior to the balance sheet date will be minimized.
C.The audit procedures selected will achieve specific audit objectives.
D. Each account balance will be tested under either tests of controls or tests of
transactions. - ANSWER-c
. In developing an overall audit strategy, an auditor should consider:
,A. Whether the allowance for sampling risk exceeds the achieved upper precision
limit.
B. Findings from substantive tests performed at interim dates.
C. Whether the inquiry of the client's attorney identifies any litigation,claims, or
assessments not disclosed in the financial statements.
D.Preliminary evaluations of materiality, audit risk, and internal control. -
ANSWER-d
. Which of the following statements is/are correct?
Statement 1: The client should plan the audit work so that the audit will be
performed in an effective manner.
Statement 2: The auditor should conduct the audit with an attitude of professional
skepticism.
Statement 3: The auditor should develop and document an overall audit plan
describing the scope and conduct of the audit.
A.Only one statement is correct
B. Only two statements are correct
C. All statements are correct
D. All statements are incorrect - ANSWER-B
,2. The auditors plan should
I. Precede action
II. Be flexible
III. Be cost-beneficial
A. I and II
B. II and III
C. I and III
D. I, II, and III - ANSWER-D.
3. Adequate planning benefits the audit of financial statements in several ways,
including the following, except
A Helping the auditor to devote appropriate attention to less important areas of
the audit
B. Helping the auditor identify and resolve potential problems on a timely basis
C. Helping the auditor properly organize and manage the audit engagement so that
it is performed in an effective and efficient manner
, D. Assisting in the selection of engagement team members with appropriate levels
of capabilities and competence to respond to anticipated risks, and the proper
assignment of work to them - ANSWER-A
4. Which of the following statements is incorrect?
A. The auditor should plan the audit so that the engagement will be performed in
an effective manner.
B. Planning an audit involves establishing the overall audit strategy for the
engagement and developing the audit plan, in order to reduce audit risk to an
acceptably low level.
C. Planning involves the engagement partner and other key members of the
engagement team to benefit from their experience and insight and to enhance the
effectiveness and efficiency of the planning process.
D.Planning is not a discrete phase of an audit, but rather a continual and iterative
process that often begins shortly after (or in connection with) the completion of
the previous audit and continues until the finalization of the audit program. -
ANSWER-D
5. Which of the following statements is/are correct?
Statement 1: According to PSA 300, the auditor may discuss elements of planning
with those charged with governance and the entity's management.
Statement 2: The audit plan sets the scope, timing, and direction of the audit and
guides the development of the more detailed overall audit strategy
MOST TESTED QUESTIONS AND VERIFIED SOLUTIONS|GET IT 100% ACCURATE!!
. An initial (first-time) audit requires more audit time to complete than a recurring
audit. One of the reasons for this is that
A. New auditors are usually assigned to an initial audit
B.Predecessor auditors need to be consulted.
C.The client's business, industry, and internal control are unfamiliar to the auditor
and need to be carefully studied.
D. A larger proportion of customer accounts receivable need to be confirmed on
an initial audit. - ANSWER-C
. An auditor should design the audit plan so that
A. All material transactions will be selected for substantive testing.
B. Substantive tests prior to the balance sheet date will be minimized.
C.The audit procedures selected will achieve specific audit objectives.
D. Each account balance will be tested under either tests of controls or tests of
transactions. - ANSWER-c
. In developing an overall audit strategy, an auditor should consider:
,A. Whether the allowance for sampling risk exceeds the achieved upper precision
limit.
B. Findings from substantive tests performed at interim dates.
C. Whether the inquiry of the client's attorney identifies any litigation,claims, or
assessments not disclosed in the financial statements.
D.Preliminary evaluations of materiality, audit risk, and internal control. -
ANSWER-d
. Which of the following statements is/are correct?
Statement 1: The client should plan the audit work so that the audit will be
performed in an effective manner.
Statement 2: The auditor should conduct the audit with an attitude of professional
skepticism.
Statement 3: The auditor should develop and document an overall audit plan
describing the scope and conduct of the audit.
A.Only one statement is correct
B. Only two statements are correct
C. All statements are correct
D. All statements are incorrect - ANSWER-B
,2. The auditors plan should
I. Precede action
II. Be flexible
III. Be cost-beneficial
A. I and II
B. II and III
C. I and III
D. I, II, and III - ANSWER-D.
3. Adequate planning benefits the audit of financial statements in several ways,
including the following, except
A Helping the auditor to devote appropriate attention to less important areas of
the audit
B. Helping the auditor identify and resolve potential problems on a timely basis
C. Helping the auditor properly organize and manage the audit engagement so that
it is performed in an effective and efficient manner
, D. Assisting in the selection of engagement team members with appropriate levels
of capabilities and competence to respond to anticipated risks, and the proper
assignment of work to them - ANSWER-A
4. Which of the following statements is incorrect?
A. The auditor should plan the audit so that the engagement will be performed in
an effective manner.
B. Planning an audit involves establishing the overall audit strategy for the
engagement and developing the audit plan, in order to reduce audit risk to an
acceptably low level.
C. Planning involves the engagement partner and other key members of the
engagement team to benefit from their experience and insight and to enhance the
effectiveness and efficiency of the planning process.
D.Planning is not a discrete phase of an audit, but rather a continual and iterative
process that often begins shortly after (or in connection with) the completion of
the previous audit and continues until the finalization of the audit program. -
ANSWER-D
5. Which of the following statements is/are correct?
Statement 1: According to PSA 300, the auditor may discuss elements of planning
with those charged with governance and the entity's management.
Statement 2: The audit plan sets the scope, timing, and direction of the audit and
guides the development of the more detailed overall audit strategy
