AUD CPA Review || acknowledged answers 100%.
Part of the audit trail is altered correct answers Matthews Corp. has changed from a system of
recording time worked on clock cards to a computerized payroll system in which employees
record time in and out with magnetic cards. The computer system automatically updates all
payroll records. Because of this change
May occur in a systematic pattern, thus destroying the sample randomness correct answers When
performing a test of a control with respect to control over cash receipts, an auditor may use a
systematic sampling technique with a start at any randomly selected item. The biggest
disadvantage of this type of sampling is that the items in the population
Notes receivable and interest income correct answers Which of the following pairs of accounts
would an auditor most likely analyze on the same audit documentation?
The service organization's system calculates accounts receivable balances. correct answers A
service organization provides processing services for a client's sales orders. Which of the
following information is relevant when gathering data for the report on the service organization's
internal controls?
A significant portion of management's compensation is represented by stock options correct
answers Management's emphasis on meeting projected profit goals most likely would
significantly influence an entity's control environment when
Identify specific internal control policies and procedures that are likely to detect or prevent
material misstatements correct answers Which of the following is a step in an auditor's decision
to assess control risk at below the maximum?
adverse correct answers An auditor identified a material weakness in December. The client was
informed and corrected it shortly after the "as of date" (December 31); the auditor agrees that the
correction eliminates the material weakness as of January 31. The appropriate report under a
PCAOB Standard 5 audit of internal control is
, Management and the audit committee correct answers According to PCAOB auditing standards,
the auditor is required to communicate, in writing, all identified material weaknesses to
Sandor, Salman & Dingle continued to use this firm name years after founding partner Jessica
Dingle died in a car wreck. correct answers In which of the following scenarios did a member act
properly?
Utility Programs correct answers Auditors often make use of computer programs that perform
routine processing functions such as sorting and merging. These programs are made available by
electronic data processing companies and others and are specifically referred to as
Indicate the substantive reasons for the qualification in the predecessor auditor's opinion. correct
answers An entity's comparative financial statements include the financial statements of the prior
year that were audited by a predecessor auditor whose report is not presented. If the predecessor's
report was qualified, the successor should
Produces an estimate that has a desired level of precision with a smaller sample size. correct
answers Stratified mean per unit (MPU) sampling is a statistical technique that may be more
efficient than unstratified MPU because it usually
Does not impair independence correct answers Arbitration clauses may be used to resolve
disputes with clients. On the other hand, arbitration can put the client and the auditor in positions
of material adverse interests and thereby impair independence. But since the audit engagement
and audit relationship are already over, independence is no longer important here.
Does not impair independence correct answers First, the audit relationship is over, so
independence is no longer relevant. Even if that were not the case, independence is imperiled by
unpaid fees only if a firm is asked to issue an audit report more than one year after payment was
due.
The larger of the samples that would otherwise have been designed for the two separate purposes
correct answers The size of a sample designed for dual-purpose testing should be
Part of the audit trail is altered correct answers Matthews Corp. has changed from a system of
recording time worked on clock cards to a computerized payroll system in which employees
record time in and out with magnetic cards. The computer system automatically updates all
payroll records. Because of this change
May occur in a systematic pattern, thus destroying the sample randomness correct answers When
performing a test of a control with respect to control over cash receipts, an auditor may use a
systematic sampling technique with a start at any randomly selected item. The biggest
disadvantage of this type of sampling is that the items in the population
Notes receivable and interest income correct answers Which of the following pairs of accounts
would an auditor most likely analyze on the same audit documentation?
The service organization's system calculates accounts receivable balances. correct answers A
service organization provides processing services for a client's sales orders. Which of the
following information is relevant when gathering data for the report on the service organization's
internal controls?
A significant portion of management's compensation is represented by stock options correct
answers Management's emphasis on meeting projected profit goals most likely would
significantly influence an entity's control environment when
Identify specific internal control policies and procedures that are likely to detect or prevent
material misstatements correct answers Which of the following is a step in an auditor's decision
to assess control risk at below the maximum?
adverse correct answers An auditor identified a material weakness in December. The client was
informed and corrected it shortly after the "as of date" (December 31); the auditor agrees that the
correction eliminates the material weakness as of January 31. The appropriate report under a
PCAOB Standard 5 audit of internal control is
, Management and the audit committee correct answers According to PCAOB auditing standards,
the auditor is required to communicate, in writing, all identified material weaknesses to
Sandor, Salman & Dingle continued to use this firm name years after founding partner Jessica
Dingle died in a car wreck. correct answers In which of the following scenarios did a member act
properly?
Utility Programs correct answers Auditors often make use of computer programs that perform
routine processing functions such as sorting and merging. These programs are made available by
electronic data processing companies and others and are specifically referred to as
Indicate the substantive reasons for the qualification in the predecessor auditor's opinion. correct
answers An entity's comparative financial statements include the financial statements of the prior
year that were audited by a predecessor auditor whose report is not presented. If the predecessor's
report was qualified, the successor should
Produces an estimate that has a desired level of precision with a smaller sample size. correct
answers Stratified mean per unit (MPU) sampling is a statistical technique that may be more
efficient than unstratified MPU because it usually
Does not impair independence correct answers Arbitration clauses may be used to resolve
disputes with clients. On the other hand, arbitration can put the client and the auditor in positions
of material adverse interests and thereby impair independence. But since the audit engagement
and audit relationship are already over, independence is no longer important here.
Does not impair independence correct answers First, the audit relationship is over, so
independence is no longer relevant. Even if that were not the case, independence is imperiled by
unpaid fees only if a firm is asked to issue an audit report more than one year after payment was
due.
The larger of the samples that would otherwise have been designed for the two separate purposes
correct answers The size of a sample designed for dual-purpose testing should be
