AUD-CPA-Exam 2 || correct answers 100%.
The element of the audit-planning process most likely to be agreed upon with the client before
implementation of the audit strategy is the determination of the correct answers Timing of
inventory observation procedures to be performed.
Which of the following matters should an auditor communicate to those charged with
governance? correct answers The process used by management in formulating sensitive
accounting estimates.
Financial statement audit plans usually should be developed correct answers After the auditor has
established the overall audit strategy.
Tests of controls in a financial statement audit are least likely to be omitted with regard to correct
answers Accounts representing many transactions.
If an auditor performing an integrated audit identifies one or more material weaknesses in a
nonissuer's internal control, the auditor should correct answers Express an adverse opinion on the
entity's internal control.
A nonissuer audit client failed to maintain copies of its procedures manuals and organizational
flowcharts. What should the auditor do in an audit of financial statements? correct answers Adopt
a substantive audit approach.
Which of the following statements is correct regarding internal control? correct answers An
inherent limitation of internal control is that controls can be circumvented by management
override.
To obtain evidence about the operating effectiveness of controls, an auditor selects tests from a
variety of methods, including correct answers Inquiries.
, Based on past experience with a client, an auditor determined performance materiality for fixed
assets should be calculated at 1/4 of total materiality (3% of total net fixed assets). Calculate
performance materiality based on the following:
Fixed assets (gross) at 1/1/2017
$2,000,000
Capital expenditures
250,000
Dispositions
200,000
Accumulated depreciation at 1/1/2017
800,000
Accumulated depreciation at 12/31/2017
770,000 correct answers 9,600
An auditor may decide to perform only substantive procedures for certain assertions because the
auditor believes correct answers Controls are not relevant to the assertions.
Which of the following auditor concerns usually is so serious that the auditor might conclude
that a financial statement audit cannot be conducted? correct answers The integrity of the entity's
management is suspect.
Which of the following most likely would indicate the existence of related parties? correct
answers Borrowing money at an interest rate significantly below the market rate.
Which of the following is true related to the auditor's consideration of controls? correct answers
Misstatements detected by the auditor's substantive procedures should be considered when
testing the effectiveness of related controls.
The element of the audit-planning process most likely to be agreed upon with the client before
implementation of the audit strategy is the determination of the correct answers Timing of
inventory observation procedures to be performed.
Which of the following matters should an auditor communicate to those charged with
governance? correct answers The process used by management in formulating sensitive
accounting estimates.
Financial statement audit plans usually should be developed correct answers After the auditor has
established the overall audit strategy.
Tests of controls in a financial statement audit are least likely to be omitted with regard to correct
answers Accounts representing many transactions.
If an auditor performing an integrated audit identifies one or more material weaknesses in a
nonissuer's internal control, the auditor should correct answers Express an adverse opinion on the
entity's internal control.
A nonissuer audit client failed to maintain copies of its procedures manuals and organizational
flowcharts. What should the auditor do in an audit of financial statements? correct answers Adopt
a substantive audit approach.
Which of the following statements is correct regarding internal control? correct answers An
inherent limitation of internal control is that controls can be circumvented by management
override.
To obtain evidence about the operating effectiveness of controls, an auditor selects tests from a
variety of methods, including correct answers Inquiries.
, Based on past experience with a client, an auditor determined performance materiality for fixed
assets should be calculated at 1/4 of total materiality (3% of total net fixed assets). Calculate
performance materiality based on the following:
Fixed assets (gross) at 1/1/2017
$2,000,000
Capital expenditures
250,000
Dispositions
200,000
Accumulated depreciation at 1/1/2017
800,000
Accumulated depreciation at 12/31/2017
770,000 correct answers 9,600
An auditor may decide to perform only substantive procedures for certain assertions because the
auditor believes correct answers Controls are not relevant to the assertions.
Which of the following auditor concerns usually is so serious that the auditor might conclude
that a financial statement audit cannot be conducted? correct answers The integrity of the entity's
management is suspect.
Which of the following most likely would indicate the existence of related parties? correct
answers Borrowing money at an interest rate significantly below the market rate.
Which of the following is true related to the auditor's consideration of controls? correct answers
Misstatements detected by the auditor's substantive procedures should be considered when
testing the effectiveness of related controls.
