CPA Exam - Auditing (in progress)
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:
a. Schedules and analyses to be prepared by the client's staff.
b. Methods of statistical sampling to be used in confirming accounts receivable.
c. Pending legal matters to be included in the inquiry of the client's attorney.
d. Evidence to be gathered to provide a sufficient basis for the auditor's opinion. ✔✔a.
Schedules and analyses to be prepared by the client's staff.
The other answers involve judgment by the auditor only and as such the decision process only
involves the auditor. Schedules and analyses to be prepared by the client's staff, however,
would necessarily have to involve the client since the client will be preparing the schedules.
Analytical review procedures are:
a. Compliance tests designed to evaluate the reasonableness of financial information.
b. Substantive tests designed to evaluate the reasonableness of financial information.
c. Compliance tests designed to evaluate the validity of management's representation letter.
d. Substantive tests designed to evaluate a system of internal control. ✔✔b. Substantive tests
designed to evaluate the reasonableness of financial information.
Analytical review procedures are substantive tests.
In reporting on an entity's internal control structure over financial reporting, a practitioner
should include a paragraph that describes the
a. Inherent limitations of any internal control structure.
b. Documentary evidence regarding the control environment factors.
c. Changes in the internal control structure since the prior report.
d. Potential benefits from the practitioner's suggested improvements.
BACK ✔✔a. Inherent limitations of any internal control structure.
A practitioner's report on an examination of management's assertion about the effectiveness of
the entity's internal control structure should include a paragraph stating that, because of
inherent limitations of any internal control structure, errors or irregularities may occur and not
be detected.
A CPA is performing an audit examination of Malfoy, Inc. The CPA has already done the work
necessary to gain a general understanding of the company's internal control. The CPA is now
looking at the internal control policies and procedures within the accounting system specifically
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:
a. Schedules and analyses to be prepared by the client's staff.
b. Methods of statistical sampling to be used in confirming accounts receivable.
c. Pending legal matters to be included in the inquiry of the client's attorney.
d. Evidence to be gathered to provide a sufficient basis for the auditor's opinion. ✔✔a.
Schedules and analyses to be prepared by the client's staff.
The other answers involve judgment by the auditor only and as such the decision process only
involves the auditor. Schedules and analyses to be prepared by the client's staff, however,
would necessarily have to involve the client since the client will be preparing the schedules.
Analytical review procedures are:
a. Compliance tests designed to evaluate the reasonableness of financial information.
b. Substantive tests designed to evaluate the reasonableness of financial information.
c. Compliance tests designed to evaluate the validity of management's representation letter.
d. Substantive tests designed to evaluate a system of internal control. ✔✔b. Substantive tests
designed to evaluate the reasonableness of financial information.
Analytical review procedures are substantive tests.
In reporting on an entity's internal control structure over financial reporting, a practitioner
should include a paragraph that describes the
a. Inherent limitations of any internal control structure.
b. Documentary evidence regarding the control environment factors.
c. Changes in the internal control structure since the prior report.
d. Potential benefits from the practitioner's suggested improvements.
BACK ✔✔a. Inherent limitations of any internal control structure.
A practitioner's report on an examination of management's assertion about the effectiveness of
the entity's internal control structure should include a paragraph stating that, because of
inherent limitations of any internal control structure, errors or irregularities may occur and not
be detected.
A CPA is performing an audit examination of Malfoy, Inc. The CPA has already done the work
necessary to gain a general understanding of the company's internal control. The CPA is now
looking at the internal control policies and procedures within the accounting system specifically
