ACC 406 Chapter 6 exam with |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
correct answers |||\\\
indicate general objective(s) for each audit procedure: observe the clients physical inventory -
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correct answer✔✔general objective in performing substantive procedures on an asset
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account: existence of assets |||\\\ |||\\\ |||\\\
indicate general objective(s) for each audit procedure: locate on the clients premises a sample
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of equipment items listed in the subsidiary plant and equipment ledger - correct
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answer✔✔general objective in performing substantive procedures on an asset account: |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
existence because it goes from ledger to physical evidence
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indicate general objective(s) for each audit procedure: obtain a listing of inventory and
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reconcile the total to the general ledger - correct answer✔✔general objective in performing
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
substantive procedures on an asset account: valuation because you are crunching the numbers
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by reconciling
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indicate general objective(s) for each audit procedure: trace a sample of shipping documents to
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recorded sales transactions - correct answer✔✔general objective in performing substantive
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procedures on an asset account: completeness because it goes from source documents to
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financial statements |||\\\
indicate general objective(s) for each audit procedure: identify related parties (need to be
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
disclosed in the notes to the financial statements) - correct answer✔✔general objective in
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
performing substantive procedures on an asset account: presentation and disclosure
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indicate general objective(s) for each audit procedure: vouch selected purchases of securities
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to broker advices (receipts) - correct answer✔✔general objective in performing substantive
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procedures on an asset account: existence because we go from FS to SD
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, indicate general objective(s) for each audit procedure: - correct answer✔✔general objective in
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
performing substantive procedures on an asset account:
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what is substantive procedures related to? - correct answer✔✔detection risk
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planning the audit - correct answer✔✔-determining the requirements for the engagement,
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including FS to be audited or any regulatory filings, and the timing of the engagement
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-determining the analytical procedures to be applied as risk assessment procedures, the level |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
of materiality, and the likely need for specialists
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-you are not going to analyze specific numbers yet, you want to pay attention to the audibility
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communication with predecessor auditors - correct answer✔✔-successor should initiate |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
communicate with predecessor auditor before accepting audit engagement |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
-successor must ask management of client to authorize predecessor auditor to communicate |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
with them |||\\\
-it is pre-engagement bc there is not contract yet
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engagement letter - correct answer✔✔to document in WRITING the understanding between |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
client and auditors |||\\\ |||\\\
1. objective and scope of the audit
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2. auditor and management responsibilities
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3. inherent limitations of an audit
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4. the applicable financial reporting framework
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5. expected form and content of written reports to be issued by the auditors
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executory contract - correct answer✔✔when the engagement letter is accepted by the
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authorized client official, it presents an executory contract between auditor and client |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
correct answers |||\\\
indicate general objective(s) for each audit procedure: observe the clients physical inventory -
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
correct answer✔✔general objective in performing substantive procedures on an asset
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
account: existence of assets |||\\\ |||\\\ |||\\\
indicate general objective(s) for each audit procedure: locate on the clients premises a sample
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
of equipment items listed in the subsidiary plant and equipment ledger - correct
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
answer✔✔general objective in performing substantive procedures on an asset account: |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
existence because it goes from ledger to physical evidence
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
indicate general objective(s) for each audit procedure: obtain a listing of inventory and
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
reconcile the total to the general ledger - correct answer✔✔general objective in performing
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
substantive procedures on an asset account: valuation because you are crunching the numbers
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
by reconciling
|||\\\
indicate general objective(s) for each audit procedure: trace a sample of shipping documents to
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
recorded sales transactions - correct answer✔✔general objective in performing substantive
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
procedures on an asset account: completeness because it goes from source documents to
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
financial statements |||\\\
indicate general objective(s) for each audit procedure: identify related parties (need to be
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
disclosed in the notes to the financial statements) - correct answer✔✔general objective in
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
performing substantive procedures on an asset account: presentation and disclosure
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
indicate general objective(s) for each audit procedure: vouch selected purchases of securities
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
to broker advices (receipts) - correct answer✔✔general objective in performing substantive
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
procedures on an asset account: existence because we go from FS to SD
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
, indicate general objective(s) for each audit procedure: - correct answer✔✔general objective in
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
performing substantive procedures on an asset account:
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
what is substantive procedures related to? - correct answer✔✔detection risk
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
planning the audit - correct answer✔✔-determining the requirements for the engagement,
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
including FS to be audited or any regulatory filings, and the timing of the engagement
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
-determining the analytical procedures to be applied as risk assessment procedures, the level |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
of materiality, and the likely need for specialists
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
-you are not going to analyze specific numbers yet, you want to pay attention to the audibility
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
communication with predecessor auditors - correct answer✔✔-successor should initiate |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
communicate with predecessor auditor before accepting audit engagement |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
-successor must ask management of client to authorize predecessor auditor to communicate |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
with them |||\\\
-it is pre-engagement bc there is not contract yet
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
engagement letter - correct answer✔✔to document in WRITING the understanding between |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
client and auditors |||\\\ |||\\\
1. objective and scope of the audit
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
2. auditor and management responsibilities
|||\\\ |||\\\ |||\\\ |||\\\
3. inherent limitations of an audit
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
4. the applicable financial reporting framework
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\
5. expected form and content of written reports to be issued by the auditors
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
executory contract - correct answer✔✔when the engagement letter is accepted by the
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
authorized client official, it presents an executory contract between auditor and client |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
