Audit And Assurance Test 1 Questions And
Answers Graded A+.
Analytical Procedures - correct answer. the reasonableness tests used to gain an
understanding of financial statement accounts and relationships
Audit Documentation - correct answer. written basis for the auditor's conclusions
Audit Plan - correct answer. the audit procedures that auditors need to perform to
gather sufficient and appropriate evidence on which to base their opinion of financial
statements
Audit Trail - correct answer. the chain of evidence provided through coding, cross-
references and documentation connecting account balances and other summary results
with original transaction source documents
Continuing Audit Files (or permanent files) - correct answer. the audit documentation
containing information of continuing audit significance for current and past audits of the
same client
Engagement Letter - correct answer. a letter from the public accounting firm to the
management of an engagement client setting forth the terms of the engagement
Form 8-K - correct answer. the "special events report" filed with the SEC whenever
certain significant corporate events occur such as changes in control, legal proceedings,
and changes of auditor
Independence in Appearance - correct answer. the extent to which others perceive
auditors to be independent
Independence in Fact - correct answer. auditor's mental attitude and impartiality with
respect to clients
Interim Audit Work - correct answer. the procedures performed weeks or months
before the balance sheet date
, Lead Schedule - correct answer. a summary of the accounts in or components of
account group
Materiality - correct answer. an amount or event that is likely to influence financial
statements user's decisions
Planning Memorandum - correct answer. the document summarizing the preliminary
analytical procedures and the materiality assessment with specific directions about the
effect on the audit
Predecessor Auditor - correct answer. the public accounting firm that has been
terminated or has voluntarily withdrawn from an audit engagement
Quality Assurance Partner - correct answer. the second partner on the audit team as
required for audits filed with the SEC and who reviews the audit teams work in critical
audit areas
Specialists - correct answer. the persons skilled in fields other than accounting and
auditing- engineers, actuaries, geologists, attorneys, appraisers- who are not members
of the public accounting firm
Substantive Audit Plan - correct answer. the specification of substantive procedures
for gathering direct evidence on management's assertions
Termination Letter - correct answer. the documentation provided to former clients
dealing with the subject of future service in particular 1) asses to audit documentation
by new auditors 2) reissuance of the auditors reports when required for SEC reporting
or comparative financial reporting, and 3) fee arrangements for such future services. It
can also contain a report of the auditors understanding of the circumstances of
termination
Tracing - correct answer. an audit procedure in which the auditor selects a basic
source document and follows its processing path forward to find its final recording in a
summary journal or ledger
Vouching - correct answer. an audit procedure in which an auditor selects an item of
financial information usually from a journal or ledger and follows its path back through
the processing steps to its origin
Year-end Audit Work - correct answer. the procedures performed shortly before and
after the balance sheet date
Accounting Estimates - correct answer. the approcimations of financial statement
numbers often included in financial statments
Answers Graded A+.
Analytical Procedures - correct answer. the reasonableness tests used to gain an
understanding of financial statement accounts and relationships
Audit Documentation - correct answer. written basis for the auditor's conclusions
Audit Plan - correct answer. the audit procedures that auditors need to perform to
gather sufficient and appropriate evidence on which to base their opinion of financial
statements
Audit Trail - correct answer. the chain of evidence provided through coding, cross-
references and documentation connecting account balances and other summary results
with original transaction source documents
Continuing Audit Files (or permanent files) - correct answer. the audit documentation
containing information of continuing audit significance for current and past audits of the
same client
Engagement Letter - correct answer. a letter from the public accounting firm to the
management of an engagement client setting forth the terms of the engagement
Form 8-K - correct answer. the "special events report" filed with the SEC whenever
certain significant corporate events occur such as changes in control, legal proceedings,
and changes of auditor
Independence in Appearance - correct answer. the extent to which others perceive
auditors to be independent
Independence in Fact - correct answer. auditor's mental attitude and impartiality with
respect to clients
Interim Audit Work - correct answer. the procedures performed weeks or months
before the balance sheet date
, Lead Schedule - correct answer. a summary of the accounts in or components of
account group
Materiality - correct answer. an amount or event that is likely to influence financial
statements user's decisions
Planning Memorandum - correct answer. the document summarizing the preliminary
analytical procedures and the materiality assessment with specific directions about the
effect on the audit
Predecessor Auditor - correct answer. the public accounting firm that has been
terminated or has voluntarily withdrawn from an audit engagement
Quality Assurance Partner - correct answer. the second partner on the audit team as
required for audits filed with the SEC and who reviews the audit teams work in critical
audit areas
Specialists - correct answer. the persons skilled in fields other than accounting and
auditing- engineers, actuaries, geologists, attorneys, appraisers- who are not members
of the public accounting firm
Substantive Audit Plan - correct answer. the specification of substantive procedures
for gathering direct evidence on management's assertions
Termination Letter - correct answer. the documentation provided to former clients
dealing with the subject of future service in particular 1) asses to audit documentation
by new auditors 2) reissuance of the auditors reports when required for SEC reporting
or comparative financial reporting, and 3) fee arrangements for such future services. It
can also contain a report of the auditors understanding of the circumstances of
termination
Tracing - correct answer. an audit procedure in which the auditor selects a basic
source document and follows its processing path forward to find its final recording in a
summary journal or ledger
Vouching - correct answer. an audit procedure in which an auditor selects an item of
financial information usually from a journal or ledger and follows its path back through
the processing steps to its origin
Year-end Audit Work - correct answer. the procedures performed shortly before and
after the balance sheet date
Accounting Estimates - correct answer. the approcimations of financial statement
numbers often included in financial statments
