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Audit Final Exam/Audit Final Exam, Exams of Nursing

Illinois College (IC)Nursing

Audit Final Exam/Audit Final Exam

Typology: Exams

2021/2022

Available from 08/16/2022

PaperPass
PaperPass 🇺🇸

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Audit Final Exam 2022 Solved
Which of the following is not one of the four decisions about what evidence to gather
and how much of it to accumulate?
A) Which audit procedures to use
B) Which accounts must agree to the general ledger
C) When to perform the procedures
D) What sample size to select for a given procedure - B
Which of the following is not a characteristic of the reliability of evidence?
A) Effectiveness of client internal controls
B) Education of auditor
C) Independence of information provider
D) Timeliness - B
The auditor must gather sufficient and appropriate evidence during the course of the
audit. Sufficient evidence
must:
A) be well documented and cross-referenced in the audit documents.
B) be based on sources that are external to company.
C) provide evidence that prove or disprove an audit objective/assertion.
D) be persuasive enough to enable the auditor to issue an audit report. - D
Which of the following forms of evidence would be least persuasive in forming the
auditor's opinion about marketable securities and other investments held by the
company?
A) Responses to auditor's questions by the president and controller regarding the
investments account
B) Correspondence with a stockbroker regarding the quantity of client's investments
held in street name by the broker
C) Minutes of the board of directors authorizing the purchase of stock as an
investment D) The auditor's count of marketable securities - A
Determine which of the following is most correct regarding the reliability of audit
evidence.
A) Information that is indirectly obtained from external sources is the most reliable audit
evidence.
B) Reliability of audit evidence is dependent upon the evidence being subjective.
C) Reliability of evidence refers to the amount of evidence obtained.
D) If internal controls are effective, evidence obtained is more reliable than when the
controls are not effective. - D
To be considered reliable evidence, confirmations must be controlled by:
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Audit Final Exam 2022 Solved

Which of the following is not one of the four decisions about what evidence to gather and how much of it to accumulate? A) Which audit procedures to use B) Which accounts must agree to the general ledger C) When to perform the procedures D) What sample size to select for a given procedure - B Which of the following is not a characteristic of the reliability of evidence? A) Effectiveness of client internal controls B) Education of auditor C) Independence of information provider D) Timeliness - B The auditor must gather sufficient and appropriate evidence during the course of the audit. Sufficient evidence must: A) be well documented and cross-referenced in the audit documents. B) be based on sources that are external to company. C) provide evidence that prove or disprove an audit objective/assertion. D) be persuasive enough to enable the auditor to issue an audit report. - D Which of the following forms of evidence would be least persuasive in forming the auditor's opinion about marketable securities and other investments held by the company? A) Responses to auditor's questions by the president and controller regarding the investments account B) Correspondence with a stockbroker regarding the quantity of client's investments held in street name by the broker C) Minutes of the board of directors authorizing the purchase of stock as an investment D) The auditor's count of marketable securities - A Determine which of the following is most correct regarding the reliability of audit evidence. A) Information that is indirectly obtained from external sources is the most reliable audit evidence. B) Reliability of audit evidence is dependent upon the evidence being subjective. C) Reliability of evidence refers to the amount of evidence obtained. D) If internal controls are effective, evidence obtained is more reliable than when the controls are not effective. - D To be considered reliable evidence, confirmations must be controlled by:

Audit Final Exam 2022 Solved

A) the client's employee responsible for accounts receivable. B) the external auditor. C) the client's internal audit department. D) the client's controller or CFO. - B A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued is the: A) inherent risk. B) acceptable audit risk. C) statistical risk. D) financial risk. - B A measure of the auditor's assessment of the likelihood that there are material misstatements in an account before considering the effectiveness of the client's internal control is called: A) control risk. B) acceptable audit risk. C) statistical risk. D) inherent risk. - D When dealing with audit risk: A) auditors accept some level of risk in performing the audit function. B) most risks that auditors encounter are relatively easy to measure. C) the audit risk model is only used for classes of transactions. D) most audit firms prefer to use a quantitative assessment for risk - A Initial audit planning involves four matters. Which of the following is not one of these? A) Develop an overall audit strategy. B) Request that bank balances be confirmed. C) Schedule engagement staff and audit specialists. D) Identify the client's reason for the audit. - B Most auditors assess inherent risk as high for related parties and related-party transactions because: A) of the unique classification of related-party transactions required on the balance sheet.

Audit Final Exam 2022 Solved

C) sampling risk. D) detection risk - B Auditors respond to risk primarily by: I. changing the extent of testing. II. changing the types of audit procedures. A) I only B) II only C) I and II D) neither I nor II - C Which of the following is not one of the three primary objectives of effective internal control? A) Reliability of financial reporting B) Efficiency and effectiveness of operations C) Compliance with laws and regulations D) Assurance of elimination of business risk - D Internal controls: A) are implemented by and are the responsibility of the auditors. B) consist of policies and procedures designed to provide reasonable assurance that the company achieves its objectives and goals. C) guarantee that the company complies with all laws and regulations. D) only apply to SEC companies. - B The PCAOB places responsibility for the reliability of internal controls over the financial reporting process on: A) the company's board of directors. B) the audit committee of the board of directors. C) management. D) the CFO and the independent auditors. - C

Audit Final Exam 2022 Solved

Which of the following statements is most correct with respect to separation of duties? A) A person who has temporary or permanent custody of an asset should account for that asset. B) Employees who authorize transactions should not have custody of related assets. C) Employees who open cash receipts should record the amounts in the subsidiary ledgers. D) Employees who authorize transactions should have recording responsibility for these

  • B Authorizations can be either general or specific. Which of the following is not an example of a general authorization? A) Automatic reorder points for raw materials inventory B) A sales manager's authorization for a sales return C) Credit limits for various classes of customers D) A sales price list for merchandise - B Which of the following is correct with respect to the design and use of business documents? A) The documents should be in paper format. B) Documents should be designed for a single purposes to avoid confusion in their use. C) Documents should be designed to be understandable only by those who use them. D) Documents should be prenumbered consecutively to facilitate control over missing documents. - D It is important for the CPA to consider the competence of the clients' personnel because their competence has a direct impact upon the: A) cost/benefit relationship of the system of internal control. B) achievement of the objectives of internal control. C) comparison of recorded accountability with assets. D) timing of the tests to be performed. - B When the auditor attempts to understand the operation of the accounting system by tracing a few transactions through the accounting system, the auditor is said to be: A) tracing. B) vouching. C) performing a walk-through. D) testing controls. - C

Audit Final Exam 2022 Solved

judgment C) Generally accepted auditing standards D) The auditor's working papers - B Which of the following tests commonly occur together? A) Substantive tests of transactions and tests of controls B) Substantive tests of transactions and obtaining an understanding of internal controls C) Analytical procedures and tests of controls D) Tests of controls and tests of details of balances - A Presentation and disclosure related audit objectives would be performed in which phase of the audit process? A) Plan and design audit approach B) Perform audit tests for controls and transactions C) Perform analytical procedures and tests of balances D) Complete the audit and issue the audit report - D Analytical procedures must be performed in: A) the planning and test of control stages. B) conjunction with tests of transactions and tests of details of balances. C) the planning and completion stages. D) the planning, test of control, and completion stages. - C In order to promote audit efficiency the auditor considers cost in selecting audit tests to perform. Which of the following audit tests would be the most costly? A) Analytical procedures B) Risk assessment procedures C) Tests of controls D) Tests of details of balances - D Which of the following is generally not included in the "evidence mix"? A) Tests of controls B) Substantive tests of transactions C) Risk assessment procedures D) Tests of details of balances - C

Audit Final Exam 2022 Solved

The document that details the specific audit procedures for each type of test is the: A) audit strategy. B) audit program. C) audit procedure. D) audit risk model. - B Which of the following is an account that is not affected by the sales and collection cycle? A) Cash B) Accounts receivable C) Allowance for doubtful accounts D) Accounts payable - D The auditor's objectives for the sales and cash collections activities when the client is primarily an e-commerce business as compared to a "bricks and mortar" business are: A) unchanged. B) expanded. C) mitigated. D) decreased. - A What event initiates a transaction in the sales and collection cycle? A) Receipt of cash B) Delivery of product to a customer C) Identification of a new customer D) Customer request for goods - D What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected? A) Determination of correct delivery address B) Credit approval C) Matching of shipping document with sales invoice D) Receipt of sales order from the customer - B Most companies recognize sales revenue when: A) sales are invoiced.

Audit Final Exam 2022 Solved

population is a(n): A) variables sample. B) representative sample. C) attributes sample. D) random sample. - B There are three phases in both statistical and nonstatistical sampling. The first phase is to: A) generate random numbers for the sample. B) evaluate the results. C) plan the sample. D) select the sample. - C A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a: A) random sample. B) statistical sample. C) judgment sample. D) representative sample. - A The process which requires the calculation of an interval and then selects the items based on the size of the interval is: A) statistical sampling. B) random sample selection. C) systematic sample selection. D) computerized sample selection. - C Which of the following types of receivables would not deserve the special attention of the auditor? A) Accounts receivables with credit balances B) Accounts that have been outstanding for a long time C) Receivables from related parties D) Each of the above would receive special attention. - D If the client's internal control for recording sales returns and allowances is evaluated as ineffective: A) a larger sample may be needed to verify cutoff. B) sampling is not appropriate. C) all sales returns must be traced to supporting documentation. D) all sales returns must be confirmed with the customer. - A

Audit Final Exam 2022 Solved

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This test is to satisfy the audit objective of: A) accuracy. B) existence. C) control. D) completeness. - D The net realizable value of accounts receivable is equal to: A) gross accounts receivable less allowance for uncollectible accounts. B) gross accounts receivable less bad debt expense. C) gross accounts receivable less returns and allowances. D) gross accounts receivable less sales discounts. - A Which of the following is the principle "weakness" of using negative confirmations for your tests of details of balances for accounts receivable? A) They can only be used for large balance accounts. B) They cannot not be used when account balances "bunch" around a mean value. C) Conclusions drawn from receiving no reply may not be correct. D) Response rates are generally too low to draw any conclusions. - C Communication addressed to the debtor requesting him or her to confirm whether the balance as stated on the communication is correct or incorrect is a: A) representation letter. B) negative confirmation. C) bank confirmation. D) positive confirmation. - D

Audit Final Exam 2022 Solved Correctly

C) since there is less than a 50% chance of occurrence, ignore. D) since there is greater that a remote chance of occurrence, accrue the $10 million. - B One of the primary approaches in dealing with uncertainties in loss contingencies uses a ________ threshold. A) monetary B) materiality C) probability D) analytical - C When using the probability threshold for contingencies, the likelihood of the occurrence of the event is classified as: A) not likely, likely, or highly likely. B) remote, reasonably possible, or probable. C) slight, moderate, great. D) remote, likely, possible. - B The standard letter of inquiry to the client's legal counsel should be prepared on: A) plain paper (no letterhead) and be unsigned. B) lawyer's stationery and signed by the lawyer. C) auditor's stationery and signed by an audit partner. D) client's stationery and signed by a company official. - D The auditor has a responsibility to review transactions and activities occurring after the balance sheet date to determine whether anything occurred that might affect the statements being audited. The procedures required to verify these transactions are commonly referred to as the review for: A) contingent liabilities. B) subsequent year's transactions. C) late unusual occurrences. D) subsequent events. - D

Audit Final Exam 2022 Solved Correctly

An auditor has the responsibility to actively search for subsequent events that occur subsequent to the: A) balance sheet date. B) date of the auditor's report. C) balance sheet date, but prior to the audit report. D) date of the management representation letter. - C Which of the following would be a subsequent discovery of facts which would not require a response by the auditor? A) Discovery of the inclusion of material nonexistent sales B) Discovery of the failure to write off material obsolete inventory C) Discovery of the omission of a material footnote D) Discovery of management's intent to increase selling prices in the future - D In connection with the annual audit, which of the following is not a "subsequent events" procedure? A) Prepare any necessary closing journal entries. B) Examine the minutes of stockholders and directors meetings subsequent to the balance sheet date. C) Review journals and ledgers. D) Obtain a letter of representation. - A After an auditor has issued an audit report on a nonpublic entity, there is no obligation to make any further audit tests or inquiries with respect to the audited financial statements covered by that report unless: A) material adverse events occur after the date of the auditor's report. B) final determination or resolution was made of a contingency which had been disclosed in the financial statements. C) final determination or resolution was made on matters which had resulted in a qualification in the auditor's report. D) new information comes to the auditor's attention concerning an event that occurred prior to the date of the auditor's report that may have affected the auditor's report. - D The date of the management representation letter received from the client should coincide with which of the following?

Audit Final Exam 2022 Solved Correctly

In the fraud triangle, fraud, financial reporting, and misappropriation of assets ____________? - Share the same three conditions Auditors need to exhibit professional skepticism, which is? - Relying on neither the dishonesty or honesty of management What is the auditor not required to ask when accessing fraud? - Is management using all assets effectively? A walkthrough is used how? - To confirm the auditor's understanding of the internal controls