determine whether transaction-related audit objectives have been satisfied for each class of transactions

QUESTION 1

 

A walkthrough is:

 

 

a brief tour of a client’s office, warehouses, manufacturing and other operating facilities

 

 

consists of the auditor following one or more transactions through the entire accounting process

 

 

normally used to obtain substantive evidence as to whether an account is fairly presented

 

 

performed near the end of the audit to be satisfied that all relevant assertions have been tested

 

 

QUESTION 2

Substantive tests:

are procedures designed to test for monetary misstatements in financial statement accounts and disclosures

are used to determine whether transaction-related audit objectives have been satisfied for each class of transactions

are used to determine whether ending balances and disclosures in the financial statements are correct and in compliance with the stated accounting framework (e.g., GAAP)

all of the above

 

QUESTION 3

The auditor observed whether personnel responsible for handling cash have no accounting responsibilities. This procedure is most likely:

a test of controls

a substantive test

an analytical procedure

a test of details of cash balances

 

 

QUESTION 4

Audit data analytics can be used in each of the five types of audit tests

True

 

False

 

 

QUESTION 5

Substantive tests of transactions usually include which of the following types of tests?

confirmation

observation

inspection

all of the above

 

QUESTION 6

 

Which of the following factors affect the auditor’s decisions regarding the mix of audit evidence to be obtained in the audit?

 

 

the nature and effectiveness of the client’s internal control

 

 

the level of assessed inherent risk

 

 

the results of testing during the audit

 

 

all of the above

 

QUESTION 7

The relationship between audit assurance obtained from substantive tests and tests of controls is best described as follows:

the auditor can obtain almost all of the assurance needed in an audit by performing tests of controls

performing tests of controls may reduce the amount of assurance needed from substantive tests

even when it is more efficient to perform substantive tests, the auditor must rely, at least to some degree, on controls

there is no relationship between the amounts of assurance required by substantive tests and tests of controls

 

 

QUESTION 8

 

Which of the following affect the design of the auditor’s tests of details of balances?

 

 

performance materiality

 

 

assessed level of control risk

 

 

evidence obtained from substantive analytical procedures

 

 

all of the above

 

 

QUESTION 9

Auditing standards require the auditor to use a written audit program.

True

 

False

 

 

QUESTION 10

If the auditor identifies a significant risk due to either error or fraud, the auditor should:

identify controls that mitigate the risk

design and perform substantive tests to determine whether misstatements occurred

incorporate knowledge of the significant risk in the evaluation of inherent and control risk

all of the above

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