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Exam 13: Overall Audit Strategy and Audit Program

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Question 41

Multiple Choice

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Transaction-related audit objectives would most likely be performed in which phase of the audit process?

A) plan and design audit approach
B) perform tests of controls and substantive tests of transactions
C) perform substantive analytical procedures and tests of details of balances
D) complete the audit and issue the audit report

E) None of the above
F) B) and D)

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Question 42

Multiple Choice

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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

E) C) and D)
F) A) and B)

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Question 43

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The cost of each type of evidence does not vary in different situations.

The primary emphasis in most tests of details of balances is on the

Assume the beginning balance in cash was audited in the prior year and is considered to be correct. In the current year, the auditor verifies that sales and cash receipts transactions are correctly recorded in the accounting records and posted to the general ledger. Before the auditor can reach a conclusion about the ending balance in the cash account in the current year, cash disbursement transactions will have to be audited.

The auditor obtained an aged list of receivables and traced the accounts to the master file, footed the schedule, and traced the amounts to the general ledger. Which balance-related audit objective was met?

The reliance the auditor places on substantive tests in relation to the reliance placed on internal control varies in a relationship that is ordinarily

For accounts with small balances and minimal potential for material misstatements, auditors often limit their tests to substantive analytical procedures if they conclude the accounts are reasonably stated.

An exception or deficiency found in a test of controls

It is inappropriate for the auditor to make written suggestions to management to improve business performance upon completion of the audit.

If tests of controls support the control risk assessment, then ________ in the audit risk model is increased.

If control risk is assessed at maximum, only substantive tests of transactions will be used by the auditor, assuming the audit is of a smaller public company, a nonpublic company, or other type of entity.

In the context of an audit of financial statements, substantive tests are audit procedures that

Only tests of details of balances involve physical examination and confirmation.

Risk assessment procedures are performed by the auditor to assess the risk of material misstatement in the financial statements. Below are four types of further audit procedures the auditor should perform that provide the basis for the auditor's opinion. Which of these are compliance procedures? 1) Tests of controls 2) Tests of details of balances 3) Substantive tests of transactions 4) Substantive analytical procedures

In a computerized environment, the auditor can often perform substantive tests of transactions quickly for a large sample of transactions.

If all transaction-related audit objectives are met, the auditor does not need to perform substantive test of balances to meet the realizable value audit objective.

List each of the five types of audit tests.

Which of the following audit tests would be regarded as a test of controls?

If no material differences are found using analytical procedures, and the auditor concludes that misstatements are not likely to have occurred,