10 a. 2 IK HO | AUDITINGTHEORY ] PART ‘onnuanec ener eng CE ® upp procedbres ¢ ion returns where no caneuson sesotesod D—_Aanagoogat consulting, gums retarding sonal financial larmaton, ited aturance eager me a8 — 6 eee acumen ol ens anton eons f Anodanpreenamylochedoreskear ‘tyr mtr ase anna he following orn, EXCEPT 8 eae er canbe ico : fruncy an etacivones ol aunty that cul de 5 Performan when ofthe fllwing citi unig othe sudo’ test fonction? a @ General competence © ue professional care the pris indy af which the auto's ent pact 3. Fanon pursuing is quay coptrel ebjectnes wth respecte aceentanca of cn, 9 CPA ers NOT Ml A tetera saeco E mokengulies of previous suai. 5. Make gules of te proposed cant’ ap couse nck of the etesaesherbuter WORE Gos asscated with assurance services petra by 8 PA fr tha wth ater lines of ef ' & tear | Compete b. Keeping inte smed in current professional developments. ‘an auditor should NOT render a report 9 ; = eee ‘ermal eontel. « 3 performance Interna auditing relates fo: & adi whch performed bya prolessional pretivoner a+ an independent contractor 2 Ruaitwhiclisimeidonal concerned with the detection and prevention raud id ve independent ef management both fact and inomenta attiude 5, Audit wherdin the aditor shou! whet ofthe fallowing activities bet describes the term OPERATIONAL avait? is Speman nah an oi ea Te FeMtantrefew ofthe administrative controls as they relate vo the operations of the company von ofthe pair presentation of a company’s results of operations. cc Venica _Thotob of implementing nancial and accounting contalsin a newiy organized company. tn government auditing the the is i A 5. Preeaud, post aud internal ave National goyerement audit, local government aud mals, audit of operations audit of ystems. dards which fs NOT observed by independent CPAs inthe private sectors 5 1 ee mtg cyan Sufficient competent evi ‘confirmations. ‘The audit is fo be adequately planned and assistants are to be properly supervised fectiveness of an organization or some part thereof would not come corporation audit 2 ‘An ausit designed to evaluate the efficiency and et tile of 8 ee i c ‘Operational audit ©. Performance audit ‘The two MOST important. qualities for an operational auditor are: “saan on appearance. A a —_Competeneg and technical training, 1. Academic bgckground and sufficient experience.abe ABS b olor GE eaelestan ed eanateinraton te faked mngnpenann 5. Tolnsogetal ued sets seed during he ear 1% Winco the Lllowng desibes MOST completely how the potesiondslinesmepadancs) 8 Perfermg ana em ‘point ol wew © Avon the appearance of significant nierest an aul chen’ interes D.___estinga cen relutanceta reveal evidence 19 Wht nrc auelated serves prone NO aurea? ind compation engagements 20, ‘Gemparjng recorded accountbity with phys existence of property os Study ond eating eral coal Overlap an internal us ontrahes an ternal audit Cent artineenal ui 2. mom set oS nad ny patina Maximum standards which denote excellent work B.__Benchirkta be used an all ats, estou, and compan 23. Pisiminany arrangements agreed 10 by the auditors andthe glen should be veduced to wriing hy dhe autor, The best place {oset forth these arfangements in * a 8. _-Amemorandum ta be placein the permanent section ole auditing working pees ou ease nt ee ie autng working ps a 8 Is prepared forthe benefit of the ausitor, aust cent and general pub C___ Sha nclude the speci audit procedures tobe potormed by the autor Dts usually sent by auditor tothe client upon the commencement of the uit 25, The engagement letter: a anata espns tobe chr 8. Canbe used to ater the aucitorsresponsibities under the standards oh auditing : : 27. Which one of these is NOT a type of evidence that would be used for both obtaining an understanding of the contyol structure : D.—Obsenation : 1D. After the auditor has completed an evaluation of the existing tena accounting recass a prose 29. Analytical athered concerning unusual balance * 8 Evalusting the aden bang © Testing individual account balances that depend on accounting estima = ©. "Identifying material weaknesses in the internal contro structure[ae on : ne a or a ». 28 ». 40, 4 2 a Wich of he owing seas pat the begin of 4m aut enpagemnt o ree tthe os sire ‘ol the sc bwtor pir to cussing the engagement wth the chant © Prepare 3 ough dato he anes atatamants and af the audio senor © Stat ndjevatuate the syst of nternladomstrative cnt eager tn year data loki far large pase o large percentage chanees © Compaisan ole ©. Daggregated dat. ‘he objectives performing ocedyesnplaneing an aut engagement sto deny heeastence of 8 Seater iat went undetected because of internal contol weaknesses © fated party ransatons acon yansacions tat were nt provely athorted Th aon shoul Pree be minimized: al vansactions wil be selected for substantive esting ‘unde ether st of contol of test of Wransactions this, which ef the following aust procedures usally the om-benei considerations are part of audit plang, I relation to EAST est 0 pert? a B—_Testsof con Tests of balances © Substantp tests of wansctons “The aut program usally CANNOT be finalized ut the Ki 8 jemeht letter has heen signed bythe auditor and the client. portable cendivons have been communicated to the aust committee 5. Semen for unrecorded labites hat bean performed and documented [ACCRA conducting the fst exatination of # non-public company’s financal statements. The CPA hopes to reduce the audi work by edecesser auditor and reviewing the predecessor's working papers. Ths procedures: 2 Acceptable the CPA refers inthe audit raport to relance upon the predecessor auto's work quired the CPA's to ander an unqualified opine. Unacceptable because the CPA should bring an independent viewpoint to a new engagement. 2. base premise underlying analytical procadures is that: a a reve procedures cannot replace tests of balances and transactions {C__Statsteal ess of tnancllintrmation may lad othe discovery of materi errors inthe nancial statements 1. The study af financial ratios isan acceptable alternative to the investigation of unusua! tuctuations, Un revewing the audit work performed, the on " A 5 Ned not revew all audit documentation Must eview all audit documentation ©. Must ask the staff performing the aust work to sign the audit report One ofthe, Peacoat following is NOT involved during the pre-plansing phase? a 8 wig an engagement letter G_Selocting sa forthe engagement 1. Deciding whether to acceptor continue an audit engagement Which of the flow a 8 e fact that the financial statements, sponsibility of management Assistance pean Wie personnel ©, Timing ofthe performance ofthe examination To obiain an understanding of » continuing clients ‘ 19 auditor MOST Nkely would - ‘seeraca inca iemore i dc 8 5 , i tso. st 5. 3. sa ss. 56. 37. 8, \nconstrtn a Pra en fGen senaesenpten Famer Staaancy as been eve i accordance wth management las. rope sayregaton it tncional exposes man etectvesractre of isto execution, a esorine ‘athortation, payment ana rec ang. his ntroal got the sur Hae tiuciere proves eosnabla stance se ‘ontolahave not been ercunvented by eon, ‘Management cannot ovate the sytem ‘Operations! etcency hasbeen ached in accordance wih management plas ‘a aur (EAT yt ot forthe ternal ontel ot prowdes fr tte penne Comoaron of recaving report and vendors vices wit purchase orders Segregstionof tha fonction of recording sbursernnts and reconcling the bank seco. ‘ i “ye itdtan sane Witenes 5 Informa dentine Im he otal ogenaatin ce. Moceeen vd ri so eo a i § bey ey er ca i ars When the par When the clans system a teal cota! s judges bythe auditor o be inadeavate mo raud should be even pester stanton than other eters. This an example ofthe application 8 ability of evidence <— Materiahy consistency When an audior reases the planned asessed lve f contol sk because certain control orocedures were determines 0 Be isonet dnt sera ° : =e Extent of rest of contol ©. Level of getecton ck Which of the flioving audit techniques would provide an autor with the MOST assurance about the effectiveness of the Soran ene oa tee &—_Contimation with ouside partes. ©, _Recompytation of ccount balance amounts ‘An auditor may compensate for & weakness athe internal control structure by increasing the. A a C—_Bitent of tests of controls. 1, Prelimingry judgment about audit risk Immediately ypon receipt of cash, 2 responsible employee should: a “rete wo late the subsidiary secounts receivable records stip in tipcate, C Prepareg 1. Record the amount inthe cash receipts journal ithe independent afditors decide thatthe work performed by the internal auditor may have besring on ther own procedures, they should conside thei A 8. Independence and review c—_Effciene} and experience. 1. Traning yd supervisory sis ‘Assessing contro tsk at below them: A isk fr most ofthe assertions relevant to significant aeount balances, omitngintri-date testing and performing the rests at yearend win auditor erforms attest vey that all merchandise raceeed + a c ‘Reducing inherent ri v. ‘Changing the timing of substantive tests by ‘To determine wheter accounts payable are complete, jocuments for this tests consists of al, recorded. The populz a ayment vouchers. 8, ©. Purchaseyrequistions. ©. Vendor's invoices.6 e @. 70. n n. 2. Belt le ha corer of rein oa pn wereat dnpar Wns sh ropa ar nee pastoris, tt BRL Ph, ded ascent to 2, What wi i cum ohm we ; EEE © Tein! Reming fn crams cna © Consus vnanle enone ats nmensstcett ‘weno bg eg taemars Sat sn ia . tTheesmgte promis anstr essing i ett &_tmengenany ey he no ao ae SE yma © Seis trates ower ma ins Se anon tecan tarde Aedes iat tee ha ones fe : tant ato Mito petare c : 8 esi ac ect sangre i ssn are hooting adit i asesng contol 3 ds asvesingiierent 13k ferngeran e pre i sing consol rise Eee soit ine astessing inherent risk, asset Dertrmang certain anal procedure co c §,—Gheonng ai st asessing contol nk, determing detection ak * B—_Oiretyrelpted to standards ona C._Indrect lated standards on siting 5. = ndiectly late to financial reporting standard ‘Adtstietion must be mad between general audit objet balance a a epetcih aut objectives ace applicable to ever account balance on the fnanchl sotenent 1b The pnaral audit objectives are stated in terms talored to the engagement The spoee audit objectives are stated in terms toed tothe agreement “weve with managements wssenion? ven of th n 8 Gwowrahip matches with rights and obbast c ‘completeness matches wth completeness ©. Valiby matches with exstence/occurtence, whith of dhe folowing statements best describes the sua mateval ef ent financial statements? A tion to se that stockholders are noted General, fhe auditor is under an obhest 1 esponsibility with respect Yo Mlgal acts that do not have a a Cc Generally, the suitor is obligated to disclose the relevant facts nthe auditor's report c eantraiy, he auditor 1s expected to compel the cnt to adhere o requirements of te Torn Conruot Wace hel. In testing for eut-of, the objective is 19 determine: 4 B._That na transactions ofthe current period have been delayed ad recorded in a future pte © That no transactions from the prior period are cluded in the current period's balances D. Whether al of the cuent period's transactions are record. In determiging the quantity ad quality of evidence to gather, the auditor will be sausfied when the evidence is A‘ "ip aesashe. 8 Conclusive. teetutabie, 0. Completely convincing ‘Audit evidence can come in different forms with different degrees of persuasiveness. Which of the following is the (CAST persuasive ce? se aiaitodede 8. Vendor's invoice. © Bankstaterment obtained from the centa. 2. a 35. 86. 87. aaa oe spon sed susie wah e esanalen i acautgeist? © Gonfemton Ana Frorat gain CRSesseeye ont kom baow he re sang ha anes wb, ne roy tana eosin ‘rpected cnnapeeeaatamrimamnseten ‘opmion sre han ose eraare by we CO OF) 8, Cine dr chen-repaed papers doco S_Reham:prane con str view cml ihe at ec fr deme sea ty works Wo ee cite seu o savers Financial statements othe potent unrecor PeeENtay urecoy ded erst he Imari ttemen "Jams and asaeiments the she prenarfsoure ef ntornatin tebe reper about MESON 8 uate, © Ghants bur D. courses, wwhchot ha fa ie a aie 3 Prone jppor C.._-A porttersn planning and conducing future suits Inptance wt standards on stg 1D. = Documents staf cor Te srerimeworing papas ot ceptor a2 1 MOST ely contains 8 nee with he cen concerning pedi | erpaauteo ume spent on the engagement by cach nddus ute 8. sneer regarding the aut wok pcre. Review nates pertnng 2 est working papers wnat reeor sce udnor ye gather agence sau be —— Destroyed when the auted ent cease to bea ce. tothe finan statements being examines Considered the primary Suppo re enracingWikbateeen he bobs af veccun athe Eman sate ogative confrmatign requests ay be used wen ene> cess velit nd conc risks igh resondent wil disregard hese reves ‘Aamall umber of fg “The combined ssessod leva ofinkerent The auctor has a reason to beve th Tests of controls, fn frequently done 2 the same time 3 ‘ “substamive test of balances 8 €—Compionce tests Analytica procedures pricy tothe audit report release date, austors have 2 rsPon “Ral The aut’ sreport cate pose slot to management's disclose of subsequentevents unt c © The flowin year’s balance sheet at, wich of im the aut examination? A Biter pf an omited su rcedie Dacre fne ators apo ees Sane sera for subnequen ven shat ent tthe balance sheet date D. Preparation of the management letter. ; ‘Which of “igg substantive procedures ‘should auditors ordinarily perform regarding : subsequent events? ° Fe cniton request c Jenesses in internal control to the chent’s audit committee. fer the yearend c_ Communicate material wea ‘bank statements for several month let ©. —_evaw the cutoff IE NOT rested when 2 a2"3 Theotobablo outcome ol asone a ; wing Drocedures MOS] ely Lo bo clued the hner © Gontemauguot cone +s eesision concerning whether ti nt pr ns a UAL TE" the a see base pn hy ans woes 19 neve (aude subset Yd date oe sues oe & Se, the date of ols subsequent evo roerencd S__Eelended ia ubseanen events ccna the dat of ance fe report co Ween ag khTREOH 9 cial eves ocring ne the completion of td work hen acon ecs¥o close essentol oration heal state note the CA l, {8 Isnue 3 saclamer of opmnion because the clon ha inerared withthe aio’ function of assensing the aecy of © Issue an unguaifiad apni, but inform the reader by inchading the omitted information in ead op 5. Prove theumformation the audit vepon practicable, and quahly ve opinion because os lrmtation onthe scope sampany's tnanca statements al aie as he pineal 135. EPA fim A has performed most of the audit ol Consaibated C esponsility for fn B's work, Which of the ausitr, CPA Fee 8 did the remand of the work Ha A wisest asume fall ‘lowing statements CORRECT? nee rei hc noprapvaletequdenvonts have bean me, FrayA shale. am wnqualiieerenan om snancastetements but should make appropriate relerence tothe Fm in the at repet _Suehassumption of respansiaty wolates the profession’ standards Cena ereng aormaly quay Ws aud report on the han ofthe scone lntation iwolved wien another CPA A's responsibilty in considering a going concatn question on audits? Which ofthe fliowing most accurate with respec 03 saved uncertainties ate property dxclotad and make no mention inthe ut enor med portcuarly at assessing whether baniuptey is proble ilcaion when fais atleast reasonobly probable ent by (i) __ and addressed to (i) 8 err € —_Petform analycal procedure 5. Issues tepoyt with 9 “going concern” mo letter of audit inguh 0 a 3G) auditor (4) cent (i) counsel © (i) counsel auctor (i cent 5 (cent (i) counsel (i) autor 96, The auctor shall consider the status of legal matters up (0 & Datel issupnee ofthe financial statements = 3 finanelal statements, whichever is eater Date of aut report or date of issuance of 5 Date audt report or date of suance of financial statements, whichever i ates means of obtaining corroboration of management’ information is 2 7 meer elena neces A its einen om he str wo 98. Arepresentation letter |ssued by a cle az 8 “Ieasubstitute for tesung ss. Al few ofthe legal documentation, CIs essential for the preparation ofthe audit program, ©. Reduces tha auditor's responsibilty only tothe extant hat it reed upon. Jepresentations as audit evidence about the completeness assertion, an When: considering the use of management's writen r _ accounting controls. ‘ve not parts ofthe evidential matter considered to support the assert, « ©. Replace reliance on internal accounting controls as evidence to support the assertion 4100, Under which ofthe following conditions can a disclaimer of opinion never be issued? A 6. ing C. The entity does not allow the auditors to have access to evidence about important accavits. D. The auditors own stockin the entity.PARTZ + toe repr of he Brown engagrnent eam reference Yo theft thet a poten a the suit was ie by «cope 2. ee hata tania scouting poles” acto th rant siemens « Spcracgy” St HEAR ht the sope Bh au reopened bythe chen he nce shuld emery sue whan ‘pe ot opinion? 2 e 14 The