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Exam 13: Developing the Overall Audit Plan and Audit Program

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Question 1

True/False

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Tests of controls are performed to support a reduced assessment of detection risk.

A) True
B) False

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Question 2

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The auditor must communicate significant deficiencies in internal control only after the entire audit is complete to ensure the auditor has a sufficient understanding of the circumstances surrounding the deficiency.

A) True
B) False

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Question 3

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Which audit tests involve physical examination and confirmation?

Collectively,procedures performed to obtain an understanding of the entity and its environment,including internal controls,represent the auditor's:

Presentation and disclosure related audit objectives would be performed in which phase of the audit process?

Analytical procedures are the least costly type of audit test.

When testing details of balances,most audit procedures satisfy only one balance-related objective,but more than one audit procedure should be used to test each objective.

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

Three factors the auditor considers when assessing control risk are: the auditor's belief concerning the effectiveness of internal controls,the results of tests of controls,and the cost-effectiveness of a reduced assessed control risk.Identify the combination of conditions for these three factors that is required before a reduction in substantive testing is permitted.

An exception in a test of control provides only an indication of the likelihood of monetary misstatements in the financial statements because tests of controls do not reveal whether monetary misstatements have actually occurred.

A deficiency uncovered in the audit of internal control is explained by which of the following in relation to a financial statement misstatement?

Discuss the relationship of each of the following to the extent of planned tests of details of balances: (1) tolerable misstatement, (2) inherent risk, (3) control risk, and (4) acceptable audit risk.

Analytical procedures must be performed in:

A major part of the auditor's risk assessment procedures is done to obtain an understanding of internal control.

A system walkthrough is primarily used to help the auditor:

Procedures to obtain an understanding of internal control generally provide sufficient appropriate evidence that a a control is operating effectively.

Because of the high cost of tests of details of balances,auditors do not perform this type fo testing unless fraud is suspected.

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

The auditor would design which of the following audit tests to detect possible monetary errors in the financial statements?

Tests of controls provide evidence about the likelihood for misstatements in a client's financial statements.