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Exam 13: Overall Audit Plan and Audit Program

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Question 1

Multiple Choice

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Which of the following types of evidence is not available when using substantive tests of transactions?

A) Documentation
B) Confirmation
C) Inquiries of the client
D) Reperformance

E) B) and D)
F) All of the above

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Question 2

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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) True
B) False

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Question 3

Multiple Choice

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When the auditor has completed the tests of details of balances and enters phase 4 of the audit process, she must still perform audit procedures for which of the following?

If the results of the tests of controls, substantive tests of transactions, and analytical procedures are not consistent with the predictions, tests of details of balances will be:

At what point in the audit process are tests of details most appropriately designed?

If the auditor's preliminary assessment of control risk is decreased from high to medium, tests of controls can be reduced.

Analytical procedures are the most expensive type of audit test to perform because of the expertise and training required to properly use them.

There are seven types of audit evidence: physical examination, confirmation, documentation, observation, inquiries of the client, reperformance, and analytical procedures. For each of the following types of audit tests, indicate the type(s) of evidence that can be obtained through the test: (1) tests of controls, (2) substantive tests of transactions, (3) analytical procedures, and (4) tests of details of balances.

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

In phase 4 of the audit, complete the audit and issue an audit report, there are five activities required. List below the activities.

Auditors who test manual controls that rely on IT-generated reports must consider:

Substantive tests of transactions focus on the changes in the beginning and ending of the year balances, particularly for the balance sheet.

You are auditing Rodgers and Company. After performing substantive analytical procedures you conclude that, for the accounts tested, the client's balance appears reasonable. This may indicate that:

Auditing standards require a written audit program.

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

Which of the following is generally not included in the "evidence mix"?

Procedures to obtain an understanding of internal control may suffice for tests of controls when the auditor is assessing control risk in a well defined transaction cycle that has not contained material misstatements in prior audits.

Analytical procedures are normally designed at the account level, whereas tests of controls and substantive tests of transactions are normally designed at the transaction-related objective level.

The purpose of tests of controls is to provide reasonable assurance that the:

The evidence mix includes risk assessment procedures.