Auditing (ACC 3573)

Analytical procedures used in planning an audit should focus on identifying

• Material weaknesses in the internal control system.

• The predictability of financial data from individual transactions.

• The various assertions that are embodied in the financial statements.

• Areas that may represent specific risks relevant to the audit.

The most reliable type of audit evidence that the auditor can obtain is

• A. Physical examination by the auditor.

• Calculation by the auditor from the company’s records.

• A. Confirmation received directly from third parties.

• External documents

Which of the following procedures is considered a test of control?

• An auditor evaluates whether a general journal entry was recorded at the proper amount

• An auditor review the audit working papers to ensure proper sign-off.

• An auditor interviews and observes appropriate personnel to determine segregation of duties.

• An auditor reviews the entity’s check register for unrecorded liabilities.

International Standards on Auditing (ISA 500), Audit Evidence classifies assertions into several broad categories EXCEPT:

• Competency.

• Existence.

• Occurrence.

• Measurement.

Failure to detect material monetary errors in the financial statements is a risk that the auditor mitigates primarily by

• performing tests of controls

• obtaining representation letter

• performing substantive tests

• evaluating internal control

1. An engagement letter confirms that an auditor is responsible for detecting all errors and fraud.

• True

• False

1. Detection risk will be assessed as high if the auditor exercises his work with competent and due care.

• True

• False

1. Cost should be the primary consideration when making decision about evidence for given audit.

• True

• False

Failing to evaluate results properly is an example of non-sampling risk.

• True

• False

Completeness assertion concerns on possible understatement of recorded transactions.

• True

• False