Substantive Test

What controls are designed to ensure that an organization's computer - based control environment is stable and well managed?

• General Controls

• Application Controls

• Detective Controls

• Preventive Controls

An example of an access control is a

• Check digit

• Password

• Test facility

• Read only memory

Which of the following is not an example of an example of a computer - assisted audit technique?

• Integrated test data

• Audit modules

• Disk operating systems

• Audit hooks

The test data method is used by auditors to test the

• Accuracy of the input

• Validity of the output

• Procedures contained within the program

• Normalcy of distribution of test data

Parallel simulation programs used by the auditors for testing programs :

• Must simulate all functions of the production computer - application system

• Cannot be developed with the aid of generalized audit software

• Can use live data or test data

• Is generally restricted to data base environments

Confirmation is the process of obtaining and evaluating a direct communication from third party in response to a request  for information about a particular item affecting financial statement assertions. Two assertions from which confirmation of accounts receivable balances primary evidences are:

• A. Completeness and valuation

• A. Valuation and rights and obligations

• A. Rights and obligations and existence

• A. Existence and completeness

Negative confirmation of accounts receivable is less effective than positive confirmation of accounts receivable because

• A majority of recipients usually lack the willingness to respond objectively

• Some recipients may report incorrect balances that require extensive follow up

• The auditor can not infer that all nonrespondents have verified their account information

• Negative confirmation do not produce evidential matter that is statistically quantifiable.

An auditor’s purpose in reviewing credit ratings of customers with delinquent accounts receivable most likely is to obtain evidence concerning management’s assertions about

• Valuation or allocation

• Presentation and disclosure

• Existence or occurrence

• Rights and obligations

To conceal defalcation involving receivables, the auditor would expect an experienced bookkeeper to charge which of the following accounts?

• Miscellaneous income

• Petty cash

• Miscellaneous expense

• Sales return

Which of the following most likely would be detected by an auditor’s review of a client’s sales cut off?

• Unrecorded sales for the year

• Lapping of year-ends accounts receivable

• Excessive sales discounts

• Unauthorized goods returned for credit