Auditing 11, 12, 13

When making a preliminary assessment of control risk, the starting point for most auditors is

• IT assessment controls.
• assessment of entity level controls.
• transaction-related controls.
• fraud controls.

The auditor should identify and include only ________ controls since they will be sufficient to achieve the transaction-related audit objectives and will also provide audit efficiency.

• key
• significant
• material
• compensating

When identifying audit objectives and existing controls,

• audit objectives are identified for classes of transactions, account balances, and presentation and disclosure.
• the auditor identifies controls to satisfy each objective.
• it is helpful for the auditor to use the five control activities as reminders of controls.
• all are correct.

Tests of controls

• are the procedures used to test the effectiveness of controls in support of a reduced assessed control risk.
• are used to support the ending balances in the balance sheet and income statement accounts.
• are performed at the end of the audit.
• are designed to detect fraud.

Which of the following is an accurate statement relating to the extent of procedures?

• If an auditor wants a lower assessed control risk than the preliminary assessed control risk, the number of controls tested increases while the extent of the tests for each control decrease.
• The extent of testing depends on the frequency of the operation of the controls.
• All controls must be tested only at year-end.
• The frequency of testing is the same for both manual and computer controls.

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

• complicated
• inverse.
• direct.
• not determined

If the auditor finds extensive control test deviations and significant misstatements while performing substantive tests of transactions and substantive analytical procedures,

• the cost of the audit should decrease.
• the auditor will conclude that internal controls are effective.
• extensive tests of details of balances will need to be performed.
• all are correct

The auditor obtained an aged list of receivables and traced the accounts to the master file, footed the schedule, and traced the amounts to the general ledger. Which balance-related audit objective was met?

• existence
• cutoff
• detail tie-in
• completeness

Once set during the planning phase, the audit program cannot be revised

• True
• Not True

What event initiates a transaction in the sales and collection cycle?

• receipt of cash
• delivery of product to a customer
• identification of a new customer
• customer request for goods or services