Assurance & Auditing Quiz

Which TWO of the following are reasons why sales are of verified by testing the internal controls in place over sales?

• There are usually too many individual transactions to test them individually

• Because there are so many individual transactions, there is a significant risk that sales are misstated

• Controls over sales in a company are often strong

• Sales constitute a high volume of similar transactions which are suitalbe for controls testing

Which of the following techniques is generally accepted to be the most efficient to obtain evidence regarding the existence of bank balances?

• Reperformance

• Confirmation

• Analytical procedures

• Observation

Select the type of procedure illustrated: Examining the instructions issued by an organisation for its year-end physical inventory count

• Test of control

• Substantive procedure

Direct confirmation of trade receivables provides evidence in respect of which TWO of the following assertions?

• Valuation

• Completeness

• Occurrence

• Existence

• Rights and obligations

Which of the following is a substantive audit procedure for wages and salaries?

• Inspect a sample of clock cards for evidence of authorization by a responsible official

• Recalculate a sample of payroll deductions such as employment taxes to confirm accuracy

• Attempt to access and make changes to the payroll master file using the log on for a junior clerk

Which of the following statements is/are true with respect to analytical procedures?

(1) Analytical procedures can be used throughout the audit.

(2) Analytical procedures must be used as risk assessment procedures.

• (1) only

• (2) only

• (1) and (2)

• Neither (1) nor (2)

Which of the following statements is/are true regarding direct confirmation of accounts receivable?

• Responses from the customer must be returned directly to the client.

• Under the positive method the customer only replies if the amount stated agrees with the customer's records.

The auditor of ABC Co is performing audit procedures to confirm the company's ownership of motor vehicles. Which of the following would provide the most persuasive evidence of this?

• Physical inspection of the motor vehicles

• Inspection of vehicle registration documents

• Checking that the motor vehicles are recorded in the non-current asset register

• Review of vehicle insurance documentation

Which of the following is NOT a responsibility of the auditor?

• To provide an opinion on the truth and fairness of the financial statements

• To conduct an audit in accordance with International Standards on Auditing

• To express an opinion on the company's going concern status

Which THREE of the following are reasons why the auditors might seek direct confirmation of balance due from suppliers?

• To obtain third party evidence

• The auditors suspect that the client is intentionally understated payables

• The internal controls relating to purchases are weak

• Supplier statements are unavailbes