1.

BCD audit firm is performing analytical procedures in the Dunder Mifflin audit. Which of the follow statements is not correct regarding BCDs use of analytical procedures?

A. Auditing standards emphasize the need for auditors to develop and use expectations when performing analytical procedures.

B. Analytical procedures may be performed at any time during the testing phase of an audit.

C. Analytical procedures are optional and their usage is subject to the BCD audit teams professional judgement.

D. Analytical procedures use comparisons and relationships to assess whether account balances appear reasonable.

E. Analytical procedures must be performed throughout the audit.

2.

If BYC audit firm established a relatively low level of preliminary materiality for an audit client, BYC will

A. gather more audit evidence than if a higher level had been set.

B. rely on professional judgment to determine the amount of audit evidence that is needed to gather.

C. gather less audit evidence than if a higher level had been set.

D. increase the audit clients assessed risk of material misstatements.

E. gather about the same amount of audit evidence as would be the case were materiality is higher.

3.

KPPY is the audit firm for the Universal Export Co. audit. What are the key issues that the KPPY auditors would consider when they are trying to obtain an understanding of Universal Export Co.s internal controls?

A. The cost and benefits of the controls.

B. The design and the effectiveness of the controls.

C. The design and implementation of the controls.

D. The effectiveness and efficiency of the controls.

E. The implementation and operating effectiveness of the controls.

4.

KPPG is the audit firm for the Buy-More Co. audit. The KPPG audit team is concerned that Buy-More is failing to bill customers for shipments. An audit procedure that the KPPG audit team would gather relevant evidence would be to

A. compare the total of the schedule of accounts receivable with the balance of the accounts receivable account in the general ledger.

B. trace a sample of sales journal entries to the accounts receivable subsidiary ledger.

C. select a sample of sales invoices and trace each to related shipping documents.

D. select a sample of shipping documents and trace it to the accounts payable subsidiary ledger.

E. trace a sample of shipping documents to related sales invoices.

5.

GLA is the audit firm for the Try-N-Save Co. audit. A written understanding detailing what the GLA audit team will do in determining if Try-N-Save Co.s financial statements are stated fairly and what the GLA audit team expects from Try-N-Save Co. in performing an audit will normally be expressed in the

A. management presentation letter.

B. standard auditor report.

C. engagement letter.

D. management discussion and analysis (MD&A).

E. auditor-clients memorandum of understanding (MoU).