1) In which audit procedure to gather evidence does the auditor review the client's cutoff bank statement?

External confirmation Reperformance of procedures Recalculation of accuracy Inspection of records and documents

2) A function of audit documentation is that it should contain evidence of significant items. Which of the following items would be omitted from the list of significant items to report on?

Accounting for unusual transactions Adjustments for industry-specific standards Selecting appropriate accounting principles Transactions involving accounting estimates

3) What should the auditors do if they uncover evidence of the existence of fraud?

Communicate their findings to the local authorities. Communicate their findings to company management. Communicate their findings to the SEC. Communicate their findings to their attorneys.

4) Which of the following is the auditor least likely to do when assessing a client's risk?

Attend board/committee meetings Make inquiries of senior management Observe staff activities Perform analytical procedures

5) Which of the following identities and histories is the auditor least likely to investigate when considering a new client?

Board members Officers Past auditors Stockholders

6) What is the appropriate response to address the risk of management overrides of controls?

Adjust supervision of the audit staff. Design procedures to obtain more reliable evidence. Examine journal entries and adjustments. Obtain corroboration of management explanations.

7) In which audit procedure to gather evidence does the auditor independently perform client processes?

Inspection of records and documents Observation of processes Recalculation of accuracy Reperformance of procedures

8) Why is it prudent to keep audit documentation confidential from internal sources (i.e., client staff)?

Auditors cannot share items such as executive salaries with others in the company who should not have access to that information. Auditors do not know who can access which information in a company and there isnt time to learn everyones access levels. Client documentation is not confidential from internal sources because it is their own information. Clients can alter the documentation when auditors share it with them.