1)The auditor undertakes procedures to obtain an understanding of a client's internal control-

a)When no mitigating controls are likely

b)On every audit engagement

c)When business risk is high

d)Only on large clients

2)Which of the following is a characteristic of interest when using sampling while undertaking tests of controls?

a)A deviation from an internal control procedure

b)The minutes of board of directors meetings

c)The dollar amount of sales transactions

An unusual balance identified by advanced data analytics

3)Which of the following is a sampling procedure?

a)Applying advanced data analytics to the population

b)Selecting all accounts grater than $20,000.

c)Selecting every ninth inventory item for further testing

Reviewing the minutes of board of directors meetings

4)Stratification is:

a)Selection of every nth item within a population

b)Selection of items the auditor believes should be included in the sample

c)Selecting items that are grouped together within the population

d)Division of a population into groups of item with similar characteristics.

5)Which of the following would increase the sample size in substantive tests?

a)An increase in tolerable misstatement

b)The number of sampling units in the population

c)A decrease in the amount of misstatement the auditor expects to find in the population

d)An increase in the auditors assessment of

6)Which of the following will increase risk inherent risk for a client?

a)The auditor has developed a friendly relationship with the client's management and board over the length of their tenure

b)The client has recently acquired a technology start-up company specialising in home automation products

c)The auditor does not possess expertise in valuation of some of the client's assets

d)Credit limit checks for new customers were not undertaken when the accounts manager was on leave

7)The purpose of using analytical procedures in auditing is to:

a)Identify unexpected fluctuations and relationships

b)Test for inefficiencies in operations

c)Understand internal controls

d)Assess the auditor's competence to perform the audit

8)Which of the following is an advantage of using statistical sampling instead of non-statistical sampling?

a)Allows for the measurement of audit risk

b)Allows the auditor to select a sample they believe is appropriate

c)None of the alternatives

d)Is easier to use than non-statistical sampling

9)The audit client is importing a new type of product which it has not previously sold. This is an example of:

a)Audit risk

b)Inherent risk

c)Detection rick

d)Control risk

10)Sampling risk for tests of controls is that:

a)Audit risk is reduced

b)The auditor concludes that a material misstatement exists when it does not

c)The auditor concludes that the audit client's internal control system is effective when it is not

d)Audit risk is increased

11)The first stage when an auditor considers the use ofan expert is:

a)Assessing the expert's report

b)Determining the scope of the work to be carried out

c)Assessing the objectivity of the expert

d)Assessing the need to use an expert

12)In tests of controls, the rate of deviation is the proportion of items tests that did not conform to the client's prescribed control procedure.

a)True

b)False