After the study and evaluation of internal control has been completed, an auditor might decide to

Group of answer choices

Reduce both tests of controls and substantive tests in areas where control procedures are strong.

Reduce the tests of controls where control procedures are strong.

Expand substantive tests after performing tests of controls with satisfactory results.

Expand substantive tests in areas where weaknesses in control procedures exist.

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Question 22.5 pts

What assurance does the auditor provide that errors, irregularities and direct-effect illegal acts that are material to the financial statements will be detected? Errors Fraud Indirect-effect

Illegal Acts

Group of answer choices

Reasonable Limited None

Reasonable Limited Limited

Limited Limited None

Reasonable Reasonable None

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Question 32.5 pts

The date of the client representation letter should coincide with the date of the:

Group of answer choices

Latest interim financial information.

Auditor's report.

Balance sheet.

Latest related party transaction.

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Question 42.5 pts

What is an auditor's evaluation of a statistical sample for attributes when a test of 50 documents results in two exceptions if the tolerable rate is 7%, the expected population exception rate is 2%, and the allowance for sampling risk is 4%?

Group of answer choices

Accept the sample results as support for the planned assessed level of control risk because the tolerable rate minus the allowance for sampling risk equals the expected population exception rate.

Modify the assessed level of control risk because the tolerable rate plus the allowance for sampling risk exceeds the expected population exception rate.

Accept the sample results as support for the planned assessed level of control risk because the sample exception rate plus the allowance for sampling risk is less than the tolerable rate.

Modify the planned assessed level of control risk because the sample exception rate plus the allowance for sampling risk exceeds the tolerable rate.

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Question 52.5 pts

As the acceptable level of detection risk decreases, the assurance directly provided from:

Group of answer choices

Tests of control should increase.

Substantive tests should decrease.

Tests of controls should decrease.

Substantive tests should increase.

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Question 62.5 pts

Of the four factors which determine the initial sample size in attributes sampling (population size, tolerable exception rate, acceptable risk of overreliance, and expected population exception rate), which factor has the least effect on sample size?

Group of answer choices

Tolerable exception rate.

Population size.

Expected population exception rate.

Acceptable risk of overreliance.

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Question 72.5 pts

In testing controls over cash disbursements, an auditor would most likely determine that the person who signs the checks also

Group of answer choices

Is denied access to the supporting documents.

Returns the checks to accounts payable.

Is responsible for mailing the checks.

Reviews the monthly bank reconciliation.

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Question 82.5 pts

Inherent risk and control risk differ from detection risk in that they:

Group of answer choices

Exist independently of the financial statement audit.

Can be changed at the auditor's discretion.

May be assessed in either quantitative or nonquantitative terms.

Arise from the misapplication of auditing procedures.

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Question 92.5 pts

After determining that a related party transaction has occurred, an auditor should:

Group of answer choices

Add a separate report to the auditors standard report to explain the transaction.

Perform analytical procedures to determine whether similar transactions occurred but were not recorded.

Obtain an understanding of the business purpose of the transaction.

Substantiate that the transaction was consummated on terms equivalent to an arms length transaction.

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Question 102.5 pts

On the basis of evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor might:

Group of answer choices

Increase materiality levels.

Decrease inherent risk.

Decrease detection risk.

Decrease substantive testing.

After the study and evaluation of internal control has been completed, an auditor might decide to

Group of answer choices

Reduce both tests of controls and substantive tests in areas where control procedures are strong.

Reduce the tests of controls where control procedures are strong.

Expand substantive tests after performing tests of controls with satisfactory results.

Expand substantive tests in areas where weaknesses in control procedures exist.

Flag this Question

Question 22.5 pts

What assurance does the auditor provide that errors, irregularities and direct-effect illegal acts that are material to the financial statements will be detected? Errors Fraud Indirect-effect

Illegal Acts

Group of answer choices

Reasonable Limited None

Reasonable Limited Limited

Limited Limited None

Reasonable Reasonable None

Flag this Question

Question 32.5 pts

The date of the client representation letter should coincide with the date of the:

Group of answer choices

Latest interim financial information.

Auditor's report.

Balance sheet.

Latest related party transaction.

Flag this Question

Question 42.5 pts

What is an auditor's evaluation of a statistical sample for attributes when a test of 50 documents results in two exceptions if the tolerable rate is 7%, the expected population exception rate is 2%, and the allowance for sampling risk is 4%?

Group of answer choices

Accept the sample results as support for the planned assessed level of control risk because the tolerable rate minus the allowance for sampling risk equals the expected population exception rate.

Modify the assessed level of control risk because the tolerable rate plus the allowance for sampling risk exceeds the expected population exception rate.

Accept the sample results as support for the planned assessed level of control risk because the sample exception rate plus the allowance for sampling risk is less than the tolerable rate.

Modify the planned assessed level of control risk because the sample exception rate plus the allowance for sampling risk exceeds the tolerable rate.

Flag this Question

Question 52.5 pts

As the acceptable level of detection risk decreases, the assurance directly provided from:

Group of answer choices

Tests of control should increase.

Substantive tests should decrease.

Tests of controls should decrease.

Substantive tests should increase.

Flag this Question

Question 62.5 pts

Of the four factors which determine the initial sample size in attributes sampling (population size, tolerable exception rate, acceptable risk of overreliance, and expected population exception rate), which factor has the least effect on sample size?

Group of answer choices

Tolerable exception rate.

Population size.

Expected population exception rate.

Acceptable risk of overreliance.

Flag this Question

Question 72.5 pts

In testing controls over cash disbursements, an auditor would most likely determine that the person who signs the checks also

Group of answer choices

Is denied access to the supporting documents.

Returns the checks to accounts payable.

Is responsible for mailing the checks.

Reviews the monthly bank reconciliation.

Flag this Question

Question 82.5 pts

Inherent risk and control risk differ from detection risk in that they:

Group of answer choices

Exist independently of the financial statement audit.

Can be changed at the auditor's discretion.

May be assessed in either quantitative or nonquantitative terms.

Arise from the misapplication of auditing procedures.

Flag this Question

Question 92.5 pts

After determining that a related party transaction has occurred, an auditor should:

Group of answer choices

Add a separate report to the auditors standard report to explain the transaction.

Perform analytical procedures to determine whether similar transactions occurred but were not recorded.

Obtain an understanding of the business purpose of the transaction.

Substantiate that the transaction was consummated on terms equivalent to an arms length transaction.

Flag this Question

Question 102.5 pts

On the basis of evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor might:

Group of answer choices

Increase materiality levels.

Decrease inherent risk.

Decrease detection risk.

Decrease substantive testing.