answer the following questions

PSA 500 pertains to:

Group of answer choices

a. The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements.

b. Quality Control of an Audit of Financial Statements

c. Audit Assertions

d. Neither a, b nor c

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When using audit evidence obtained in previous audits, the auditor should consider the following

Group of answer choices

a. The effectiveness of the control and its application by the entity, including the nature and extent of deviations in the application of the control noted in previous audits, and whether there have been personnel changes that significantly affect the application of the control

b. The risks of material misstatement and the extent of reliance on the control.

c. Both a and b

d. Neither a nor b

Statement I: The selection of particular procedures to achieve specific audit objectives is influenced by the following considerations:

• The nature and materiality of the particular component of the Financial statements (account balance or class of transaction).
• The nature of the audit objective to be achieved.

Statement II: The selection of particular procedures to achieve specific audit objectives is influenced by the following considerations:

• The relative risk of material errors or irregularities. The kinds and competence of available evidence.
• The internal control associated with the account

Group of answer choices

a. Only statement I is true

b. Only statement II is true

c. Both statements are true

d. Both statements are false

Designing the overall audit responses and further audit procedures requires the following, except

Group of answer choices

a. Updating overall audit strategy

b. Developing response to assessed risks

c. Briefing team on audit plans as required

d. Assessing results and evidence obtained

These are audit procedures designed to evaluate the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the assertion level.

Group of answer choices

a. Substantive test

b. Analytical review procedure

c. Test of control

d. Neither a nor b

This type of substantive test involves obtaining evidential matter on the items involved in an account balance or class of transactions.

Group of answer choices

a. Substantive test

b. Analytical review procedure

c. Test of control

d. Neither a nor b

PSA 240 pertains to:

Group of answer choices

a. The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements.

b. Quality Control of an Audit of Financial Statements

c. Audit Assertions

d. Neither a, b nor c

The distinguishing factor between fraud and error is

Group of answer choices

a. Method

b. Materiality

c. Intent

d. Perpetrator

It is all the information used by the auditor in arriving at the conclusions on which the audit opinion is based, and includes both information contained in the accounting records underlying the financial statements and other information.

Group of answer choices

a. Audit response

b. Audit assertions

c. Audit evidence

d. Neither a, b nor c

This test has the objective of establishing the monetary correctness of the accounts they relate to.

Group of answer choices

a. Test of details

b. Test of controls

c. Test of transactions

d. Test of balances

It is the measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor's opinion is based.

Group of answer choices

a. Materiality

b. Appropriateness

c. Reliability

d. Neither a, b nor c

23-24. This types of tests involve study and comparison of relationships among accounting data and related information.

Group of answer choices

a. Test of details

b. Analytical review procedures

c. Test of transactions

d. Test of balances

25-26. This fraudulent act involves intentional misstatements including omissions of amounts or disclosures.

Group of answer choices

a. Misappropriation of assets

b. Falsification

c. Fraudulent financial reporting

d. Manipulation

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27-28. It is the measure of the quantity of audit evidence.

Group of answer choices

a. Materiality

b. Sufficiency

c. Reliability

d. Neither a, b nor c

Which of the following is not true

Group of answer choices

a. Audit evidence provided by original documents is more reliable than audit evidence provided by photocopies or facsimiles.

b. Audit evidence is more reliable when its exists in documentary form, whether paper, electronic, or other medium

c. Audit evidence obtained directly by the auditor is less reliable than audit evidence obtained indirectly or by inference.

d. Audit evidence that is generated internally is more reliable when the related controls imposed by the entity are effective.

31-32. Statement I: Audit evidence is more persuasive when items of evidence from different sources or of a different name are consistent.

Statement II: Audit evidence provided by original documents is more reliable than audit evidence provided by photocopies or facsimiles.

Group of answer choices

a. Only statement I is true

b. Only statement II is true

c. Both statements are true

d. Both statements are false

33-34. Fraudulent financial reporting may be accomplished by any of the following, except

Group of answer choices

a. Embezzling receipt

b. Manipulation

c. Falsification

d. Misrepresentation

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35-36. Confirmation is an audit technique that substantiate which of the following assertion?

Group of answer choices

a. Completeness

b. Measurement

c. Rights and obligations

d. Neither a, b nor c

37-38. The risk of management fraud increases in the presence of

Group of answer choices

a. Improved internal control

b. Substantial increase in sales

c. Frequent changes in supplies

d. Neither a, b nor c

39-40. The risk that an auditor's procedures will lead to the conclusion that material error does exist in an account balance when, in fact, such error does exist is referred to as

Group of answer choices

a. Control risk

b. Audit risk

c. Detection risk

d. Neither a, b nor c

41-42. This involves the examination of records, documents, or tangible assets.

Group of answer choices

a. Inspection

b. Analytical procedures

c. Recalculation

d. Neither a, b nor c

43-44. When the auditor assesses inherent risk, he/she considers among others the following factors, except

Group of answer choices

a. Unusual pressure on management

b. Result of the interim tests

c. Integrity of the management

d. Nature of entity's business

45-46. It is the process of obtaining a representation of information or of an existing condition directly from a third party

Group of answer choices

a. Inspection

b. Analytical procedures

c. Confirmation

d. Neither a, b nor c

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47-48. The auditor will most likely perform extensive tests for possible understatement of

Group of answer choices

a. Revenues

b. Expenses

c. Assets

d. Capital

49-50. The evidence considered most appropriate or competent by auditors is best described as:

Group of answer choices

a. Direct personal knowledge obtained through physical observation and mathematical calculation

b. Internal documents such as sales invoice copies produced under conditions of strong internal control

c. Written representations made by the president of the company

d. Documentary evidence obtained directly from independent external sources.

51-52. Statement I: Negative external confirmation request asks the respondent to reply to the auditor in all cases either by indicating the respondent's agreement with the given information, or by asking the respondent to fill in information

Statement II: Positive external confirmation request asks the respondent to reply only in the event of disagreement with the information provided in the request

Group of answer choices

a. Only statement I is true

b. Only statement II is true

c. Both statements are true

d. Both statements are false

53-54. Which of the following is not a benefit claimed for the practice of determining materiality in the initial planning stage of starting an audit?

Group of answer choices

a. Avoiding the problem of doing too little work

b. Avoiding the problem of doing more work than necessary

c. Being able to fine tune the audit work for effectiveness and efficiency

d. Being able to decide early what kind of audit opinion to give

55-56. Inquiry is an audit technique that substantiate which of the following assertions?

Group of answer choices

a. Existence

b. Completeness

c. Occurrence

d. Measurement

57-58. Analytical review is an audit technique that substantiate which of the following assertions?

Group of answer choices

a. Existence

b. Completeness

c. Occurrence

d. Measurement

59-60. Statement I: The primary responsibility for the prevention and detection of fraud rest to auditors

Statement II: Misappropriation of assets is often accompanied by false or misleading records or documents in order to conceal the fact that the assets are missing or have been pledged without proper authorization.

Group of answer choices

a. Only statement I is true

b. Only statement II is true

c. Both statements are true

d. Both statements are false

61-62. Negative confirmation requests may be used to reduce audit risk to an acceptable level in any of the following, except

Group of answer choices

a. The assessed level of inherent and control risk is low

b. A large number of large balances is involved

c. A substantial number of errors is not expected

d. The auditor has no reason to believe that respondents will disregard these requests.

63-64. This involves seeking information both financial and nonfinancial of knowledgeable persons inside or outside the entity.

Group of answer choices

a. Inspection

b. Observation

c. Recalculation

d. Inquiry

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65-66. This consists of checking the mathematical accuracy of source documents and accounting records or of performing independent calculations.

Group of answer choices

a. Inspection

b. Observation

c. Recalculation

d. Analytical procedure

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67-68. It consist of evaluations of financial information made by a study of plausible relationships among both financial and non-financial data.

Group of answer choices

a. Inspection

b. Observation

c. Recalculation

d. Analytical procedure

69-70. The auditor should consider the following in deciding whether and when to perform interim work in a particular account balance, except

Group of answer choices

a. The predictability of the account balances at year-end.

b. Management's predisposition to misstate the financial statements and the potential impact of such misstatements on the account.

c. The internal control associated with the account.

d. The risks arising from the characteristics of the control, including whether it is manual or automated

71-72. An audit procedure that seems applicable in dealing accounting transaction

Group of answer choices

a. Counting

b. Inspection

c. Tracing

d. Analyzing

73-74. An audit procedure that seems applicable to prove the accuracy of rent income against lease contract

Group of answer choices

a. Vouching

b. Verifying

c. Tracing

d. Analyzing

75-76. When using audit evidence obtained in previous audits, the auditor should consider the following, except

Group of answer choices

a. The effectiveness of the control and its application by the entity, including the nature and extent of deviations in the application of the control noted in previous audits, and whether there have been personnel changes that significantly affect the application of the control.

b. how rapidly business conditions might change

c. Whether the lack of a change in a particular control poses a risk due to changing circumstances.

d. The risks of material misstatement and the extent of reliance on the control.

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77-78. Statement I: In planning the audit, the auditor should assess the risk that fraud and error may cause the financial statements to contain material misstatements and should inquire of management as to any fraud or significant error which has been discovered.

Statement II: An auditor conducting an audit in accordance with PSAs is responsible for obtaining limited assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error.

Group of answer choices

a. Only statement I is true

b. Only statement II is true

c. Both statements are true

d. Both statements are false

79-80. Statement I: The risk of not detecting a material misstatement resulting from error is lower than the risk of not detecting a material misstatement resulting from fraud, because fraud ordinarily involves acts designed to conceal it, such as collusion, forgery, deliberate failure to record transactions, or intentional misrepresentations being made to the auditor.

Statement II: The auditor should plan and perform the audit with an attitude of professional skeptism, recognizing that conditions or events may be found that indicate that fraud or error may exist.

Group of answer choices

a. Only statement I is true

b. Only statement II is true

c. Both statements are true

d. Both statements are false

81-82. Complex and unstable organizational structure is evidenced by any of the following, except

Group of answer choices

a. Oversight by those charged with governance over the financial reporting process and internal control is not effective.

b. Difficulty in determining the organization or individuals that have controlling interest in the entity.

c. Overly complex organizational structure involving unusual legal entities or managerial lines of authority.

d. High turnover of senior management, legal counsel, or those charged with governance.

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83-84. An audit procedure that seems applicable to prove the completeness of cash or inventory account

Group of answer choices

a. Vouching

b. Verifying

c. Tracing

d. Counting

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85-86. An audit program should be designed, so that

Group of answer choices

a. Most of the required procedures can be performed as interim work.

b. The audit evidence gathered support the auditor's conclusion

c. Inherent risk is assessed at a sufficiently low level

d. Neither a, b nor c

87-88. Which of the following factors is most important in determining the appropriateness of audit evidence?

Group of answer choices

a. The reliability of the evidence in meeting the audit objective

b. The objectivity of the auditor gathering the evidence

c. The independence of the source of evidence

d. The quality of the evidence obtained

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89-90. Which of the following elements ultimately determines the specific auditing procedures necessary under the circumstances to afford a reasonable basis for an opinion.

Group of answer choices

a. Auditor's judgment

b. Materiality

c. Relative risk

d. Reasonable assurance

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91-92. An auditor's analytical procedures most likely will be facilitated if the entity

Group of answer choices

a. Corrects material weaknesses in internal control before the beginning of the audit

b. Develops its data from sources solely within the entity

c. Segregates obsolete inventory before the physical inventory count

d. Uses a standard cost system that produces variance reports

93-94. Which of the following ordinarily is designed to detect possible material peso errors on the financial statements?

Group of answer choices

a. Control testing

b. Analytical procedures

c. Computer control

d. Post-audit working paper review

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95-96. Proper segregation of duties reduces the opportunities in which a person could both

Group of answer choices

a. Journalize entries and prepare financial statements

b. Record cash receipts and record cash disbursements

c. Establish internal control and authorize transaction

d. Perpetuate errors and irregularities and conceal them

97-98. Which of the following audit risk components may be assessed in non-quantitative terms?

Group of answer choices

a. Inherent risk: Yes ; Control risk: Yes ; Detection risk: No

b. Inherent risk: Yes; Control risk: No ; Detection risk: Yes

c. Inherent risk: No ; Control risk: Yes; Detection risk: Yes

d. Inherent risk: Yes; Control risk: Yes; Detection risk: Yes

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99-100. Inherent and control risk differ from detection risk in that, they

Group of answer choices

a. Arise from misapplication of auditing procedures

b. May be assessed in either quantitative or non-quantitative terms

c. Exist independently of the financial statement audit

d. Can be changed at the auditor's discretion

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