MULTIPLE CHOICE QUESTION !!! Please answer all

Which of the following is not covered in the auditors responsibilities paragraph? Select one: a. Wording indicating that the audit evidence is sufficient to provide the basis for the audit opinion. b. A statement that the standards require that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. c. Reference to the financial accounting standards followed in conducting the audit. d. Wording indicating that the audit evidence is not sufficient to provide the basis for the audit opinion.

A walk-through test is a procedure used during an audit of an entity's accounting system to gauge its reliability. Hence, Walk-throughs usually involve all of the following audit procedures except: Select one: a. Internal Confirmation b. External confirmation. c. Enquiry. d. Observation.

Professional scepticism is a one of the Fundamental principles in Auditing. Which of the following items is an example of professional scepticism? Select one: a. Determining a low level of Audit risk. b. Being alert to transactions not at arm's length. c. Determining a high level of business risk. d. All of the answers given are correct.

Selected items from the payroll register are compared to employee time cards that have been approved by supervisory personnel. Which of the following assertions for payroll expense does this test? Select one: a. Rights and obligation. b. Occurrence. c. Valuation and allocation. d. Occurrence and Classification.

When a control risk is assessed at the maximum level, an auditor should: Select one: a. Document the control structure more extensively. b. Perform more tests of controls. c. Document the assessment. d. Perform fewer substantive tests of details.

You are concerned about whether all sales have occurred. The procedure that will be most effective in verifying this assertion is: Select one: a. Selecting a sample of customers' orders and tracing them to delivery dockets. b. Checking the sequence of delivery dockets. c. Selecting a sample of delivery dockets and tracing them to invoices. d. Selecting a sample of invoices and vouching them to delivery dockets.

Fraudulent financial reporting is the intentional misstatement or omission of amounts or disclosures from financial reports to deceive financial statement users. Which of the following factors would most likely increase an auditor's concern about the risk of fraudulent financial reporting? Select one: a. Inability to borrow necessary capital without granting debt covenants. b. Management's lack of interest in increasing the entity's earnings trend. c. Large amounts of liquid assets that are easily converted into cash. d. Inability to generate cash flows from operations while reporting substantial earnings growth.

Neela Linh is an auditor who is planning confirmation of accounts payable. There are 500 supplier balances and based on the condition of the accounting records and her past experience with the supplier, she plans to send 15 confirmation requests to suppliers that will be randomly selected from the accounts payable subsidiary ledger. Neela plans to evaluate confirmation responses qualitatively and by multiplying the average error in the 15 responses by 500. This audit approach may be described most precisely as: Select one: a. Non-statistical sampling. b. Random selection. c. Statistical sampling. d. Block selection.

At the planning stage, an auditor must consider the risk that material misstatements resulting from fraud. The primary factor that distinguishes error from fraud is: Select one: a. Whether the misstatement is perpetrated by an employee or by a member of management. b. Whether the misstatement is pervasive. c. Whether the underlying cause of misstatement relates to the misapplication of accounting principles. d. Whether the underlying cause of a misstatement is intentional or unintentional.

If an auditor finds that there is a high risk of material misstatement, the most appropriate course of action in that case will be: Select one: a. Select more effective substantive tests. b. Increase tests of controls. c. Perform substantive tests as of an interim date. d. Use smaller, rather than larger, sample sizes.

Jamie Wack, an auditor, has decided to use systematic selection of payments when testing the control that payments are supported by a supplier's invoice, a purchase requisition and a goods received note. Each payment comprises a sampling unit. There are 1000 payments made (numbered 1--1000) and the total amount of payments is $10 million. The sample size is 20 and the random start is 127. Given this information, the sample interval is: Select one: a. 50. b. 1,000. c. 177. d. 10,000.

An audit test is a procedure performed by an auditor to see how accurate various financial statements are. Tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management's assertion of: Select one: a. Cut-off. b. Completeness. c. Presentation. d. Existence.

Analytical procedures are one of many financial audit processes which help an auditor understand the client's business and changes in the business. Hence, Analytical procedures may be classified as being primarily: Select one: a. Tests of Accounting. b. Substantive tests. c. Tests of details. d. Test of analyses.

A Privity letter is a letter from the auditor acknowledging a third party's reliance on an audited report. Privity letters are issued by auditors to: Select one: a. Establish proximity and foreseeability. b. Disclaim any liability. c. Assume the auditor's liability to a specified amount. d. None of the given answers are correct.

The International Auditing and Assurance Standards Board (IAASB) is an independent standard-setting body that serves the public interest by setting high-quality international standards for auditing. What has been the major recent initiative by the IAASB to reduce the expectations gap? Select one: a. A separate report to the independent audit regulatory. b. Amendments to the Auditor's Report. c. Amendments to the way confidential report to those charged with governance was prepared. d. A statutory limitation on auditor's liability.