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Audit > A3 > Flashcards

A3 Flashcards

1
Q

Internal control ONLY relevant to the entire entity, and NOT to any of it’s operating units or business functions. (T o F)

A

FALSE

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2
Q

Reviewing the client’s lawyer’s letter for information would assit and audit in determining whether management has identified all accounting ____________ that could be __________ to the financial statements

A

ESTIMATES; MATERIAL

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3
Q

Sample results must be projected to the population. Every 20th test is a (1/20= __) of the population. When projected onto population, it would equal number of overstatements divided by the percentage e.g $3,500/.05)

A

.05

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4
Q

An example of a disclaimer provided within a response to an auditor’s confirmation request would included language like, __________ is furnished as a matter of courtesy without a duty to do so and ….

A

INFORMATION

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5
Q

Reviewing ________ transactions reflected on the quarter-end Balance Sheet is not a procedure an auditor would perform to identify client contingencies

A

DERIVATIVE

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6
Q

Reperformance gives an auditor evidence regarding ___________ effectiveness

A

OPERATING

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7
Q

If an auditor unexpectedly discovers a high number of deviations, the auditor would increase ____________ risk of __________ misstatemnt

A

ASSESSED; MATERIAL

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8
Q

Mean per unit estimation formula = avg _______ value * number of items in a ___________

A

AUDITED; POPULATION

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9
Q

An inquiry to management regarding actual or potential litigation and the related assessment is classified as a ___________ procedure because it provides evidence regarding accruals and/or disclosures

A

SUBSTANTIVE

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10
Q

Selecting voucher packages that had been approved and matched the invoice, purchase order and receiving report is considered a __________

A

REPERFORMANCE

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11
Q

__________ Controls and policies and procedures that relate to many applications and support the effective functions and proper operation of the information system. This would ensure appropriate systems software acquisition

A

GENERAL

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12
Q

When an auditor is testing a client’s pension benefit obligation, one of the most appropriate was of making sure the FS are fairly stated is by getting an ____________ valuation from an outside firm

A

ACTUARIAL

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13
Q

When there is substantial doubt about an entity’s ability to continue as a going concern and every thing is properly disclosed, the auditor may issue a _________ of opinion

A

DISCLAIMER

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13
Q

the sample size used by an auditor has an inverse relationship with __________ misstatement

A

TOLERABLE

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14
Q

A file that has a high level of risk of data integrity is a file that has ________ inputs

A

MANUAL

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15
Q

Sampling Interval = ___________ Misstatement/ _________ factor

A

TOLERABLE; RELIABILITY

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16
Q

Sample size = Total __________ amount/ sampling _________

A

REPORTED; INTERVAL

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17
Q

Auditor scanning for large, significant or unusual transactions is an __________ procedure

A

ANALYTICAL

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18
Q

When an auditor finds a high number of deviations when performing procedures to sample test management’s review and approval of time sheets the auditor should __________ the assessed risk of ___________ misstatement

A

INCREASE; MATERIAL

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19
Q

Substantive audit procedures, during an integrated audit are required in a ________ __________ audit but not in the audit of _________ control

A

FINANCIAL STATEMENT; INTERNAL

20
Q

An economy at the peak of the business cycle will be at the natural rate of ___________

A

EMPLOYMENT

21
Q

Income statement account balances tend to be more predictable than accounts that only include __________ _________ accounts

A

BALANCE; SHEET

22
Q

A likely benefit of information technology used for internal control will enhance _________ of information

A

TIMELINESS

23
Q

An auditor should design tests of details such that __________ audit evidence support the planned level of assurance at the __________ assertion level

A

SUFFICIENT; RELEVANT

24
Q

In assessing control risk, an auditor generally would select from a variety of techniques one of which being ____________

A

REPERFORMANCE

25
Q

Return on Assets

A

NET INCOME/ AVERAGE TOTAL ASSETS

26
Q

Auditor will most likely increase test of controls when a client’s IT system is extensively ___________ throughout the company’s accounting system

A

INTEGRATED

27
Q

To detect overstatements of sales using test of details (existence assertions) the auditor would ________ transactions from the accounting records to the _________ documents

A

TRACE; SOURCE

28
Q

To calculate tainting in sampling, divided the difference between the recorded amount and the amount ___________ by the __________ amount

A

AUDITED; RECORDED

29
Q

Compensating balance agreements might signify ___________ ___________ transactions

A

RELATED PARTY

30
Q

Business cycle:

A

PEAK, RECESSION, TROUGH, RECOVERY

31
Q

An auditor might chose to not to test control related to certain assertions because the auditor believes evaluating the _____________ of the control is ____________

A

EFFECTIVENESS; INEFFICIENT

32
Q

In testing assertions, _____________ is important in reviewing the collectability A/R

A

VALUATION

33
Q

Monetary unit sampling is typically used as a ___________ test and would be suitable in a scenario where transactions are of ____________ amounts to give a higher likelihood of selecting __________ value items

A

SUBSTANTIVE; VARYING; HIGHER

34
Q

Sampling method to allow selection of high value items and also used to test the existence of A/R

A

MONETARY UNIT SAMPLING

35
Q

Human judgement in the decision making process is an example of a __________ limitation to and entity’s ___________ controL

A

INHERENT; INTERNAL

36
Q

When an account has minimal activity during the year, the auditor most likely would use ________ of ________ in designing audit procedures

A

TEST; DETAILS

37
Q

An advantage of statistical vs. nonstatistical sampling is that statistical sampling provides an objective basis for quantitatively evaluating sample risk (T o F)

A

True

38
Q

The primary objective of data security controls is to ensure that storage media are only _________ with prior approval

A

ALTERED

39
Q

Ratio estimation = _______ value of sample/ _______ value of sample) * Total book value

A

AUDITED; BOOK

40
Q

Auditor observing the use of registers and tapes by employees provides evidence for __________

A

COMPLETENESS

41
Q

A Walkthrough is following a transaction from it’s origination until it is reflected in the ____________ statements

A

FINANCIAL

42
Q

performing an ___________ review procedure is an example of procedures used to test the completeness assertion

A

ANALYTICAL

43
Q

As sample size increases, expected population ____________ rate increases (same in opposite direction) and simultaneously, __________ rate decreases (same in opposite direction)

A
43
Q

An auditor will perform test of details if accounts being tested at interim are reasonably ______________

A

PREDICTED

44
Q

Auditor should use _________ sampling when auditor expects error rates to be low

A

DISCOVERY

45
Q

Material Weakness is when a potential misstatment may cause a _________ misstatement in the Financial Statements

A

MATERIAL

46
Q

Significant Deficiency is when a deficiency is less ________ than a material weakness but important enough to merit attention by those charged with governance

A

SEVERE

47
Q

Control Deficiency is when the design or operation of control doesn’t allow __________, ___________ or allow for ____________ in a timely manner

A

PREVENTION, DETECTION, CORRECTION

Audit (7 decks)

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