A3

Question 1

Factors that change the supply

Answer 1

ECOST
Expectation of a change in price
Cost to produce
Other goods price changes
Subsidies changes
Technological improvements

Question 2

list of the walkthrough procedures usually performed in an issuer’s integrated audit

Answer 2

Inquiry, observation, inspection of relevant documentation, and reperformance of controls.

Question 3

An auditor would most likely perform risk-assessment procedures to

Answer 3

evaluate the design of relevant controls when obtaining an initial understanding of the system of internal control sufficient to assess the risk of material misstatement of the financial statements.

Question 4

Substantive testing is an audit procedure designed to

Answer 4

detect material misstatements

Question 5

the auditor should usually rely on audit evidence that is

Answer 5

persuasive

Question 6

what is the auditor’s direct personal knowledge

Answer 6

examination, re-computation, inspection, and observation

Question 7

professional judgment

Answer 7

evaluate the sufficiency and appropriateness of audit evidence. For example the amount of evidence required and how relevant it is.

Question 8

Professional requirements

Answer 8

inform the auditor of their minimum responsibilities in the audit (Part of professional standards)

Question 9

Substantive tests are

Answer 9

concerned with dollar amounts and consist of tests of details of transactions and balances and analytical procedures

Accounts that are less predictable

Question 10

What accounts tend to be more predictable more predictable than balance sheet accounts

Answer 10

Income statement accounts.

Question 11

To determine whether transactions have been recorded

Answer 11

the auditor should trace from the source documents to the accounting records (general ledger, trial balances, etc.).

Question 12

Reperformance occurs when

Answer 12

an auditor independently performs procedures or controls that were originally performed as part of an entity’s internal control.

Question 13

If there are few transactions in an account what test is ran

Answer 13

Test of detail

Question 14

Analytical procedures are used for

Answer 14

Accounts that are more predictable, Focuses on the comparison between accounts and their balances

*developing an expectation (based on plausible relationships) and comparing recorded amounts or ratios based on recorded amounts to that expectation

Most of the time is will be Income Statement accounts

Question 15

From accounting records to source document

Answer 15

Helps detect overstatements (Tests existence)

Question 16

From source document to accounting records

Answer 16

Helps with Completeness that all transactions are included

Question 17

Analytical procedures applied during the final review stage should be used to

Answer 17

determine whether adequate evidence has been gathered in response to unusual or unexpected balances identified during the audit.

Question 18

By using statistical sampling

Answer 18

the auditor can quantify sampling risk to assist in limiting it to a level considered acceptable.

Question 19

The efficiency of the audit

Answer 19

is related to the risk of incorrect rejection and the risk of assessing control risk too high.

Question 20

the risk of incorrect acceptance and the risk of assessing control risk too low relate to

Answer 20

effectiveness of an audit

Question 21

Attribute sampling is used to

Answer 21

Test controls

Question 22

Nonsampling risk includes

Answer 22

the auditor selecting inappropriate auditing procedures, using inappropriate audit evidence, and failure by the auditor to recognize misstatements in documents examined.

Question 23

If the auditor is not able to test the control as planned, nor perform alternative procedures

Answer 23

the auditor should treat the item as a deviation from the prescribed control in their documentation.

Question 24

What has no effect on sample size

Answer 24

Population size is not an issue in determining a sample size,

Question 25

Allowance for sampling risk

Answer 25

recognizes that it is likely that what we found in the sample isn’t exactly what we would find in the population

Question 26

Stratification

Answer 26

Separate data into homogeneous groups
Each group is treated as a separate population
Generally results in a reduction of sample size
(Used mostly when data has a high variable recorded amount)

Question 27

Ratio estimation is most effective

Answer 27

if there is a correlation between book values and audit amounts.

Question 28

Stratified mean per unit (MPU) sampling

Answer 28

Produces an estimate having a desired level of precision with a smaller sample size.

Question 29

In PPS sampling

Answer 29

the auditor controls the risk of incorrect acceptance by specifying that risk level for the sampling plan.

Identifies large overstatement errors
(Struguls with smaller amounts and understatement)

Question 30

Sampling interval

Answer 30

Tolerable misstatement / Reliability factor

Question 31

Sample size

Answer 31

Recorded amount of the population / sampling interval

Question 32

Descriptive analytics

Answer 32

describe what happened within the data

Question 33

Prescriptive analytics

Answer 33

prescribe or recommend actions to be taken based on advanced analytics to reach a desired goal.

Question 34

Diagnostic analytics

Answer 34

explain why something happened

Question 35

Predictive analytics

Answer 35

provide expected or predicted outcomes based on historical data