A4

Question 1

True/false: in the management responsibility paragraph it states that management has the responsibility to design internal controls to detect and prevent fraud.

Answer 1

TRUE

Question 2

Going from source documents to accounting records is what assertion?

Answer 2

COMPLETENESS

Question 3

Going from accounting records to source documents is what assertion?

Answer 3

EXISTENCE

Question 4

True/false: Sending out AP confirmations are usually used when controls are lacking, there are disputed amounts, or when vendor statements are not available

Answer 4

TRUE

Question 5

If management does not correct misstatements what must they do?

Answer 5

Provide a statement that they believe the uncorrected misstatements are immaterial to the financial statements and include a summary of uncorrected misstatements.

Question 6

How can a company safeguard market securities?

Answer 6

Have two officials who have joint custody over the official and keep them in a bank safe deposit box.

Question 7

How should the auditor verify the valuation of marketable securities at the balance sheet date?

Answer 7

Comparing the prices of the securities with the published closing prices of the securities on the balance sheet date.

Question 8

An auditor (is / is not) required to recalculate the gain or loss of the derivative

Answer 8

IS NOT

Question 9

When can an auditor communicate significant deficiencies?

Answer 9

DURING OR AFTER THE AUDIT

Question 10

Are all significant deficiencies material weaknesses?

Answer 10

NO

Question 11

Are all material weaknesses significant deficiencies?

Answer 11

YES

Question 12

When an auditor audits payroll, what will they most likely compare?

Answer 12

Payroll costs with entity standards or budgets

Question 13

What auto assertion make sure that transactions are recorded to the correct account?

Answer 13

PRESENTATION & CLASSIFICATION

Question 14

What type of procedures/tests compare things?

Answer 14

ANALYTICAL PROCEDURES

Question 15

Accounts tested prior to the balance sheet date should be easily ______.

Answer 15

PREDICTABLE

Question 16

All significant deficiencies (corrected or uncorrected) need to be reported to management within how many days?

Answer 16

60 DAYS AFTER THE REPORT RELEASE DATE

Question 17

What professional committees are part of COSO?

Answer 17

AICPA, IMA, IIA, FEI, & AAA

Question 18

Is it appropriate to use positive confirmations when majority of the clients have small balances?

Answer 18

NO

Question 19

Obtaining current value appraisal for collateral confirms the ______ of the collateral is the delinquent loan.

Answer 19

VALUATION

Question 20

What document provides evidence that the sale actually occurred?

Answer 20

SHIPPING DOCUMENTS

Question 21

When an auditor finds noncompliance with laws and regulations, the auditor should reconsider the degree of reliance placed on _______

Answer 21

MANAGEMENT’S REPRESENTATION LETTER

Question 22

When an auditor finds noncompliance with laws and regulations, they should put less reliance on _________

Answer 22

MANAGEMENT REPRESENTATION LETTER

Question 23

The auditor ______ look at subsequent that have happened after the audit is over.

Answer 23

DOES NOT

Question 24

Who is properly approved to write off uncollectible accounts?

Answer 24

TREASURER

Question 25

True/false: the vouchers department usually accounts for unused pre numbered POs and receiving reports.

Answer 25

FALSE - THEY DO NOT ACCOUNT FOR UNUSED POS AND RECEIVING REPORTS. SO THERE IS MORE SEGREGATION OF DUTIES

Question 26

Where where would an auditor most likely select items for testing to verify that all checks issued have been authorized?

Answer 26

CANCELLED CHECKS

Question 27

Does AP confirmations test both existence and completeness?

Answer 27

YES

Question 28

True/false: to confirm, dividend income from investments in publicly health companies, the auditor would refer to dividend record books produced by investment advisory services.

Answer 28

TRUE