A4 NEW Flashcards
Who controls the mailing of independent confirmations - the auditor or the entity?
AUDITOR
If an auditor has communicated control deficiencies in a prior period and management has chosen not to correct the deficiencies, does the auditor need to repeat the communication in the current period?
NO
To ensure proper custody of assets in the investing cycle, an __________________ person comparing the contents of the safety deposit box with the recorded balances in the investment ________________________ ledger is an effective control.
INDEPENDENT; SUBSIDIARY
To test existence, the auditor needs to start with the _________________ records and _____________ backwards to the _______________ documents.
ACCOUNTING; VOUCH; SOURCE
An internal control questionnaire for NP would likely ask if direct borrowings on NP are authorized by the ___________________________.
BOARD OF DIRECTORS
When an employee has both the custody and recording functions is a lack of ________________ of ___________, which is a deficiency in the ____________ of internal control.
SEGREGATION; DUTIES; DESIGN
For all audits, __________________ deficiencies must be communicated in writing to management.
SIGNIFICANT
Assertions about the understandability of ___________________ and ___________________ deal with whether financial information is appropriately presented and described and disclosures are clearly expressed.
PRESENTATION; CLASSIFICATION
When an auditor selects items for test counts and traces the test counts to the client’s inventory listing, the auditor has obtained evidence concerning management’s assertion of ________________.
COMPLETENESS
By ensuring that credit approval is obtained before goods are shipped to customers, the auditor is testing management’s assertion regarding _______________________ and ______________________.
ALLOCATION; VALUATION
If the auditor is unable to count the securities at the balance sheet date, can the auditor request the client to have the bank seal the safe deposit box until the auditor can count the securities?
YES
A client’s failure to investigate differences between the general ledger and the subsidiary ledger would make the auditor suspect there are _____________ __________________ that exist in the client’s financial statement.
MATERIAL MISSTATEMENTS
Check ________ may result in a high level of _________ coupled with a low average ____________.
KITING; DEPOSITS; BALANCE
___________________ confirmations offer a lower level of assurance than __________________ confirmations, thus should only be used when the risk of material misstatement is _____.
NEGATIVE; POSITIVE; LOW
The auditor should ____________ identify ______________ deficiencies and _____________ weaknesses.
SEPARATELY; SIGNIFICANT; MATERIAL
A gap in recorded sequence numbers might indicate an unrecorded sale, so periodic accounting of the numerical sequence of shipping documents and invoices supports management’s financial statement assertion of _____________________ of sales.
COMPLETENESS
___________ confirmations would be appropriate when the majority of the accounts receivable accounts are large, not small.
POSITIVE
The internal control procedure of prenumbering receiving reports and periodically reconciling them to the inventory records most likely addresses the ________________ assertion for inventory, because it allows the auditor to determine whether all goods received have been recorded as inventory.
COMPLETENESS
In auditing long-term bonds payable, an auditor most likely would compare _______________ expense with the bond payable amount for _________________.
INTEREST; REASONABLENESS
A deposit in transit is a _______________ recorded in one accounting period with the ____________ occurring in the subsequent period.
DISBURSEMENT; RECEIPT
An audit client has a valid reason for requesting that a certain account receivable that the auditor has selected for confirmation not be confirmed. Under these circumstances, the auditor should perform __________________ procedures on the confirmation.
ALTERNATIVE
