(A4, S4) Evaluating Audit Findings

Question 1

Inadequate recordkeeping with respect to assets, such as failing to reconcile the physical inventory count and the accounting records, provides an opportunity for fraud or error to occur.
True or False.

Answer 1

True.

Question 2

If analytical procedures suggest unexpected relationships, the auditor would perform additional tests of details of the accounts involved.
True or False?

Answer 2

True.

Question 3

What is the objective of analytical procedures used in the overall review stage of the audit?

Answer 3

To assist the auditor in assessing conclusions reached and in the evaluation of the overall financial statement presentation. These procedures are used to consider the adequacy of evidence gathered in response to unusual or unexpected balances identified in planning the audit, and to identify unusual or unexpected balances or relationships that were not previously identified.

Question 4

During the final review stage of an audit, the auditor focuses on the overall presentation of the financial statements. Total debt/total assets indicates the portion of assets financed by creditors, which is a meaningful ratio to calculate during the final audit review.
True or False?

Answer 4

True.

Question 5

The auditor should document the errors in the summary of uncorrected errors, and document the conclusion that the errors do not cause the financial statements to be misstated.
True or False?

Answer 5

True.

Question 6

Identifying account balances that represent specific risks relevant to the audit is an analytical procedure used in the final review stage of an audit.
True or False?

Answer 6

False, this is an analytical procedure used during the planning stages of the audit.