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Yaeger AUD > Adaptive Drill 3 > Flashcards

Adaptive Drill 3 Flashcards

0
Q

In determining the effectiveness of an entity’s policies and procedures relating to the existence or occurrence assertion for payroll transactions, an auditor most likely would inquire about and…

A

Observe the segregation of duties concerning personnel responsibilities and payroll disbursement

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1
Q

Segregating payroll related duties such as authorizing new hires and wage rates, as done by a personnel department, and disbursing payroll checks as done by treasurer, reduces the likelihood that…

A

Fictitious payroll transactions that did not occur will get recorded

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2
Q

Authorizing new hires and wage rates, who is responsible for this?

A

Personnel department

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3
Q

Disbursing payroll checks, who is responsible for this?

A

The treasurer

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4
Q

An auditor using audit software probably would be least interested in which filed in s computerized perpetual inventory file?

A

Economic order quantity

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5
Q

Economic order quantity would be the least interest to an auditor using audit software for evaluating computerized perpetual inventory files because…

A

Auditor would be least concerned with inventories purchased

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6
Q

Warehouse location would be of interest to an auditor using audit software for evaluating computerized perpetual inventory files because…

A

He would be concerned with existence of inventory

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7
Q

A CPA is permitted to disclose confidential client information without consent of client to…

A

A state CPA society voluntary control review board

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8
Q

If management is using a financial reporting framework for its financial statements and management has no choice of using another financial reporting framework then…

A

No reference to responsibility for determining the applicable
framework is required

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9
Q

Population size has very little effect on…

A

The determination of sample size

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10
Q

In determining the sample size for a test of controls, an auditor should consider the likely rate of deviations, the allowable risk of assessing control risk too low and…

A

The tolerable deviation rate

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11
Q

Accepting an engagement to compile an entity’s financial projection most likely would be inappropriate if the projection is to be included in…

A

An offering statement of the entity’s initial public offering of
common stock

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12
Q

Financial projections can only…

A

Be provided to limited audiences

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13
Q

Financial projections can only be provided to limited audiences, one that can…

A

Discern assumptions and limitations to the financial projections

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14
Q

A mortgage company, bank, labor union or audit committee are…

Why?

A

All limited audiences

As entity is in direct relationship with each one

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15
Q

Prospective buyers of an entity’s stock are…

A

A general audience

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16
Q

In order to efficiently establish the correctness of the accounts payable cutoff, an auditor will be most likely to…

A

Coordinate cutoff tests with physical inventory observation

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17
Q

By coordinating cutoff tests with the physical inventory, auditor’s can determine if…

A

Items are physically present

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18
Q

Resolving differences reported by customers on confirmation request is an audit technique that…

A

Could not be performed through computer program

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19
Q

Which of the following bodies promulgates standards for audits of federal financial assistance recipients?

A

General Accounting Office

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20
Q

Control and distribution of unclaimed checks, the auditor would…

A

In auditing an entities computerized payroll transactions, least likely
use test data to test these controls

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21
Q

Test data are…

A

Auditor contrived transactions designed to test controls that are
Imbedded in info technology driven processing programs

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22
Q

Test data for an entity’s computerized payroll transactions would be useful in…3

A

1 calculation of hours worked

2 withholding of payroll taxes and

3 identifying employee numbers

23
Q

Test data of payroll transactions is important to identify employee numbers as this data can…2

A

1 Be fabricated by an auditor and

2 put to a test to determine if they would be detected by controls

24
Q

Idiots would be least likely to enter dummy checks to determine…

A

Control of unclaimed checks when whey can observe and inquire
As to whereabouts and disposition of actual checks

25
Q

What is the correct statement Bout the circumstances under which a CPA firm may or may not disclose the names of its clients without the clients’ express permission?

A

CPA firm may disclose this information unless disclosure would suggest that the client may be experiencing financial difficulties

26
Q

A CPA may not disclose the name of a client if doing so…

A

Disclosed confidential client information

27
Q

To satisfy the CPA of other auditing procedures when certain customary auditing procedures are not performed is…

A

Not a valid purpose for a representation letter in an audit

28
Q

Client representations in any for (written or oral) must be…

A

Supported by other audit evidence

29
Q

One example of a “special report” as defined by Statements on Auditing Standards, is a report issued in connection with…

A

Price-level basis financial statements

30
Q

There are four types of special reports, one of which in a definite set of criteria having…

A

Substantial support that is applied to all material items appearing
in financial statements

31
Q

Price-level financial statements qualify as a…

A

Basis of accounting having substantial authoritative support

32
Q

What represents a quality control requirement under government auditing standards?

A

A CPA seeking to enter into a contract to perform an audit should

provide the CPA’s most recent external quality control review
Report to the party contracting for the audit

33
Q

Government auditing standards include a general standard stating that each audit organization conducting government audits should have…2

A

1 an appropriate internal quality control system in place and

2 participate in an external quality control review program

34
Q

Planning and supervision is…

A

A general standard that applies to consulting service engagements

35
Q

4 general standards of Consulting Service engagements

A

1 professional competence
2 due professional care
3 planning and supervision
4 sufficient relevant data to support conclusions

36
Q

What is a computer assisted audit technique that permits an auditor to insert the auditor’s version of a client’s program to process data and compare the output with the client’s output?

A

Parallel simulation

37
Q

A parallel simulation uses an auditor generated program using…

A

Generalized audit software into s client’s data base

38
Q

A parallel simulation uses an auditor generated program using generalized audit software into a client’s data base in use for…

A

Comparing results of the program to that of the client generated
result using the same client database

39
Q

In parallel simulation the auditor’s program should include the client database’s…

Why?

A

Edit checks

So results of processing, rejections/errors related to data base,
Should be same for auditor and the client’s program

40
Q

Frame relay protocols are used for…

A

Quick and efficient transmission of information across networks

41
Q

A remote node router…

A

Directs network information to appropriate remote locations

42
Q

In statistical sampling methods used in substantive testing, an auditor most likely would stratify a population into meaningful groups if…

A

The population has highly variable recorded amounts

43
Q

A population is highly variable…

A

Spread out

44
Q

Example of a population being highly variable

A

Individual accounts receivable balances range from $10 to $1,000,000

45
Q

If Individual accounts receivable balances range from $10 to $1,000,000, the auditor would have to…

A

Select many items to get a representative sample

46
Q

To reduce the total sample size and thus be more efficient, the auditor may decide to…

A

Stratify a population that has highly variable recorded amounts
By dividing it into subpopulations

47
Q

Stratify a population that has highly variable recorded amounts
By dividing it into subpopulations. Example

A

$1 to $1,000, $1,000 to $10,000, and over $10,000

48
Q

PPS sampling automatically stratifies the population by…

A

Selecting all amounts greater than the sampling interval

49
Q

Allows the relative frequency of any interval to be determined by knowing only the mean and standard deviation

A

Normal distribution

50
Q

Standard deviation is used to…

A

Measure the extent to which values of items are spread about the
Mean

51
Q

The mean is…

A

A measure of central tendency obtained by totaling all values
And dividing by number of items

52
Q

A concept expressed either quantitatively or qualitatively

A

Determination of materiality

53
Q

The determination of materiality requires…

A

Auditor judgement

54
Q

Although materiality is often expressed in number terms, it can be expressed in qualitative terms such as…2

A

1 Key disclosures or

2 items related to laws and regulations that are less than the
material amount

Yaeger AUD (38 decks)

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