AUD 4 Flashcards
Using microcomputers in auditing may affect the methods used to review the work of staff assistants because
Working paper documentation may not contain readily observable details of calculations.
The scope of an audit is not restricted when an attorney’s response to an auditor, as a result of a client’s letter of audit inquiry, limits the response to
Matters to which the attorney has given substantive attention in the form of legal representation.
auditor’s primary method to corroborate information on litigation, claims, and assessments
review the response from the client’s lawyer to a letter of audit inquiry
differences of opinion between the engagement partner and the quality control reviewer be resolved
by following the firms policies and procedures
On receiving a client’s bank cut-off statement, an auditor most likely would trace
Prior-year checks listed in the cut-off statement to the year-end outstanding checklist.
In confirming accounts receivable, an auditor decided to confirm the customer’s account balances rather than individual invoices. Which of the following most likely would be included with the client’s confirmation?
A client-prepared statement of account showing the details of the customer’s account balance.
Which of the following statements would an auditor most likely add to the negative form of confirmations of accounts receivable to encourage timely consideration by the recipients?
“If you do not report any differences within 15 days, it will be assumed that this statement is correct.”
Which of the following procedures is performed first for unreturned positive confirmations of accounts receivable?
Sending second requests for confirmation of accounts receivable
While performing interim audit procedures of accounts receivable, numerous unexpected errors are found resulting in a change of risk assessment. Which of the following audit responses would be most appropriate?
Use more experienced audit team members to perform year-end testing.
To obtain assurance that all inventory items in a client’s inventory listing are valid, an auditor most likely would agree
Items in the inventory listing to inventory tags and the auditor’s recorded count sheets.
The purpose of tracing a sample of inventory tags to a client’s computerized listing of inventory items is to determine whether the inventory items
Represented by tags were included on the listing.
Which of the following auditing procedures most likely would provide assurance about a manufacturing entity’s inventory valuation?
Testing the entity’s computation of standard overhead rates
Gaining assurance about the valuation of inventory requires, among other things, determining that inventories have been properly priced at the lower of cost or market. The determination of cost is obtained by reviewing current production costs, which might include testing the entity’s computation of standard overhead rates
A client maintains perpetual inventory records in both quantities and dollars. If the assessed level of control risk is high, an auditor would probably
Request that the client schedule the physical inventory count at the end of the year.
An auditor most likely would inspect loan agreements under which an entity’s inventories are pledged to support management’s financial statement assertion of
rights and obligation
An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit assertion that all
expenditures for property and equipment have not been charged to expense.
