AUD 7 Flashcards
immediately upon receipt of cash, a responsible employee should
prepare a remittance listing. this ensures that control over cash received is established.
which of the following controls most likely would prevent direct labor hours from being charged to manufacturing overhead?
use of time tickets to record actual labor worked on production orders.
the current file of an auditors working papers would most likely include a copy of the
bank reconciliation.
for which of the following audit tests would an auditor most likely use ATTRIBUTE sampling?
inspecting employee time card for proper approval by supervisors. Attribute sampling is used to reach a conclusion about a population in terms of a rate of occurrence.
when management prepares financial statements in conformity with GAAP, assertions are made about account balances and
classes of transactions AND disclosures.
An auditor most likely would inspect loan agreements under which an entitiy’s inventories are pledged in order to support management’s financial statement assertion of
Presentation and disclosure. This addresses the adequacy of disclosures related to the inventory account.
Subsequent events affecting the realization of assets ordinarily will require adjustment of the financial statements under examination because such events typically represent
the culmination of conditions that existed at the balance sheet date.
of the following, which is the least persuasive type of audit evidence
copies of sales invoices inspected by the auditor, because these represent internally generated evidence.
when performing a test of a control with respect to control over cash disbursements, a CPA may use a systematic sampling technique with a start at any randomly selected item. the biggest DISADVANTAGE to this type of sampling is that the items in the population
may occur in a systematic pattern, thus destroying the sample randomness.
which of the following types of control best describes procedures to ensure appropriate systems software acquisition?
General.
which of the following MOST LIKELY would be detected by an auditor’s review of a client’s sales cutoff?
unrecorded sales at year-end
the refusal of a client’s attorney to provide information requested in an inquiry letter generally is considered
a limitation on the scope of the audit. it would result in a disclaimer or a qualified opinion.
which of the following is the primary objective of probability-proportional-to-size sampling?
to identify overstatement errors
the use of the ration estimation sampling technique is most effective when
the calculated audit amounts are approximately proportional to the client’s book amounts.
if management refuses to furnish certain written representations that the auditor believes are essential, which of the following is appropriate?
this may have an effect on the auditor’s ability to rely on other representations of management.
