AUD 8 Flashcards
The existence of audit risk is recognized by the statement in the auditor’s standard report that the
auditor obtains reasonable assurance about whether the financial statements are free of material misstatements
an example of an analytical procedure is the comparison of
financial information with similar information regarding the industry in which the entity operates
An entity prepares it financial statements on its income tax basis. A description of how that basis differs from GAAP should be included in the
notes to the financial statements
when performing a review of a nonpublic company, the auditors should obtain in representation letter acknowledgement of management for its responsibility for each of the following EXCEPT:
responsibility for identifying all illegal acts committed by employees
the date of the management representation letter should coincide with the
date of the auditor’s report
which of the following statements is correct concerning statistical sampling in tests of controls?
deviations from specific internal control procedures at a given rate ordinarily result in misstatements at a lower rate
which of the following is NOT a principle included in trust services engagements?
independence
which of the following circumstances most likely would cause an auditor to suspect that there are material misstatements in an entity’s financial statements?
supporting accounting record and files that should be readily available are not produced promptly when requested
in attribute sampling, a 25% change in which of the following factors will have the smallest effect on the size of the sample?
number of items in the population because population size isn’t considered in determining the sample size for an attributes sampling application.
when an adverse opinion is expressed, the opinion paragraph should include a direct reference to
a separate paragraph which discuses the basis for the opinion rendered.
analytical procedures performed during the risk assessment phase of an audit should focus on
enhancing the auditors understanding of the transactions and events that have occurred since the last audit
An auditor’s primary consideration regarding an entity’s internal control structure policies and procedures is whether they
affect the financial statement assertions
Validity Check
the computer flags any transmission for which the control field value didn’t match that of existing file record. A check to see if the data carry valid values.
which of the following computer-assistend auditing techniques processes client input data on a control program under the auditor’s control to test controls in the computer system?
parallel simulation.
an advantage that using statistical sampling methods have over non statistical sampling methods in tests of controls is that the statistical methods
provide an objective basis for quantitatively evaluating sample risk