Audit Planning Flashcards
Adequate planning benefits the audit of FS in the following ways, except:
a. Assisting in the selection of engagement team members with appropriate levels of capabilities and competence to respond to anticipated risks
b. Helping the auditor identify and resolve potential problems on a timely basis
c. Assist in training junior auditors in an audit team
d. All of the choices
c.
Which of the following does not affect the nature and extent of planning activities?
a. Size and complexity of the entity
b. Timing of the appointment of the independent auditor
c. Key engagement team members’ previous experience with the entity
d. Opinion to be issued by the auditor
d.
True or false: Planning is not a continual phase of an audit, but a discrete and iterative process.
False.
Planning is not a discrete phase, but a continual and iterative process
Which sets the scope, timing, and direction of the audit?
a. Overall audit plan
b. Overall audit strategy
c. Risk assessment procedures
d. None of the choices
b.
This includes a description of the nature, timing, and extent of audit procedures, as well as other planned procedures that are required to be carried out.
a. Audit plan
b. Overall audit strategy
c. Other audit procedures
d. None of the choices
a.
True or false: The auditor shall update and change the overall audit strategy and the audit plan as necessary.
True
This is described as the susceptibility of an assertion about a class of transaction, account balance or disclosure to a misstatement that could be material before consideration of any related controls.
a, Control risk
b. Inherent risk
c. Business risk
d. Detection risk
b.
Risk that will not be prevented (or detected and corrected) on a timely basis by entity’s internal controls
a. Business risk
b. Inherent risk
c. Detection risk
d. Control risk
d.
Attitude that is applied by auditor when making professional judgments
a. Professional skepticism
b. Professional judgment
c. Biased skepticism
d. None of the choices
a.
Example of application of professional skepticism is (choose the exception):
a. Being alert to conditions that may indicate possible misstatement due to fraud, but not error
b. Considering whether audit evidence obtained supports auditor’s identification and assessment of risks of material misstatements
c. Considering responses to inquiries and other information obtained from management and those charged with governance
d. Questioning contradictory information and reliability of documents
a.
True or false: The auditor is required to perform an exhaustive search to identify all possible sources of audit evidence
False
The auditor considers _______ and ________ of information to be used as audit evidence.
a. Objectivity; Neutrality
b. Relevance; Faithfulness
c. Relevance; Reliability
d. Faithfulness; Objectivity
c.
Audit procedures performed to obtain an understanding of the entity and its environment to identify and assess the risk of material misstatement, whether due to fraud or error, at the financial statement and assertion levels.
a. Risk assessment procedures
b. Substantive testing
c. Analytical procedures
d. Business risk model
a.
