chap 13 types of tests

Question 1

what are the 4 types of further audit procedures that provide the basis for the auditors opinion and are done in response to the auditors assessment of the risk of material misstatement

Answer 1

1. tests of controls 2. substantive tests of transactions 3. substatntive analytical procedures 4. tests of detail of balances

Question 2

auditing standards state that substantive analytical procedures are a type of substantive test, when they are performed to do what?

Answer 2

provide evidence about an account balance

Question 3

auditors can perform test of controls separetly from all other tests but it is more efficient to do them at the same time as what?

Answer 3

substantive tests of transactions

Question 4

when auditors are conficent that all transaction were correctly recorded int he journals and correctly posted, they can be conficent that what is correct?

Answer 4

the general ledger totals

Question 5

substantive tests of transactions are used to determine what?

Answer 5

whether all 6 transaction related audit objectives have been satisfied for each class of transactions

Question 6

for automated controls, the auditors procedures to determine whether the automated control has been implemented may also serve as the test of that control if what two things are true?

Answer 6

1. the auditor determines that general controls are effective 2. there is minimal risk that the automated control has been changed since the understanding was obtained

Question 7

if auditors believe that analytical procedures indicate a reasonable possibility of misstatement, they may do what 2 things?

Answer 7

1. perform additional analytical procedures 2. decide to modify test of details of balances

Question 8

the extent that auditors may be willing to rely on substantive analytical procedures in support of an account balance depends on what 3 factors?

Answer 8

1. the precision of the expectation developed by the auditor 2. materiality 3. the risk of material misstatement

Question 9

to obtain suffiencient appropriate evidence to support an assessment of the effectiveness of controls and therefore the control risk, an auditor performs what?

Answer 9

tests of controls

Question 10

what are substantive tests?

Answer 10

procedures designed to test for dollar misstatments that directly affect the correctness of FS balances

Question 11

what 2 procedures are performed for transactions in the cycle?

Answer 11

1. test of controls 2. substantive test of transactions

Question 12

the extent of the tests of details of balances depends on the results of what (3)

Answer 12

1. tests of controls 2. substantive tests of transactions 3. substantive analytical procedures for these accounts

Question 13

tests of controls form the basis for what?

Answer 13

the auditors report on internal control over financial reporting for larger public companies

Question 14

when the auditor develops expectations using substantive analytical procedures and concludes that the clients ending balances in certain accounts appear reasonable, , what might they do? (2)

Answer 14

1. certain tests of details of balances may be eliminated 2. sample sizes may be reduced

Question 15

tests of controls include what 4 types of evidence?

Answer 15

1. make inquireies of appropriate client personnel 2. examine documents, records, and reports 3. observe control related activities 4. reperform client procedures

Question 16

tests of ending blances are essential why?

Answer 16

because the evidence is usually obtained from a source independent of the client, which is considered highly reliable

Question 17

the two most important purposes of substantive analytical procedures in the audit of account balances are ?

Answer 17

1. indicate possible misstatements in the FSs 2. provide substantive evidence

Question 18

involve comparisons of recorded amounts to expectations developed by the auditor . what procedures?

Answer 18

analytical procedures

Question 19

substantive tests of transactions affect what kinds of risk? (2)

Answer 19

control and planned detection risk

Question 20

what are analytical procedures?

Answer 20

involve comparisons of recorded amounts to expectations developed by the auditor

Question 21

why are test of controls performed?

Answer 21

to support a reduced assessment of control risk

Question 22

reperformance simultaneously provides evidence about both ?(2)

Answer 22

1. controls 2. monoetary correctness

Question 23

T/F procedures to obtain an understanding of internal control generally do not provide sufficient appropriate evidience that a control is operating effectively

Answer 23

T

Question 24

procedures that focus on the ending general ledger balances for both B/S and I/S accounts

Answer 24

test of details of balances

Question 25

substantive test of transactions are used to verify what?

Answer 25

transactions recorded in the journals and posted in the general ledger

Question 26

the auditors test of details of balances must satisfy what?

Answer 26

all balance related audit objectives for each significant B/S account

Question 27

tests of controls help auditors evaluate whether contreols over transactions in the cycle are sufficiently effective to support what?

Answer 27

the reduced assessment of control risk which would allow reduced substantive testing

Question 28

the primary emphasis in most tests of details of balances is on the?

Answer 28

B/S

Question 29

what are test of details of balances?

Answer 29

focus on the ending general ledger balances for both B/S and I/S accounts

Question 30

what are the 3 types of substantive test that auditors rely on?

Answer 30

1. substantive tests of transactions 2. substantive analytical procedures 3. tests of details of balances

Question 31

tests of details of balances emphasize what ?

Answer 31

the ending balances in the general ledger

Question 32

why are tests of details of balances considered substantive tests?

Answer 32

because they help establish the monetary correctness of the accounts they relate to

Question 33

substantive analytical procedures and test of details of balances are used to satisfy what?

Answer 33

planned detection risk

Question 34

the amount of additional evidence required for tests of controls depends on what 2 things?

Answer 34

1. the extent of evidence obtained in gaining the understanding of internal control 2. the planned reduction in control risk

Question 35

auditing standards require that analytical procedures be done when?

Answer 35

during planning and completing the audit

Question 36

although not required, analytical procedures may also be performed to audit what?

Answer 36

an account balance

Question 37

substantive analytical procedures emphasize the overall what?

Answer 37

reasonableness of transactions and the general ledger balances

Question 38

procedures designed to test for dollar misstatments that directly affect the correctness of FS balances are what kind of tests?

Answer 38

substantive tests

Question 39

T/F both tests of controls and substantive tests of transactions are performed on the ending account blances

Answer 39

F perfromed for transactions in the cycle

Question 40

procedures to obtain an understanding of internal control focuses on what and are used for what?

Answer 40

1. focuses on the design and implementation of internal control 2. to assess control risk for each transaction related audit objective

Question 41

what are the 5 types of tests that are used to determine whether the FSs are fairly stated?

Answer 41

1. risk assessment procedures 2. test of controls 3. substantive tests of transactions 4. substantive analytical procedures 5. tests of details of balances

Question 42

procedures performed to obtain an understanding of the entity and its environmnet, including internal controls, represent the auditors what?

Answer 42

risk assessment procedures