CHAPTER 4 NEED TO KNOW Flashcards
What audit procedure would primarily respond to the audit objective for AR that AR is properly described and presented in the F/S?
Review the AR TB for amounts due from officers and employees
What is a control activity that most likely could help prevent employee payroll fraud?
The personnel department promptly sends employee termination notices to the payroll supervisor
In testing plant and equipment balances, an auditor may inspect new additions listed on the analysis of plant and equipment. This procedure is designed to obtain evidence concerning management assertions of:
Existence and valuation
An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and cash disbursements journal. The purpose of this substantive audit procedure most likely was to:
Determine that purchases were properly recorded.
Which of the following information discovered during an audit most likely would raise a question concerning possible noncompliance with laws and regulations?
The entity prepared several large checks payable to cash during the year
Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities:
Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices
Application controls pertain to:
processing of individual applications in an IT environment
A weakness in internal control over recording retirements of equipment may cause an auditor to:
Select certain items of equipment from the accounting records and locate them in the plant.
In auditing a clients RE account, an auditor should determine whether there are any restrictions on RE that result from loans, agreements, or state law. This procedure corroborates mgmts FS assertion of:
Presentation and disclosure
To obtain evidence that user ID and password controls are functioning as designed, an auditor would most likely:
examine a sample of assigned passwords and access authority to determine whether password holders have access authority incompatible with their other responsibilities
Which of the following events least likely would indicate the existence of related party transactions:
Writing off obsolete inventory to NRV
SAS - auditor should complete the assembly of the final audit file on a timely basis, but within how many days following the report release date?
60 Days
Program change control
general controls found in an IT environment
Which of the following controls is not usually performed in the vouchers payable department?
Accounting for unused prenumbered purchase orders and receiving reports
On receiving a client’s bank cutoff stmt, an auditor most likely would trace:
PY checks listed in the cutoff stmt to the year-end outstanding checklist
