Chapter 9 & 10 MCQ Flashcards
Which of the following audit tests is usually the most costly to perform?
tests of details of balances
A PA has designed an audit approach where she places maximum possible reliance on controls. This means that she will be _______.
following a combined audit approach
The procedures to test the effectiveness of control policies and procedures in support of a reduced assessed control risk are called _______.
tests of controls
Control risk has been assessed at 100% for your client. What audit approach will you follow?
A substantive approach
Which of the following statements is true about the auditor’s obligation to communicate significant control deficiencies under CAS 265?
If the client does not have an audit committee, then the communication should go to whoever in the organization has overall responsibility for internal control, such as the board of directors or the owner-manager.
If no material fluctuations are found using analytical procedures and the auditor concludes that differences should not have occurred, _______.
other tests may be reduced
When considering the relationships between types of audit tests and evidence, which of the following procedures is suitable for use for all types of audit tests (procedures to obtain an understanding of internal control, tests of controls, analytical procedures, and tests of details of balances)?
Inquiries of the client
Cost of the procedures is a practical consideration all auditors must incorporate when developing an audit plan (audit efficiency). Which of the following is true about the relative costs of further audit procedures?
Substantive tests of details are often considerably more costly than any of the other types of procedures because they often involve more auditor time and effort.
A standard audit program can dramatically increase _______.
Audit efficiency
When the auditor has determined that there is a significant risk of misstatement for a particular assertion (for example, completeness of revenue), what type of audit testing does CAS 330 require?
substantive tests
After considering a client’s internal controls, an auditor has concluded that the internal controls are well designed and are functioning as intended. Under these circumstances, the auditor would most likely _______.
use a combined audit approach that includes tests of controls and substantive tests
The auditor would like to design a test of control to test that statements are mailed to all customers each month. Which of the following typical tests of controls would be suitable?
Inquire about who is responsible for mailing the statements.
Which of the following audit tests is usually the least costly to perform?
Analytical procedures
The highest-cost audit will be incurred when the auditor expects that the internal control system would _______.
be effective but the auditor found extensive control test deviations
When developing an audit plan for further audit procedures at the assertion level, auditors _______.
must design specific audit procedures to address significant risks that have been identified through performing risk assessment procedures