Fieldwork And Testing

Question 0

The purpose of discussing and observing monitoring controls is to determine that they are…

Answer 0

1. Designed to achieve objectives

2. Working as designed

Question 1

What are the five key stages of the engagement process?

Answer 1

1. Discussion and observation of monitoring controls.
2. Verification of evidence.
3. Documenting results of audit work.
4. Assessing management’s evaluation of residual risks.
5. Conclusions on responses covered by assignment.

Question 2

What processes might be used in verifying evidence?

Answer 2

1. Documentary analysis
2. Interview
3. Observation
4. Calculation and analysis

Question 3

When documenting audit results under RBIA, links between what should be made clear?

Answer 3

Risks
Responses
Assurances
Work done

Question 4

What does IA conclude on when assessing m’ment’s evaluation of residual risks?

Answer 4

Specific risk scores in the risk register

Question 5

How should IA proceed if systemic risk management failings are identified during the audit?

Answer 5

Should include in organisational level conclusions on risk maturity

Question 6

On what two aspects of risk responses should IA conclude?

Answer 6

Design
Effectiveness (working as designed)

Question 7

In RBIA, audit conclusions should be linked to…

Answer 7

Risks that are managed by responses tested

Question 8

What are the two general forms of audit testing?

Answer 8

Substantive testing

Compliance testing

Question 9

… tests involve detailed tests of transactions or account balances

Answer 9

Substantive

Question 10

Substantive tests are detailed tests of t… or a… b…

Answer 10

Transactions or account balances

Question 11

True or false: substantive tests test control activities

Answer 11

False

Question 12

Substantive tests are generally used when c… e… is weak

Answer 12

Control evaluation

Question 13

A characteristic of substantive tests is that the samples are…

Answer 13

Much larger

Question 14

Compliance tests establish whether…

Answer 14

Controls are being applied as prescribed

Question 15

Compliance tests test whether the result of the control is…

Answer 15

Achieved as intended

Question 16

Compliance tests test whether the control is o…

Answer 16

Operating

Question 17

If controls are assessed as inadequate, what kind of testing should be used?

Answer 17

Substantive testing

Question 18

Compliance tests tell the auditor more about the o… of the s… than substantive tests

Answer 18

Operation of the system

Question 19

True or false: substantive tests give some level of assurance about achievement of future objectives

Answer 19

False

Question 20

Name four specific types of testing technique

Answer 20

Documentary analysis
Interviewing
Observation
Calculation and analysis

Question 21

Give some examples of documentary analysis

Answer 21

Review of bank recs to ensure carried out
Examination of payments to ensure authorised
Examination of personnel files to ensure references taken up

Question 22

Give some examples of the use of interviewing

Answer 22

Interviewing payments staff to establish whether password disclosure procedures are known
Interviewing warehouse staff to establish nature of checks on goods received

Question 23

Give examples of the use of observation

Answer 23

Observing environmental conditions in a temperature controlled area
Observation of security checks on entry to premises

Question 24

In analytical review, the auditor establishes a b... for a relationship then checks to see if it exists

Answer 24

Benchmark

Question 25

In analytical review, the auditor establishes a benchmark for a relationship, then...

Answer 25

Checks to see if it exists

Question 26

Describe analytical review

Answer 26

In analytical review, the auditor establishes a benchmark for a relationship, then checks to see if it exists

Question 27

Give three reasons why analytical review is a useful technique

Answer 27

1. Flexible - can be used in many different ways 2. Quick and easy to do - especially in computerised environment 3. Cost effective method of substantive testing

Question 28

What are the two techniques of analytical review?

Answer 28

1. Trend analysis | 2. Ratio analysis

Question 29

Trend analysis compares...

Answer 29

Data over periods of time

Question 30

Ratio analysis compares...

Answer 30

Size of one thing to another

Question 31

The engagement testing programme is developed from the...

Answer 31

Risk matrix

Question 32

The testing program should link back to...

Answer 32

Individual risks

Question 33

What will the testing programme cover?

Answer 33

1. How much testing to undertake 2. What types and techniques of testing 3. What periods tests will cover 4. What sampling types and sizes to be used

Question 34

How will strong risk mitigation in an audit area affect testing?

Answer 34

Less testing and most testing will be compliance testing.

Question 35

Substantive testing may be required when the auditor needs to q... errors and exceptions

Answer 35

Quantify

Question 36

Substantive testing may be required when compliance tests reveal...

Answer 36

Weakness in control

Question 37

Substantive testing may be required when management have...

Answer 37

Expressed concern about part of their activity

Question 38

When considering the evidence required, the auditor needs to understand what l... of a... is acceptable and how much evidence this will require

Answer 38

Level of assurance

Question 39

If audit evidence is not provided in the time available, how should IA proceed?

Answer 39

Reduce level of assurance OR Increase audit time

Question 40

What two things determine the choice of evidence techniques?

Answer 40

1. Nature of the activity | 2. Evidence requirements

Question 41

E... available may determine how detailed testing will be

Answer 41

Expertise

Question 42

Expertise available may determine how d... testing will be

Answer 42

Detailed

Question 43

If evidence is not available, the level of ... should be adjusted

Answer 43

Assurance

Question 44

What five things affect the cost of the audit activity?

Answer 44

1. How much testing done 2. How many auditors involved 3. Type of tests 4. Locations visited 5. Number of visits

Question 45

If cost is likely to impact on the scope of the engagement, how should management be informed?

Answer 45

Via terms of reference

Question 46

What are the three main reasons sampling is used?

Answer 46

1. Gives level of assurance required in almost all cases 2. Best use of audit resources 3. 100% testing does not necessarily give 100% assurance

Question 47

What are the two general methods of sample selection?

Answer 47

1. Judgmental sampling | 2. Statistical sampling

Question 48

Which method of sampling is used most often: judgmental or statistical sampling?

Answer 48

Judgmental sampling

Question 49

In judgmental sampling, auditors use k... and experience to determine what transactions to sample

Answer 49

Knowledge

Question 50

In judgmental sampling, auditors use knowledge and e... to determine what transactions to sample

Answer 50

Experience

Question 51

When is judgmental sampling suitable?

Answer 51

1. When it will satisfy evidence requirements 2. Auditors familiar enough with audit area 3. Samples need to include items prone to fraud, etc 4. No need to extend results of sample to whole population 5. Statistical sampling not practical