M4-Planning Flashcards
Assistants should be informed of their responsibilities and the objectives of the procedures that they are to perform. Part of the assistant’s responsibility is to properly evaluate audit results, and the in-charge auditor would likely discuss this with them. (true or false)
true
The auditor considers several factors in planning the nature, timing, and extent of auditing procedures. One of these factors is the extent of involvement of the client’s internal auditors. (true or false)
true
Pre-audit planning meetings are typically held to plan technical and personnel aspects of the audit. Assistants should be informed of their responsibilities and the objectives of the procedures that they are to perform. (true or false)
true
Knowledge of an entity’s business is ordinarily obtained through experience with the entity or its industry and inquiry of personnel of the entity. Audit documentation from prior years may contain useful information about the nature of the business, its organizational structure, its operating characteristics, and transactions that may require special consideration. (true or false)
true
The auditor should consider the methods the entity uses to process accounting information in planning the audit because such methods influence the design of internal control. The extent to which computer processing is used in significant accounting applications , as well as the complexity of the processing, may also influence the nature, timing, and extent of audit procedures. (true or false)
true
Review of assistant’s work is necessary to determine whether it was performed in a satisfactory manner and to determine whether the work supports the conclusions presented in the auditor’s report. (true or false)
true
Each assistant has a professional responsibility to bring to the audit supervisor, disagreements or concerns the assistant might have with respect to accounting and auditing issues that he or she believes are of significance to the financial statements or auditor’s report. In addition, each assistant should have a right to document his or her disagreement if he or she believes it is necessary to be disassociated from the resolution of the matter. (true or false)
true
A decrease in the amount of misstatements that the auditor can tolerate will cause the auditor to modify the nature, timing and/or extent of auditing procedures. Performing the planned procedures closer to the balance sheet date is a timing modification that addresses this change. (true or false)
true
The auditor would perform substantive procedures before year-end if the amount of misstatements the auditor could tolerate were increased. The earlier in the year that the auditor performs substantive testing, the greater the incremental risk the auditor accepts regarding the year-end financial statements.
Procedures that an auditor may consider in planning the audit include discussing the type, scope, and timing of the audit with the client’s management. (true or false)
true
In all audits, the auditor should obtain a sufficient understanding of each of the five components of internal control in order to properly plan the audit. The entity’s risk assessment process is one of the five components of internal control. (true or false)
true
In designing a written audit plan, an auditor should establish specific audit objectives that relate primarily to the financial statement assertions. (true or false)
true
There are six main financial statement assertions:
C Completeness O cut Off V Valuation, allocation, and accuracy E Existence and occurrence R Rights and obligations U Understandability and classification
In developing an overall audit strategy, an auditor should consider preliminary evaluations of materiality, audit risk, and internal control. (true or false)
true
