MCQ AUD 4.1

Question 1

The auditor relies on substantive test to achieve audit objectives related to particular assertions.

Answer 1

Analytical is one of the substantive procedure

Question 2

The objective of test of controls

Answer 2

testing mgt controls(Non-dollars)

Question 3

The objective of test of details

Answer 3

Substantive tests (Dollar Amounts)

Question 4

Most persuasive Audit Evidence

Answer 4

Getting Evidence from third party

Question 5

Assertions about valuation and allocation

Answer 5

deal with whether assets liabilities and equity interest have been included in the financial statements at appropriate amounts

Question 6

Analytical procedures involve

Answer 6

Comparison of recorded amounts, or ratios developed from recorded amounts to expectations developed by auditor. Projection don’t involve such comparisions

Question 7

To determine whether transactions have been recorded (completeness assertion)

Answer 7

The auditor should trace from the source documents to accounting records)

Question 8

Income statement and B/S relations

Answer 8

Income statement relationship tend to be more predictable

Question 9

Theobjective of analytical procedures

Answer 9

used in the planning stage is to assist in planning the nature timing and extent of auditing procedures to be performed
The overall review stage of audit is to assist the auditor in assessing the conclusions reached and the overall financial presentation

Question 10

In auditing fraudulent transactions

Answer 10

The auditor should compare one outside and one internally created document

Question 11

Reliable form of evidence

Answer 11

Auditors direct personal knowledge ( Observation, examination, inspection or recalculation)

Question 12

If there is no third party documents are involved the next best evidence is

Answer 12

evidence obtained directly by accountant (e.g through physical examination) provides more persuasive evidence than obtained through inquiry discussion or analytical procedures

Question 13

The decision whether to use analytical procedures as substantive test is

Answer 13

based part on the availability reliability and the precision of data used to develop expectations

Question 14

Analytical procedures

Answer 14

more appropriate for IS accounts

Question 15

PCAOB standards state that

Answer 15

the auditors risk assessment affects the nature timing and extent of the audit procedure but not determine the relevance of audit evidence

Question 16

Analytical procedure performed during the final stage

Answer 16

Generally include current and prior year financial statements