MCQ NOTES AUDIT 4 EVALUATING AUDIT FINDINGS and SUPPLEMENTARY QUESTIONS Flashcards
To be effective, analytical procedures in the overall review stage of an audit engagement should be performed by
A manager or partner who has a comprehensive knowledge of the client’s business and industry.
The objective of analytical procedures used in the overall review stage of the audit is to assist the auditor in assessing conclusions reached and in the evaluation of the overall financial statement presentation. Analytical procedures applied in the overall review stage are used to consider the adequacy of evidence gathered in response to unusual or unexpected balances identified in planning the audit, and to identify unusual or unexpected balances or relationships that were not previously identified.
The objective of analytical procedures used in the overall review stage of the audit is to assist the auditor in assessing conclusions reached and in the evaluation of the overall financial statement presentation. Analytical procedures applied in the overall review stage are used to consider the adequacy of evidence gathered in response to unusual or unexpected balances identified in planning the audit, and to identify unusual or unexpected balances or relationships that were not previously identified.
During the final review stage of an audit, the auditor focuses on the overall presentation of the financial statements. Total debt/total assets indicates the portion of assets financed by creditors, which is a meaningful ratio to calculate during the final audit review.
During the final review stage of an audit, the auditor focuses on the overall presentation of the financial statements. Total debt/total assets indicates the portion of assets financed by creditors, which is a meaningful ratio to calculate during the final audit review.
During the final review stage of an audit, an auditor evaluates the overall financial statement presentation and assesses the conclusions reached. As part of this evaluation, the auditor would likely read the financial statements and consider whether there are any unusual or unexpected balances that were not previously identified. During the final review stage of an audit, the auditor focuses on the overall financial statement presentation rather than testing details. In addition, even during the audit, the auditor generally would not look at every individual expense account balance, but rather would look at some sample of balances.
During the final review stage of an audit, an auditor evaluates the overall financial statement presentation and assesses the conclusions reached. As part of this evaluation, the auditor would likely read the financial statements and consider whether there are any unusual or unexpected balances that were not previously identified. During the final review stage of an audit, the auditor focuses on the overall financial statement presentation rather than testing details. In addition, even during the audit, the auditor generally would not look at every individual expense account balance, but rather would look at some sample of balances.
note about prepaid insurance
Unexpired insurance should be reported as prepaid insurance. This is a correct application of the matching principle
When auditing the pres/discl. of investments, the assertions and performed are:
Completeness - To test this assertion, the auditor would try and determine whether all required disclosures of marketable securities have been made.
Understandability and classification - When testing this assertion, the auditor should read disclosures for understandability and evaluate the methods used by the client to account for and classify investments
Rights and obligations, and occurrence - As part of her due diligence, the auditor makes management inquiries and reviews loan agreements and board minutes to determine if the client has pledged any investments as collateral
Valuation, allocation, and accuracy - The focus of testing this assertion is for the auditor to determine if investment information presented is accurate and presented at the appropriate amounts
Who should be the one to approve the writing off of an A/R?
The treasurer
