Mcq To Memorize

Question 1

According to PCAOB standard each of the following items if information should be included in the documentation of engagement quality review EXCEPT

Answer 1

An assessment by the engagement quality reviewer of the instances of fraud identified

Question 2

Which is not correct regarding control definitiencies in in an integrated audit?

Answer 2

Communication of significant deficiencies and material weaknesses must include restricted language. It should NOT. Only for FS audit but not integrated audit

Question 3

Section 404 of SOX of 2002

Answer 3

Requires attest to and report to internal control assessment made by management of issuer

Question 4

When determining a number of checks (sample size) auditor should consider:

Answer 4

The risk if assessing control risk too low, tolerable deviation rate, expected deviation rate

Question 5

To obtain evidence of control risk auditor selects from variety of techniques including

Answer 5

Inquiry, observation, inspection, reperformance

Question 6

The objectives of audit procedures applied to segment info to provide auditor with basis for conclusion whether

Answer 6

The info is presented in conformity with GAAP rules on segment info

Question 7

Which of the following is a correct statement about a practicioner who is engaged to exam entity’s compliance

Answer 7

A practicioner should assess control risk

Question 8

Which of the following factors is an auditor least likely to consider when reporting on compliance of contractual agreement?

Answer 8

The appropriate opinion to render in the report on compliance with aspects of the contractual agreement

Question 9

An auditor conducting a compliance audit will design and perform additional audit procedures in response to the assessed risk of material non-compliance. These procedures will include tests of controls if:

Answer 9

Tests of controls are required by the governmental audit requirements

Question 10

CPA is required to comply with the provision of SSAE

Answer 10

Testifying expert witness in accounting and auditing matters given stipulated facts- NO

Compiling financial projection that presents a hypothetical course of action-NO

Question 11

2 Assertionscfor AR

Answer 11

Existence be and Rights and obligations

Question 12

Samples to test internal control intended to provide basis to conclude

Answer 12

Control activities are operating effectively

Question 13

Which of the following internal control activities not perform ed in voucher payable department?

Answer 13

Accounting for unused prenumbered purchase order and receiving report

Question 14

In a well designed internal control employee who approve PO would also

Answer 14

Negotiate with vendors

Question 15

Under proper designed internal control the same employee would match vendors invoice, receiving report and

Answer 15

Recompute calculation on vendors invoice

Question 16

Auditor’s purpose in reviewing credit rating of customer

Answer 16

Valuation and allocation

Question 17

On receiving a client s bank cutoff statement, auditor most likely would trace

Answer 17

Prior year checks listed in the cutoff statement to the year end outstanding checklists

Question 18

Walk through procedures in issuer integrated audit

Answer 18

Inquiry, observation, inspection of relevant documentation and reperformance of controls

Question 19

Which procedures Auditor perform to determine that an interest rate swap contract is properly stated at fair value in BS

Answer 19

Testing the data used to arrive at the fair value of the interest rate swap contract

Question 20

When auditor increases assessed level of control risk because some controls are ineffective, auditor most likely increase

Answer 20

Extent level of test of details

Question 21

Purpose of reviewing renewal of note payable shortly after BS date

Answer 21

Understandability and classification

Question 22

Key control to ensure sales properly authorized

Answer 22

Sales orders are sent to the credit department for approval

Question 23

An auditor would be most likely to identify contingent liability by obtaining

Answer 23

Standard bank confirmation

Question 24

Sound internal control dictates that immediately upon receiving checks from customer by mail, a responsible employee shoud

Answer 24

Prepare a dublicate listing of checks received

Question 25

Which is not example of deficiency in design of internal control that may be a is significant definitiency or MW

Answer 25

Observed deviation rate that exceeds auditor’s expected rate

Question 26

Which is not considered evidence of failure in the operation of internal controls?

Answer 26

Insufficient control consciousness

Question 27

Which is not true regarding audit documentation for specific audit

Answer 27

Audit documentation should demonstrate compliance with quality control standards

Question 28

Audit documentation should

Answer 28

Show that accounting records agree or reconcile with the FS

Question 29

What auditor should perform during planning stage of an audit?

Answer 29

Make preliminary judgement about materiality

Question 30

Before applying principal substantive test to entities accounts receivable at interim date

Answer 30

Auditor should assess the difficulty in controlling the incremental audit risk

Question 31

Examination of financial forecast.Significant assumptions not disclosed.

Answer 31

Adverse opinion

Question 32

Analytical procedures used in planning audit engagements

Answer 32

They use financial and non financial data agregarted on high level

Question 33

An Auditor of nonissuer should design test of details to ensure that sufficient audit evidence supports

Answer 33

The planned level of assurance at the relevant assertion level

Question 34

Auditor was unable to obtain sufficient appropriate audit evidence concerning certain transactions due to inadequacy in accounting records. The auditor would choose between

Answer 34

Disclaimer and Qualified opinions

Question 35

If entity changes depreciation method and this change has no material effect on FS but it will have effect in later years. Change disclosed in notes. Auditor should issue

Answer 35

Unmodified opinion

Question 36

Which is not usually performed in the vouchers payable department?

Answer 36

Accounting for unused prenumbered PO and receiving report

Question 37

Which of the following procedures most appropriate for testing the completeness assertion as it applies to inventory

Answer 37

Cut off for shipping and receiving

Question 38

Which statement describe auditor’s obligation to identify deficiencies in the design or operation of internal control in FS of nonissuer

Answer 38

The auditor need not search for significant definitiency in IC but should communicate if discovered

Question 39

Which activities performed by a department supervisor most likely would help toprevent payroll fraud

Answer 39

Approving summary of hours of each employee