Memorize Tricky Questions Flashcards
An auditor testing reasonabless of dividend income from investment in publicly held company. The auditor most likely would compute the amount that should have been received and recorded by the client
Electronically assessing the details of dividend records on the internet (many dividend accounts, easy to get info electronically)
Which prosedures most likely would assist auditor in identifying conditions and events for substantial doubt about going concern?
Confirming with 3rd party details of arrangements to maintain financial support
According PCAOB standards which one of the following statements doesn’t reflect qualitative standard considered when evaluating materiality of uncorrected misstatement?
The $ amount of the error
The scope of audit is Not restricted when attorneys response to auditor limits response to
Matters to which attorney gave substantial attention in the form of legal representation
Which is Not true about Accounting estimates
Accounting estimates is an Approximation
In evaluating reasonabless of accounting estimates auditor would least likely to use
Review the minutes of board of directors
Auditor concludes there is substantial doubt about entity ability to continue as a going concern for a reasonable period of time. Audit report may include
Disclaimer of Opinion -YES
Except for qualified-NO
Which questions auditor includes on internal control questionnaire for Notes Payable
Are Direct Borrowing on notes payable authorized by the board of directors?
Auditor testing plant and equipment balances, examinig new additions listed on an analysis of plant and equipment. It’s procedure to obtain evidence concerning management assertion of
Existence
Property acquisitions that are missclassified as Maintenance expense would most likely be detected by internal control that provides
Investigation of variances with formal Budgeting System
Which of the following statement is CORRECT concerning an auditors required communication with those changed with governance?
This communication should include MANAGEMENT CHANGES IN APPLICATION OF SIGNIFICANT ACCOUNTING POLICIES
AR confirmed in interim date. All confirmations are ok. What auditor should perform at year end?
Review supporting documents for new Large balances occuring after interim date
Auditor testing LONG term investments woul ordinary use analytical review to ascertain
Completeness of recorded investment income
Auditor scans clients INVESTMENT RECORS for period just before and just after year end to determine transfers between categories. Primary purpose to obtain evidence
Understandability, classification, valuation and accuracy
Cashiers job description contains COMPATIBLE DUTIES if the cashier receives remittance from mail room and also prepares
Daily deposit slip
Auditor most likely would inspect LOAN AGREEMENTS UNDER WHICH ENTITIES INVENTORY ARE PLEAGED TO SUPPORT
PRESENTATION AND DISCLOSURE
Authorization of uncollectible write off should be approved in
Treasure department
Auditor plan to examine long term debts would include steps that require
Correlating interest expense with outstanding debt
“Management prepared a description and evaluation of certain contingencies”
Audit inquiry letter of legal counsel
Which statement matches assertion with potential misstatement and audit procedures
Auditor physically examine physical inventory
What is the most appropriate method to communicate significant deficiencies which were not corrected from prior year
In writing, referencing prior communication and the date of prior communication
Auditor testing LONG TERM INVESTMENTS would use analytical review as primary audit procedures to ascertain reasonabless
COMPLETENESS OF RECORDED INVESTMENT INCOME
Which is NOT demonstrate inappropriate segregation of duties
Billing clerk prepare invoices and records resulting increase in AR
Which procedures concerning AR auditor performs to obtain audit evidence supporting the effective operation of controls
Observing an entities employee prepare the schedule of past due AR
When reporting on conditions relating to internal control observed during the audit of FS auditor should include
Restriction on the use of the report
Objectives of audit procedures applied to segment information
The info presented in conformity with GAAP rules for segment info
Which is weakness of internal control in investment cycle
Investment not held by independent custodian but in Treasurer office
Primary purpose of sending standard confirmation request to financial institutions with which client done business during the year
Corroborate info regarding deposits and loan balances
Under properly design of internal control the same employee would match invoice with receiving report and
Recompute calculation on vendors invoice
In 1st audit of client auditor was not able to gather sufficient evidence about consistent application of Accounting principles between current and prior year also assets and liability. If amount material auditor would
Be unavailable to express opinion on the current year results of operations and cash flows
Auditor unable to obtain sufficient appropriate audit evidence concerning certain transactions due to an inadequacy in the accounting records. Auditor would isdue
Disclaimer or Qualified opinions
Which event occuring after issuance of an auditors report most likely would case the auditor to make further inquiries about previously issued financial statements
Discovery of information regarding contingency that existed before FS were issued
Which procedures auditor perform to obtain evidence for subsequent event
Inquiring of the entities legal counsel concerning litigations, claims after year end
Primary objective to obtain knowledge about entity and environment
Knowledge for risk assessment and audit planning
What should be documented in audit plan in addition to NET and planned audit proceduresх
Other audit procedures to comply with GAAS
Regression analysis
Provides direct and quantitative measures of the precition of expectations
Analytical procedures are most appropriate when testing which type of transactions?
Operating expense transactions
Which is a consideration in planning a sample for a test of subsequent cash receipts (it’s a subsequent test of details)
Preliminary judgement about materiality levels
Stratified MPU sampling is more efficient because
Produces an estimate having a desired level of precision with smaller sample size
Ratios considered engagement partner in overall review stage of audit
COGS/AVERAGE INVENTORY
In performing interviews and examinig documents for preliminary work auditor identified business risk associated with plans for new product line
Analyze newly identified risk in conjunction with other risks
Auditor is determining sample size for MPU. To calculate sample size he derermins
Variability- YES
Risk of incorrect acceptance-Yes
MD&A Control risk
The risk that MM in MD&A won’t be prevented
Auditor assesses control risk because
Affect the level of detection risk that Auditor may accept
The objective of tests if details performed as test of controls
Evaluate whether internal control operated effectively
Auditor should design test if details to ensure that sufficient audit evidence suppots
The planned level of assurance at relevant assertion level
Before applying principal substantive test to the details of account at interim date auditor should
Consider whether the amounts of year end balances reasonable predictable
Going consern
Disclaimer
Unmodified with emphasis matter
