Payroll etc.

Question 1

What is the personnel dept’s objective?

Answer 1

planning, controlling, and coordinating EEs
They determine the proposed salary increases (recommended by EE’s supervisors) are consistent with the company salary guidelines and will approve changes in deductions.

Question 2

What are mgmt’s objectives in est and maintaining an internal control structure?

Answer 2

Transactions are executed in accordance with mgmt’s general or specific auth.

2. transactions are recorded as necessary to permit preparation of the FS in accordance with GAAP and to maintain accountability for assets
3. Access to assets is permitted only in accordance with mgmt’s authorization
4. the recorded accountability for assets is compared with the existing assets at reasonable intervals and differences are investigated and resolved. ensuring that custody of WIP and Finished goods are properly maintained is an example of the 3rd obj,

Question 3

Inventory turnover

Answer 3

COGS / avg inventory

Question 4

Days sales in AR

Answer 4

AR / credit sales per day

with credit sales per day = total credit sales / 365

Question 5

gross profit ratio

Answer 5

sales - COGS / sales

Question 6

If the auditor desires to further reduce the assessed level of control risk, they must first consider whether..

Answer 6

additional evidence will be available to support such a reduction. the auditor must also consider whether it would be cost effective to collect such evidence

Question 7

when obtaining an understanding of an entitys internal control procedures, an auditor should concentrate on the substance of the procedures, rather than their form, bc

Answer 7

mgmt may est. appropriate procedures but not enforce compliance with them.

Question 8

when assessing an internal auditors competence, a cpa ordinarily obtains info about all of the following:

Answer 8

Quality of working paper documentation
Educational level and professional experience
Audit programs and procedures

Question 9

Decision table

Answer 9

presents in tabular form, the conditions and alternative actions related to making a particular decision. it emphasizes logical relationships among conditions and actions

Question 10

which assertions are specific to account balances at period end

Answer 10

existence
completeness
rights and obligation
valuation and allocation

Question 11

assertions about presentation and disclosure

Answer 11

occurrence and rights and obligation
completeness
classification and understandability
accuracy and valuatio

Question 12

assertions about classes of transactions and event during the period

Answer 12

accuracy
occurrence
completeness
cutoff

Question 13

sufficiency of audit evidence relates to

Answer 13

the quantity of evidence required to support a conclusion in the circumstance

Question 14

Appropriate evidence means that it is …

Answer 14

relevant and reliable

Question 15

cutoff

Answer 15

transactions and events that have been recorded in the proper period

Question 16

what are the 3 categories of assertion

Answer 16

assertions about classes of transactions and events
assertions about acct balances at the period end
assertions about presentation and disclosure

Question 17

audit risk

Answer 17

the risk that material miss. will not be detected due to the early testing at interim.

Question 18

what does the auditor do during the review stage

Answer 18

assess the conclusions reached and the evaluation of the overall FS presentation. as part of that evaluation, they would consider whether the results of the audit procedures performed affect the risk of mm due to fraud.

Question 19

Before applying principal sub. tests to an entity’s AR at an interim date, an auditor should

Answer 19

asses the difficulty in controlling the incremental audit risk

Question 20

tests of internal controls are intended to provide a basis for an auditor to conclude whether

Answer 20

the control procedures are operating effectively

Question 21

what are the 3 categories of audit procedures

Answer 21

risk assessment procedures
tests of controls
substantive procedures

Question 22

what are substantive procedures

Answer 22

performed to detect MM at the relevant assertion level. consists of test of details and substantive analytical procedures

Question 23

Judgmental misstatements

Answer 23

Unreasonable acct estimates as well as the selection of inappropriate acct policies.

Question 24

Factual misstatement

Answer 24

Inaccuracy in acct processing data
misapplication of acct principles
Difference between the classification of a reported FS element and the classification according to GAAP

Question 25

the AU C 230 states that the degree of doc for a particular audit area should be affected by:

Answer 25

the risk of MM
extent of judgment
nature of the auditing procedures
significance of the evidence obtained
nature and extent of the exceptions identified
the need to document a conclusion that is not obvious from the doc of the work.

Question 26

Documentation release date

Answer 26

AICPA - A should complete the assembly of the final audit file no later than 60 days after the “report release date” (PCAOB - 45 days)