quick as lightning

Question 1

impact on the audit when:
control risk is assessed too low
control risk is assessed too high

Answer 1

inefficient
ineffective

Question 2

difference between SOC Type I vs Type II reports?

Answer 2

design/implementation vs design/implementation/operation

Question 3

structure of an compilation report

Answer 3

paragraph
+ lack of independence
+ omitted disclosures
+ special purpose framework

Question 4

relationship with sample size:
risk of assessing CR too low
tolerable deviation rate
expected deviation rate

Answer 4

inverse
inverse
direct

Question 5

sales cycle departments

Answer 5

sales
credit
warehouse
shipping
billing
AR

Question 6

sales documents

Answer 6

sales order
bill of lading
sales invoice

Question 7

expenditure cycle documents

Answer 7

purchase requisition
purchase order
receiving report
purchase invoice

Question 8

PPS Sampling Interval: $3,000
Account Balance #1: $1,500; overstated by $150
Account Balance #2: $4,000; overstated by $400

what is the projected misstatement?

Answer 8

150/1500 * 3,000 = 300
400
= 700

Question 9

tolerable deviation rate
sample deviation rate
population deviation rate

Answer 9

control risk is assessed too high

Question 10

population deviation rate
tolerable deviation rate
sample deviation rate

Answer 10

control risk is assessed too low

Question 11

calculate sampling interval:

tolerable misstatement: $50,000
reliability factor: 2

Answer 11

$25,000

Question 12

calculate sample size:

total population amount: $100,000
sampling interval: $10,000

Answer 12

10 sample items

Question 13

calculate tainting factor:
audited value: $2,000
book value: $1,500

Answer 13

500/2000

Question 14

mean per unit estimation

Answer 14

avg audited value * total population

Question 15

ratio estimation

sample audited value: $25,000
sample book value: $30,000
total book value: $500,000

Answer 15

25/30 * 500,000
$416,667

Question 16

difference estimation

sample audited value: $25,000
sample book value: $30,000
sample size: 100
total population: 2,000 items
total book value: $500,000

adjustment for account balance?

Answer 16

30k-25k = 5k
5000/100 = 50
50*2,000 = 10,000 adjustment

$490,000 audited total book value

Question 17

reporting objectives, determining the timing of the audit, required communications, using the work of others and a preliminary assessment of materiality determines the

a. audit strategy
b. audit plan

Answer 17

audit strategy

Question 18

the process of determining the nature, extent and timing of audit procedures is called a:

a. audit strategy
b. audit plan

Answer 18

audit plan

Question 19

the auditor’s evaluation of sampling results by calculating the possible error in either direction is:

Answer 19

precision

Question 20

a measure of variability of a frequency distribution about its mean:

Answer 20

standard deviation

Question 21

how are unrecorded asset retirements detected by the auditor?

Answer 21

fixed assets subledger to physical plant inspection

Question 22

what is the level of assurance for an audit over:
compliance
internal controls for compliance

Answer 22

reasonable assurance
disclaimer

Question 23

what is a critical component of the determination of whether providing a non-audit service would create a threat to independence?

Answer 23

management’s ability to effectively oversee the nonaudit service to be performed

Question 24

the primary purpose of sending a confirmation to banks with which the client has done business with is to:

Answer 24

corroborate information on deposits and loan balances

Question 25

the following may be evidence for:

compensating balances
loan guarantees
non-monetary exchanges

Answer 25

related party transactions