SIM Quiz Flashcards
A new CFO redesigning the company’s accounting policies and procedures would…
Increase control risk
Which audit procedure would be the best suited for testing inventory is relieved using FIFO?
Recalculation
During the physical inventory count, the auditor requested certain
Material containers be opened to ensure they were not empty.
This procedure is used to…
Ensure that a closed container contained the appropriate material
Noted on the inventory
A letter of audit inquiry to the client’s attorney is the auditor’s primary means of…
Obtaining corroboration of info furnished by management
concerning litigation
By creating an aging of certain accounts independent of the client the auditor has…
Reperformed this step
When an auditor scans the repairs and maintenance account for unusually large accounts this is an example of…
Performing analytical procedures
Disclosure of a known departure from GAAP would be included in…
Both the review and audit reports
Inquiry procedures are required for…
Review and audit engagements
Inquiry procedures are only performed in a compilation engagement when…
Questions arise
An engagement letter documents the parties involved and…
Their understanding of the engagement terms
The control environment sets…
The tone of an organization, influencing the control consciousness
Of its people
Control environment is the foundation for all other components of internal control providing…
Discipline and structure
Firing individuals that stole from the company and possibly pressing charges demonstrates that…
Fraud is unacceptable
Firing individuals that stole from the company and possibly pressing charges demonstrates that fraud is unacceptable, this serves as…
Communication and enforcement of ethical values, which is part of
Control environment
Human resource policies and practices are another component of…
Control environment
When a person has access to all records and has complete control, the risk of…
2) What controls would help with this?
Management override of controls is present
2) none of the controls on the list in the simulation
When staff are overworked or under paid compared to management employees, what would alleviate this problem?2
1 change in compensation standards
2 change in human resource policies
1 change in compensation standards
2 change in human resource policies
Are both part of…
Control environment
Training for new employees is nonexistent. What would alleviate this problem?
Changed management philosophy (control environment)
TWD Company utilizes a complicated cash sweep account for which reconciliations are difficult and time consuming. What risk is increased?
Inherent risk
Complex transaction or calculations increase…
Inherent risk
Inherent risk is the susceptibility of…
An assertion to misstatement
TWD Company utilizes a complicated cash sweep account for which reconciliations are difficult and time consuming. What assertion does the risk relate to?
Valuation
Vouching (or substantiating) additions to property, plant and equipment acquisitions allows the auditor to…
Determine if documents support the purchase of these items
Fixed assets included in the balance sheet. Audit procedures for this assertion would be testing…
Existence
