test 2

Question 1

three controls to separate

Answer 1

authorization
custody of assets
record keeping

Question 2

vouching

Answer 2

existence
acct records —> source docs

Question 3

tracing

Answer 3

completeness
source docs —> acct records

Question 4

audit evidence

Answer 4

inquiry
inspection
observation
analytical procedures
confirmation
reperformance
recalculation

Question 5

requirements of audit documentation

Answer 5

keep for 7 years
keep organized
auditors responsibility

Question 6

prelim analytical procedures

Answer 6

gain understanding
set NET

Question 7

substantive analytical procedures

Answer 7

optional
gather evidence

Question 8

final analytical procedures

Answer 8

review

Question 9

persuasive audit evidence

Answer 9

sufficient (#)
appropriate (quality)
relevant
reliable

Question 10

assertions and testing

Answer 10

occurrence/existence — inspection (vouching)
completeness — inspection (tracing)
rights/obligations – confirmation
cutoff – inspection
valuation – reperformance
accuracy -inspection
classification – analytical procedures

Question 11

COSO framework

Answer 11

control environment
risk assessment
information and communication
control activities
monitoring

Question 12

substantive strategy

Answer 12

less test of controls
more NET testing
control risk set at high

Question 13

reliance strategy

Answer 13

trust controls
more test of controls
less NET
control risk set at low

Question 14

type one report

Answer 14

design of controls

Question 15

type 2 report

Answer 15

operation of controls

Question 16

integrated audit

Answer 16

audit of controls
audit of financial statements

Question 17

non accelerated

Answer 17

doesn’t need to audit controls

Question 18

design deficiency

Answer 18

control is missing
or
control not properly designed

Question 19

operating deficiency

Answer 19

control doesn’t operate as designed
or
person performing control doesn’t have proper authorization

Question 20

significant deficiency

Answer 20

reasonable possibility
significant magnitude

Question 21

material weakness

Answer 21

reasonable probability
material magnitude

Question 22

likelihood

Answer 22

probability
remote, reasonable, probable

Question 23

magnitude

Answer 23

insignificant, significant, material

Question 24

adverse report

Answer 24

material weakness identified

Question 25

unqualified report

Answer 25

no material weakness

Question 26

disclaimer

Answer 26

serious scope limitiation

Question 27

accelerated

Answer 27

SOX
accept responsibility for effectiveness
evaluate effectiveness
support evaluation w evidence
present written assessment

Question 28

remediattion

Answer 28

correcting material weaknesses

Question 29

ICFR

Answer 29

process to provide reasonable assurance regarding reliability of financial reporting

Question 30

NET

Answer 30

Nature – effectiveness
Extent – sample size
Timing – yearend/interim

Question 31

control environment

Answer 31

set of standards that provide basis (tone at top)
HR policies

Question 32

risk assessment

Answer 32

process for identifying and analyzing risks

Question 33

control activites

Answer 33

actions established to ensure management mitigates risk

Question 34

information and communication

Answer 34

enables personnel to understand internal control responsibilities

Question 35

monitoring activities

Answer 35

evaluate if other coso components are functioning

Question 36

auditor needs to

Answer 36

understand controls
and
assess control risk