Test Wrong Answers Part V

Question 1

A well designed accounts payable process includes the separation of what 3 tasks?

Answer 1

Therefore, a well-designed plan of organization separates the duties of
authorization
record keeping
custody of assets.

Question 2

According to the PCAOB, when a qualified opinion results from a scope limitation or insufficiency of evidential matter, the auditor’s report should describe the basis for departure from an unqualified opinion where?

Answer 2

In a separate paragraph immediately following the Opinion Paragraph
AND
Refer to that description in both the Basis for Opinion section and Opinion Paragraph of the auditor’s report

Question 3

In testing controls over cash disbursements, an auditor most likely would determine that the person who signs checks also

Answer 3

A control for cash disbursements is for the person who signs the checks to compare them to sup­porting documents, cancel the documents, and to mail the checks.

Question 4

Which of the following statements is correct concerning the use of negative confirmation requests?

Answer 4

Unreturned negative confirmation requests do not provide significant explicit evidence.

Negative confirmations may be effective when the combined assessed level of inherent and control risk is low.

Question 5

Reasonable assurance is obtained when the auditor has gathered sufficient appropriate audit evidence to reduce audit risk to an acceptably ____________ level.

Answer 5

Reasonable assurance is obtained when the auditor has gathered sufficient appropriate audit evidence
to reduce audit risk to an acceptably low (not moderate) level.

Question 6

According to PCAOB auditing standards, the auditor should record the understanding of the terms of the audit engagement in an engagement letter and provide the engagement letter to whom?

Answer 6

According to PCAOB auditing standards, the auditor should record the understanding of the terms of the audit engagement in an engagement letter and provide the engagement letter to the audit committee annually. The auditor is NOT REQUIRED to provide it to management.

Question 7

A CPA is required to comply with the provisions of what standards when engaged to review management’s discussion and analysis (MD&A) prepared pursuant to rules and regulations adopted by the SEC?

Answer 7

SSAE

Question 8

In attribute sampling, a 25% change in which of the following factors will have the smallest effect on the size of the sample?

A Tolerable rate of deviation
B Number of items in the population
C Degree of assurance desired
D Planned assessed level of control risk

Answer 8

The number of items in the population has virtually no effect on the sample size unless the population is very small.