Thursday Quiz

Question 0

While performing an audit, the auditor should allow for some misstatements of lesser value than the assessed materiality level so that in total the misstatements might not result in a material misstatement to the financial statements. In order to do so, the auditor sets which of the following lower than the materiality level(s)?

Answer 0

Tolerable misstatement

Question 1

SSARS ordinarily precludes the accountant from downgrading an engagement from an audit under the 2 following circumstances.

Answer 1

1 CPA has been prohibited by the client from corresponding with entity’s legal counsel

2 entity refuses to provide the CPA with signed representation
Letter

Question 2

Interpretation No. 1 to AU 339, Audit Documentation, entitled “Providing Access to or Copies of Audit Documentation to a Regulator,” contains guidance relating to providing access to or copies of audit documentation to a regulator. Under what circumstances does this apply to an attest engagement?

Answer 2

In all cases, however the letter to the regulator should outline the purpose of regulatory request as understood by the practitioner

Question 3

“Significant deficiencies and material weaknesses communicated in prior audits that have not yet been remediated need not be communicated” this is an…

Answer 3

Incorrect statement

Question 4

An employee in the receiving department keyed in a shipment from a remote terminal and inadvertently omitted the purchase order number. The best systems control to detect this error would be a…

Answer 4

Completeness test

Question 5

Type 1 report, reports on management’s description of service organization’s system and…

Answer 5

suitability of design of controls

Question 6

Type 2 report, reports on management’s description of service organization’s system and…

Answer 6

Suitability of design and operating effectiveness of controls

Question 7

When a service auditor expresses an opinion on management’s description of payroll processor’s system and suitability of design of controls (type 1 report). The independent auditor’s report should…

Answer 7

Contain a disclaimer of opinion on the operating effectiveness of
The payroll processor’s controls

Question 8

An auditor’s Disagreements with management based on preliminary information does…

Answer 8

Not to be communicated to those charged with governance

Question 9

“After performing our preliminary analytical procedures we will discuss with you he other procedures we consider necessary to complete the engagement.” This statement…

Answer 9

Is least likely to appear in auditor’s engagement letter

Question 10

In auditing computer based systems, the integrated test facility is…2

Answer 10

1 a concurrent audit technique where a special set of dummy
master files is established and

2 test transactions are entered to test the programs using the
Dummy files during regular processing runs

Question 11

SSARS define submission as either…2

Answer 11

manual or computer prepared statements

Question 12

Which of the following is in the correct order of feedback, feedforward and preventative control systems?

Answer 12

1 Cost accounting variances, 2 cash budgeting

and 3 organizational independence

Question 13

Which organization’s mission is to promote the value of professional accountant’s worldwide?

Answer 13

International Federation of Accountant’s (IFAC)

Question 14

Which of the following is a computer assisted audit technique that permits an auditor to insert the auditor’s version of a client’s program to process data and compare the output with the client’s output?

Answer 14

Parallel simulation

Question 15

When qualifying an opinion because of an insufficiency of audit evidence an auditor should refer to the situation in…

Answer 15

The scope paragraph

Question 16

“It is appropriate to use calculator tapes with names or explanations
on the tapes rather than writing separate lists onto work papers.” This statement is…

Answer 16

A correct statement concerning the content of audit documentation

Question 17

The firm’s management philosophy should be considered when…

Answer 17

Monitoring a firm’s accounting and audit practice

Question 18

What would the following phrase be contained in?

During our audit, we discovered evidence of the company’s failure to safeguard inventory from loss, damage, and misappropriation.

Answer 18

Auditor’s communication of significant deficiencies to audit
committee

Question 19

What would the following phrase be contained in?

The company considers the decline in value of equity securities classified as available for sale to be temporary.

Answer 19

Management representation letter

Question 20

What would the following phrase be contained in?

“Was the difference of opinion on the accrued pension liabilities that existed between the engagement personnel and actuarial specialist resolved in accordance with firm policy and appropriately documented?”

Answer 20

Partner’s review work papers

Question 21

What would the following phrase be contained in?

There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in financial reporting practices.

Answer 21

Representation letter from management

Question 22

What would the following phrase be contained in?

When the audited provides negative assurance about unaudited financial statements.

Answer 22

Information evaluated against reasonable criteria by a regulatory authority

Question 23

What would the following phrase be contained in?

The company believes that all material expenditures that have been deferred to future periods will be recoverable.

Answer 23

Representation letter from management

Question 24

What would the following phrase be contained in?

Our use of professional judgement and the assessment of audit risk and materiality for the purpose of our audit mean that matters may have existed that would have been assessed differently by you. We make no representation as to the sufficiency or appropriateness of the information in our working papers for your purposes.

Answer 24

Communication of predecessor auditor to successor auditor

Question 25

What would the following phrase be contained in?

Blank checks are maintained in an unlocked cabinet along with the check signing machine. Blank checks and the check signing machine should be locked in separate locations to prevent the embezzlement of funds.

Answer 25

Communication of significant deficiency to audit committee

Question 26

What would the following phrase be contained in?

Several employees have disabled the anti virus detection software on their PCs because the software slows the processing of data and occasionally rings false alarms. The company should obtain anti virus software that runs continuously at all system entry points and that cannot be disabled by unauthorized personnel.

Answer 26

Communication of significant deficiency to audit committee

Question 27

What would the following phrase be contained in?

“In planning the sampling application, was appropriate consideration given to the relationship of the sample to the audit objective and to preliminary judgments about materiality levels?”

Answer 27

Partner’s review work papers

Question 28

For the question, “as part of the audit planning process, which of the following inquiries would be made of the predecessor auditor, would include what period in particular?

Answer 28

Includes communication before accepting engagement