Year Test 3 (MCQ) Flashcards
Permanent or perpetual working paper files contain information relevant to more than one engagement and are more general in nature.
True
False
True
Which of the following controls would help an organisation not to order more goods than what is needed?
I. User department supervisor reviews all purchase requisitions prior to submitting them to the purchasing department.
II. Automatic reorder by the purchasing department when low inventory is indicated by the system.
III. A policy requiring the accounts payable department to match the goods received note with the supplier’s invoice.
I and III only.
I and II only.
I, II and III.
I only.
I only
What is the advantage of statistical sampling?
It allows for objective statements about the population.
It allows for subjective statements about the population.
It requires no calculations.
It is quicker to perform and is less expensive.
It allows for objective statements about the population
Which of the following is a risk in the payment and recording of creditors?
Incorrect goods received.
Invalid purchase orders.
Goods returned incorrectly.
Transactions recorded inaccurately.
Transactions recorded inaccurately
The working papers specifically related to the audit engagement “Leave process at the University of Pretoria” will be filed in the permanent or perpetual working paper file.
True
False
False
Working papers related to a specific audit engagement, such as “Leave process at the University of Pretoria,” would typically be filed in the current working paper file, as they pertain to a particular audit period or engagement. The permanent or perpetual working paper file contains documents that are relevant across multiple audits or engagements, such as organizational charts or legal documents, and is not specific to one particular engagement.
What is the process of stratification in sampling?
Testing all items in a population.
Dividing a population into sub-populations.
Calculating the mean of a sample.
Selecting random items from a population.
Dividing a population into sub-population
Which one of the following documents are not used in the warehouse for the revenue and receipts process?
Picking slip.
Delivery note.
Sales order.
Receipt.
The correct answer is Sales order.
The sales order is typically used by the sales department to record a customer’s order. It is not usually used in the warehouse for the revenue and receipts process.
In the warehouse:
-The picking slip is used to gather the items for delivery.
-The delivery note is used to confirm the goods delivered.
-The sales order is more relevant for tracking and processing the sale rather than being part of the warehouse operations.
Consider the following statement: “All leave applications from 1 January 2024 to 31 March 2024 will be investigated”. This is mostly likely an example of an:
engagement scope.
engagement condition.
engagement objective.
engagement criteria.
The correct answer is engagement scope.
The engagement scope refers to the boundaries or extent of the audit or review, specifying what is to be covered during the engagement. In this case, the statement “All leave applications from 1 January 2024 to 31 March 2024 will be investigated” defines the time period and the specific process (leave applications) that will be examined, making it an example of the scope of the engagement.
Other options:
-Engagement condition refers to the terms or circumstances under which the engagement is conducted.
-Engagement objective refers to the purpose or goal of the engagement.
-Engagement criteria refers to the standards or benchmarks used to evaluate the subject matter during the engagement.
What is a common control to manage risks in the recording of purchases?
Inspection of goods on arriving at the premises.
Comparison of supplier invoices, goods received notes and purchase orders.
Comparison of goods and the supplier invoice.
Use of approved supplier lists.
The correct answer is Comparison of supplier invoices, goods received notes and purchase orders.
Which of the following statements is false?
A working paper should contain a heading.
The permanent working paper file relates to more than one specific audit engagement.
Enquiries are the best form of audit evidence.
The current working paper file relates to a specific audit engagement.
Enquiries are the best form of audit evidence.
The receiving department maintains a purchase order file. Purchase orders are kept in the file until goods are received. The main purpose of this control activity is to ensure that:
only approved deliveries/shipments are accepted.
goods are accurately counted upon receipt.
goods are not stolen or lost after receipt.
received goods are released to the appropriate department in a timely manner.
only approved deliveries/shipments are accepted.
The following statements are all true regarding the characteristics of a systems description, except:
ensure that descriptions are concise and factual.
refer to a specific person, for example, Mrs Naidoo, to avoid confusion.
avoid lengthy descriptions of tasks.
use a simple numbering system.
refer to a specific person, for example, Mrs Naidoo, to avoid confusion.
The systematic sample selection method is:
a method to select items randomly.
a method to select items based on judgement.
a method to select all items.
a method to select items at regular intervals.
The correct answer is a method to select items at regular intervals.
The primary purpose of an internal control questionnaire is to:
determine the control environment at the client.
establish the level of compliance with controls.
make preliminary appraisals of controls to be tested.
establish the time budget for the audit.
The correct answer is establish the level of compliance with controls.
An internal control questionnaire is used to assess the extent to which a client complies with established internal controls. It helps in evaluating whether the controls are in place and functioning as intended, thus establishing the level of compliance with those controls.
Other options:
-Determine the control environment at the client is more about understanding the overall control environment rather than compliance.
-Make preliminary appraisals of controls to be tested is part of the process of planning an audit but not the primary purpose of the questionnaire.
-Establish the time budget for the audit is related to audit planning and scheduling, not the purpose of an internal control questionnaire.
Which one of the following is not a step in planning an audit engagement?
Obtain final confirmation from client.
Identify and allocate the necessary resources.
Provisional contact with engagement client.
Perform engagement procedures.
Perform engagement procedures.
Step of performing of an audit engagement
