Tiêu đề Auditing - Final.pdf ✅

Auditing - Final Exam MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is not one of the subcomponents of the control environment? A) organizational structure B) management's philosophy and operating style C) commitment to competence D) adequate separation of duties 1) 2) An auditor should consider two key issues when obtaining an understanding of a client's internal controls. These issues are A) the design and operating effectiveness of the controls. B) the effectiveness and efficiency of the controls. C) the implementation and operating effectiveness of the controls. D) the frequency and effectiveness of the controls. 2) 3) Which of the following is not one of the elements to prevent, deter, and detect fraud according to the AICPA? A) performing analytical procedures B) management's responsibility to evaluate risks of fraud C) culture of honesty and high ethics D) audit committee oversight 3) 4) Which of the following parties is responsible for implementing internal controls to minimize the likelihood of fraud? A) audit committee members B) Committee of Sponsoring Organizations C) management D) external auditors 4) 5) When setting a preliminary judgment about materiality, A) more evidence is required for a low dollar amount than for a high dollar amount. B) there is no relationship between materiality and the dollar amount of evidence needed. C) less evidence is required for a low dollar amount than for a high dollar amount. D) the same amount of evidence is required for either low or high dollar amounts. 5) 6) Audit standards require the auditor to consider materiality early in the audit. Which statement(s) regarding preliminary materiality are true? I. Preliminary materiality may change during the engagement. II. Preliminary materiality is the maximum amount by which the auditor believes the financials could be misstated and still not affect the decisions of reasonable users. A) I only B) II only C) both I and II D) neither I nor II 6) D-1
7) For public companies, the ________ is responsible for hiring the auditor as required by the Sarbanes-Oxley Act. A) client's audit committee B) client's chief financial officer C) client's management D) client's chief executive officer 7) 8) A ________ exists if one or more control deficiencies exist that are less severe than a material weakness, but are important enough to merit attention by those responsible for oversight of the company's financial reporting. A) significant deficiency B) potential misstatement C) significant weakness D) fraud symptom 8) 9) In order to promote audit efficiency the auditor considers cost in selecting audit tests to perform. Which of the following audit tests would be the most costly? A) risk assessment procedures B) tests of details of balances C) tests of controls D) substantive analytical procedures 9) 10) Which of the following would most likely not be included in the evidence mix for an integrated audit of a public company's financial statements and internal control over financial reporting? A) sophisticated internal controls B) extensive substantive analytical procedures C) extensive tests of details of balances D) low inherent risk 10) 11) The measurement of the auditor's assessment of the susceptibility of an assertion to material misstatement, before considering the effectiveness of related internal controls is defined as A) inherent risk. B) audit risk. C) sampling risk. D) detection risk. 11) 12) When an auditor believes that analytical procedures indicate a reasonable possibility of misstatement, the auditor usually would A) Perform additional tests of controls Decide to modify tests of details of balances No Yes B) Perform additional tests of controls Decide to modify tests of details of balances Yes No C) Perform additional tests of controls Decide to modify tests of details of balances No No D) Perform additional tests of controls Decide to modify tests of details of balances Yes Yes 12) D-2
13) The risk that audit evidence for an audit objective will fail to detect misstatements exceeding performance materiality levels is A) planned detection risk. B) control risk. C) inherent risk. D) audit risk. 13) 14) In what order should the following steps occur? A. Set preliminary judgment of materiality and performance materiality. B. Understand the clients business and industry. C. Perform preliminary analytical procedures. D. Accept the client and perform initial audit planning. A) B, A, C, D B) D, B, C, A C) D, C, B, A D) B, D, A, C 14) 15) Based on audit evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor would A) decrease substantive testing. B) increase materiality levels. C) decrease detection risk. D) increase inherent risk. 15) 16) The purpose of the requirement in having communication between the predecessor and successor auditors is to A) help the client by facilitating the change of auditors. B) ensure the predecessor collects all unpaid fees prior to a change in auditor. C) help the successor auditor to evaluate whether to accept the engagement. D) allow the predecessor to disclose information which would otherwise be confidential. 16) 17) If planned detection risk is reduced, the amount of evidence the auditor accumulates will A) be indeterminate. B) increase. C) decrease. D) remain unchanged. 17) 18) Which of the following is most correct for audits of non-public companies? A) An audit of internal control is required. B) An audit of internal control is not required. C) An audit of the operational effectiveness of internal controls is required. D) An audit of the design of internal controls is required. 18) 19) Fictitious revenues A) understate the gross margin percentage. B) have no impact on the gross margin percentage. C) increase accounts receivable turnover. D) lower accounts receivable turnover. 19) D-3
20) Which of the following represents a correct statement regarding internal control testing? A) The auditor uses control risk assessment and results of tests of controls to determine planned detection risk and the related substantive tests for the financial statement audit. B) Testing of internal controls can only be performed by the auditor at the end of the fiscal year. C) When auditors plan to use evidence about the operating effectiveness of internal control contained in prior audits, auditing standards require tests of the controls' effectiveness at least every other year. D) The greater the risk, the less audit evidence the auditor should obtain that controls are operating effectively. 20) 21) Initial audit planning involves four matters. Which of the following is not one of these? A) Identify the client's reason for the audit. B) Develop an overall audit strategy. C) Request that bank balances be confirmed. D) Schedule engagement staff and audit specialists. 21) 22) Inherent risk is ________ related to planned detection risk and ________ related to the amount of audit evidence. A) inversely; inversely B) inversely; directly C) directly; directly D) directly; inversely 22) 23) Presentation and disclosure related audit objectives would be performed in which phase of the audit process? A) perform audit tests for controls and transactions B) plan and design audit approach C) complete the audit and issue the audit report D) perform analytical procedures and tests of balances 23) 24) If tests of controls support the control risk assessment, then ________ in the audit risk model is increased. A) planned inherent risk B) planned assurance risk C) planned detection risk D) planned fraud risk 24) 25) Which of the following is generally not included in the "evidence mix"? A) tests of details of balances B) tests of controls C) substantive tests of transactions D) risk assessment procedures 25) 26) Which of the following is an accurate statement regarding the four phases of the audit process? A) After the planning stage, the auditor should have a well-defined audit strategy and plan and a specific audit program for the entire audit. B) During phase II, the auditor must evaluate the going-concern assumption. C) The objective of phase III is to perform tests of controls. D) All of the above are correct statements. 26) D-4