Question 1

The choice of which types of tests to use and how extensively they need to be performed must be the same for all audits.

Accepted Answer

The choice of which types of tests to use and how extensively they need to be performed depend on the specific circumstances of each audit and may vary depending on factors such as the size and complexity of the organization being audited, the risks associated with the audit, and the availability of evidence. Therefore, the extent and types of tests performed may differ from one audit to another.

Question 2

When testing details of balances,most audit procedures satisfy only one balance-related objective,but more than one audit procedure should be used to test each objective.

Accepted Answer

The answer of When testing details of balances,most audit procedures...

Question 3

Substantive tests of transactions and control tests are often conducted simultaneously.

Accepted Answer

Substantive tests of transactions and control tests can be conducted at the same time to improve audit efficiency while still obtaining sufficient evidence to support the auditor's opinion. This approach is known as an integrated audit or a combined audit.

Question 4

Which of the following types of evidence is not available when using substantive tests of transactions?
A) Inspection
B) Confirmation
C) Inquiries of the client
D) Reperformance

Accepted Answer

Confirmation is a type of evidence available when performing substantive tests of account balances, not transactions. Transactions tests rely on inspection, inquiries of the client, and reperformance to gather evidence.

Question 5

When designing an audit program for tests of details of balances,the auditor should make assumptions about inherent risk and control risk,and predictions concerning the outcome of tests of controls,substantive tests of transactions,and analytical procedures.

Accepted Answer

When designing an audit program, the auditor should make assumptions about inherent risk and control risk, and predictions concerning the outcome of tests of controls, substantive tests of transactions, and analytical procedures in order to tailor the audit procedures to the specific risks and circumstances of the client.

Question 6

When designing tests of controls and substantive tests an auditor is gathering evidence to satisfy the transaction related audit objectives.What are the four steps the auditor would normally follow to reduce assessed control risk?

Accepted Answer

The answer of When designing tests of controls and substantive...

Question 7

Transaction related audit objectives would most likely be performed in which phase of the audit process?
A) Plan and design audit approach
B) Perform audit tests for controls and transactions
C) Perform analytical procedures and tests of balances
D) Complete the audit and issue the audit report

Accepted Answer

Transaction related audit objectives involve testing controls and transactions, which falls under the phase of performing audit tests for controls and transactions. This phase is typically performed after the plan and design audit approach phase and before the perform analytical procedures and tests of balances phase. The completion of the audit and issuing of the audit report is the final phase of the audit process.

Question 8

The document that details the specific audit procedures for each type of test is the:
A) audit strategy.
B) audit program.
C) audit procedure.
D) audit risk model.

Accepted Answer

The audit program provides the specific audit procedures to be performed in order to achieve the audit objectives. It outlines the steps that the auditor will take to obtain sufficient and appropriate audit evidence for each type of test. The audit strategy and risk model provide a high-level overview of the audit approach and risk assessment, while audit procedures refer to the specific steps taken during the audit program.

Question 9

When designing the audit program and the particular audit tests,the auditor should keep in mind that:
A) the audit program is broken down into two parts-the risk assessment procedures and the tests of details of balances.
B) the tests of controls will not vary depending on assessed control risk.
C) analytical procedures performed during substantive testing are generally more focused and more extensive than those done as part of planning.
D) auditing standards require that the tests contained in the audit program must be approved by the PCAOB.

Accepted Answer

Analytical procedures performed during substantive testing are generally more focused and detailed than those performed during planning. The other options are incorrect as the audit program consists of more than just risk assessment procedures and tests of details of balances, tests of controls can vary depending on assessed control risk, and auditing standards do not require the tests contained in the audit program to be approved by the PCAOB.

Question 10

Presentation and disclosure related audit objectives would be performed in which phase of the audit process?
A) Plan and design audit approach
B) Perform audit tests for controls and transactions
C) Perform analytical procedures and tests of balances
D) Complete the audit and issue the audit report

Accepted Answer

The answer of Presentation and disclosure related audit objectives would...

Question 11

What type of test is used to obtain the most types of evidence?
A) Substantive tests of transactions
B) Tests of controls
C) Risk assessment tests
D) Tests of details of balances

Accepted Answer

Tests of details of balances typically involve obtaining the most types of evidence, such as examining source documents, performing recalculations and re-performing procedures performed by the entity. Therefore, it is the best choice for obtaining the most types of evidence.

Question 12

Which of the following is generally not included in the "evidence mix"?
A) Tests of controls
B) Substantive tests of transactions
C) Risk assessment procedures
D) Tests of details of balances

Accepted Answer

The answer of Which of the following is generally not...

Question 13

Auditing standards require a written audit program.

Accepted Answer

Auditing standards require a written audit program. This program should include the nature, timing, and extent of audit procedures to be performed. It acts as a guide for the auditors to execute the audit in a systematic and efficient manner.

Question 14

Which audit tests involve physical examination and confirmation?
A) Tests of controls
B) Tests of transactions
C) Tests of balances
D) Analytical procedures

Accepted Answer

Tests of balances involve physical examination and confirmation of the existence, ownership, completeness, and accuracy of assets, liabilities, and equity balances. Tests of controls and tests of transactions primarily involve evaluating the effectiveness of internal controls and examining individual transactions, while analytical procedures involve evaluating relationships between financial data to identify potential misstatements or irregularities.

Question 15

Auditors follow a four step approach to reduce assessed control risk.Which of the following is not one of the four?
A) Apply transaction related audit objectives to a class of transactions.
B) Identify accounts that have high inherent risk.
C) Identify key controls that reduce control risk.
D) For potential misstatements, design appropriate substantive tests of transactions.

Accepted Answer

The four steps to reduce assessed control risk are:
1. Understand and document the client's internal control system
2. Assess control risk
3. Design tests of controls
4. Perform and evaluate tests of controls
Identifying accounts with high inherent risk is not part of this four-step approach.

Question 16

Discuss the relationship of each of the following to the extent of planned tests of details of balances: (1) tolerable misstatement, (2) inherent risk, (3) control risk, and (4) acceptable audit risk.

Accepted Answer

The answer of Discuss the relationship of each of the...

Question 17

The evidence mix includes risk assessment procedures.

Accepted Answer

The answer of The evidence mix includes risk assessment procedures....

Question 18

Which of the following types of procedures will be performed in an audit of internal control over financial reporting?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Which of the following types of procedures...

Question 19

Auditors must use considerable professional judgment to determine any change in audit procedures that can be made when the level of inherent risk is increased or decreased.

Accepted Answer

Auditors must use professional judgment to assess inherent risk, and this assessment will inform the audit procedures that must be followed. If the inherent risk changes, auditors may need to adjust their audit procedures accordingly. This requires careful judgment to determine the appropriate course of action.

Question 20

If all transaction-related audit objectives are met,the auditor does not need to perform substantive tests of balances to determine realizable value.

Accepted Answer

Meeting all transaction-related audit objectives does not guarantee that the balances are accurately stated or that realizable value is determined appropriately. Substantive tests of balances are still necessary to confirm these factors.

Quiz 13: Developing the Overall Audit Plan and Audit Program

The choice of which types of tests to use and how extensively they need to be performed must be the same for all audits.

When testing details of balances,most audit procedures satisfy only one balance-related objective,but more than one audit procedure should be used to test each objective.

Substantive tests of transactions and control tests are often conducted simultaneously.

Which of the following types of evidence is not available when using substantive tests of transactions?

When designing an audit program for tests of details of balances,the auditor should make assumptions about inherent risk and control risk,and predictions concerning the outcome of tests of controls,substantive tests of transactions,and analytical procedures.

When designing tests of controls and substantive tests an auditor is gathering evidence to satisfy the transaction related audit objectives.What are the four steps the auditor would normally follow to reduce assessed control risk?

Transaction related audit objectives would most likely be performed in which phase of the audit process?

The document that details the specific audit procedures for each type of test is the:

When designing the audit program and the particular audit tests,the auditor should keep in mind that:

Presentation and disclosure related audit objectives would be performed in which phase of the audit process?

What type of test is used to obtain the most types of evidence?

Which of the following is generally not included in the "evidence mix"?

Auditing standards require a written audit program.

Which audit tests involve physical examination and confirmation?

Auditors follow a four step approach to reduce assessed control risk.Which of the following is not one of the four?

Discuss the relationship of each of the following to the extent of planned tests of details of balances: (1) tolerable misstatement, (2) inherent risk, (3) control risk, and (4) acceptable audit risk.

The evidence mix includes risk assessment procedures.

Which of the following types of procedures will be performed in an audit of internal control over financial reporting?

Auditors must use considerable professional judgment to determine any change in audit procedures that can be made when the level of inherent risk is increased or decreased.

If all transaction-related audit objectives are met,the auditor does not need to perform substantive tests of balances to determine realizable value.