Question 1

The auditor must communicate significant deficiencies in internal control only after the entire audit is complete to ensure the auditor has a sufficient understanding of the circumstances surrounding the deficiency.

Accepted Answer

The auditor must communicate significant deficiencies in internal control as soon as they come across them during the audit process, and not wait until the entire audit is complete. Timely communication can help the client address the deficiency and improve their internal control.

Question 2

At what point in the audit process are tests of details most appropriately designed?
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

Tests of details are most appropriately designed during the performance of analytical procedures and tests of balances, as this is when auditors gather specific evidence about individual accounts and transactions. Planning and designing the audit approach sets the overall strategy, while performing audit tests for controls and transactions tests the effectiveness of the internal controls. Completing the audit and issuing the audit report is the final step in the audit process.

Question 3

Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor's use of tests of details of balances.Which of the following is true?
A) They are likely to be performed prior to the clients end of the fiscal year.
B) They are likely to eliminate the need for tests of details of balances.
C) They are likely to have no impact on the planned tests of details of balances.
D) They are likely to be used only in the audit of internal control.

Accepted Answer

Tests of controls and substantive tests of transactions are typically performed prior to the client's end of the fiscal year. This is because they assess the effectiveness of internal controls over financial transactions and detect any errors or fraud in the processing of those transactions. These tests may reduce the amount of testing needed for details of balances, but they do not eliminate the need entirely. In addition, these tests are not only used in the audit of internal control but also in the overall audit of the financial statements.

Question 4

Which of the following is/are performed in an audit of internal control over financial reporting?
A) 
B) 
C) 
D)

Accepted Answer

An audit of internal control over financial reporting (ICFR) includes testing the design and operating effectiveness of controls, identifying deficiencies in ICFR, and communicating any deficiencies to management and the audit committee. Option B (testing the operating effectiveness of controls) is one of the procedures performed in an audit of ICFR, while options A, C, and D are not relevant to this audit.

Question 5

Analytical procedures must be performed in:
A) the planning and test of control stages.
B) conjunction with tests of transactions and tests of details of balances.
C) the planning and completion stages.
D) the planning, test of control, and completion stages.

Accepted Answer

The answer of Analytical procedures must be performed in:
A) the...

Question 6

In phase 4 of the audit,complete the audit and issue an audit report,there are five activities required.List below the activities.

Accepted Answer

The answer of In phase 4 of the audit,complete the...

Question 7

Which of the following tests commonly occur together?
A) Substantive tests of transactions and tests of controls
B) Substantive tests of transactions and obtaining an understanding of internal controls
C) Analytical procedures and tests of controls
D) Tests of controls and tests of details of balances

Accepted Answer

The answer of Which of the following tests commonly occur...

Question 8

Which of the following ultimately determines the specific audit procedures necessary to provide an independent auditor with a reasonable basis for the expression of an opinion?
A) The audit program
B) The auditor's judgment
C) Generally accepted auditing standards
D) The auditor's working papers

Accepted Answer

The auditor's judgment ultimately determines the specific audit procedures necessary to provide an independent auditor with a reasonable basis for the expression of an opinion. While generally accepted auditing standards and the audit program provide guidance and structure, it is the auditor's professional judgment that determines the specific procedures to be performed. The working papers are a record of the audit procedures performed and the evidence obtained, but they do not determine the procedures to be performed.

Question 9

Which of the following audit tests form the basis for an auditor's report on internal control over financial reporting?
A) Analytical procedures
B) Tests of transactions
C) Tests of controls
D) Tests of details of balances

Accepted Answer

Tests of controls form the basis for an auditor's report on internal control over financial reporting. The auditor performs tests of controls to obtain evidence about the operating effectiveness of the entity's internal control over financial reporting. This evidence forms the basis for the auditor's opinion on the effectiveness of internal control over financial reporting. Analytical procedures, tests of transactions, and tests of details of balances are used to obtain evidence about the completeness, accuracy, and validity of transactions recorded in the financial statements, but they do not form the basis for the auditor's report on internal control over financial reporting.

Question 10

Management implements internal controls to ensure that all required footnote disclosures are accurate.Auditors tests those controls to provide evidence supporting the ________ presentation.
A) completeness and valuation
B) completeness and accuracy
C) rights and obligations and existence
D) occurrence and accuracy

Accepted Answer

Management's internal controls are in place to ensure accuracy and completeness of footnote disclosures. Auditors test these controls to provide evidence supporting the completeness and accuracy of the presentation. The other choices do not necessarily relate to the accuracy of footnote disclosures.

Question 11

In accumulating final evidence upon which to base an audit opinion,the auditor should perform four activities.List the activities below.

Accepted Answer

The answer of In accumulating final evidence upon which to...

Question 12

Discuss the major activities and procedures performed by the auditor in the plan and design of the audit approach.

Accepted Answer

The answer of Discuss the major activities and procedures performed...

Question 13

Which of the following audit tests would be regarded as a test of controls?
A) Comparison of the inventory pricing to vendors' invoices
B) Tests of the signatures on canceled checks to board of directors' authorizations
C) Tests of the additions to property, plant, and equipment by physical inspections
D) Review of the specific items making up the balance in a given general ledger account

Accepted Answer

Tests of signatures on canceled checks to board of directors' authorizations would be regarded as a test of controls as it ensures that proper authorization and control procedures are in place for the disbursement of company funds. The other options listed are substantive tests to check accuracy and completeness of financial statement balances.

Question 14

When the auditor has completed the tests of details of balances and enters phase 4 of the audit process,she must still perform audit procedures for which of the following?
A) Contingent liabilities and employee compensation
B) Contingent liabilities and subsequent events
C) Subsequent events and contractual commitments
D) Subsequent events and unrecorded liabilities

Accepted Answer

The auditor must still perform audit procedures for contingent liabilities and subsequent events in phase 4 of the audit process, as these events may impact the financial statements and need to be disclosed appropriately. The other options listed may have already been addressed in earlier phases of the audit.

Quiz 13: Developing the Overall Audit Plan and Audit Program

The auditor must communicate significant deficiencies in internal control only after the entire audit is complete to ensure the auditor has a sufficient understanding of the circumstances surrounding the deficiency.

At what point in the audit process are tests of details most appropriately designed?

Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor's use of tests of details of balances.Which of the following is true?

Which of the following is/are performed in an audit of internal control over financial reporting?

Analytical procedures must be performed in:

In phase 4 of the audit,complete the audit and issue an audit report,there are five activities required.List below the activities.

Which of the following tests commonly occur together?

Which of the following ultimately determines the specific audit procedures necessary to provide an independent auditor with a reasonable basis for the expression of an opinion?

Which of the following audit tests form the basis for an auditor's report on internal control over financial reporting?

Management implements internal controls to ensure that all required footnote disclosures are accurate.Auditors tests those controls to provide evidence supporting the ________ presentation.

In accumulating final evidence upon which to base an audit opinion,the auditor should perform four activities.List the activities below.

Discuss the major activities and procedures performed by the auditor in the plan and design of the audit approach.

Which of the following audit tests would be regarded as a test of controls?

When the auditor has completed the tests of details of balances and enters phase 4 of the audit process,she must still perform audit procedures for which of the following?