ADM 3349A Fall 2009 Mid-Term 2 Marking Key

ADM 3349A Fall 2009 Mid-Term 2 Marking Key - Mid-Term...

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Mid-Term Examination #2 ADM 3349 A AUDITING THEORY Fall 2009 November 20, 2009 Professor: S.Weatherstone INSTRUCTIONS 1. Books and notes are not permitted. 2. Calculators are permitted. 3. Complete all questions. 4. Write in pen. 5. Answer all questions directly on the examination paper. 6. Follow the suggested time frames for each question. Question Marks Suggested Time Grade 1 30 30 minutes 2 40 40 minutes 3 10 10 minutes Total 80 80 minutes
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NAME: __________________________________________ STUDENT #: ________________________ Statement of Academic Integrity The School of Management does not condone academic fraud, an act by a student that may result in a false academic evaluation of that student or of another student. Without limiting the generality of this definition, academic fraud occurs when a student commits any of the following offences: plagiarism or cheating of any kind, use of books, notes, mathematical tables, dictionaries or other study aid unless an explicit written note to the contrary appears on the exam, to have in his/her possession cameras, radios (radios with head sets), tape recorders, pagers, cell phones, or any other communication device which has not been previously authorized in writing. Statement to be signed by the student: I have read the text on academic integrity and I pledge not to have committed or attempted to commit academic fraud in this examination. Signed:______________________________________ Note: an examination copy or booklet without that signed statement will not be graded and will receive a final exam grade of zero.
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QUESTION 1 (30 marks - 30 minutes) Circle the letter corresponding to the best response. 1. The amount by which a projected, likely misstatement differs from an actual misstatement is usually the result of a. A misunderstanding of accounting principles. B . Sampling error. c. Management override of an internal control procedure. d. Risk of incorrect acceptance. 2. Which of the following is an advantage of statistical sampling? a. It permits a less rigid approach to unique audit problems. b. It uses an evaluation method that allows evaluation of the sample on factors other than the sample evidence. c. It permits auditors to use a computer to select a random sample. D . It requires auditors to be exact in their judgements on risk and materiality. 3. The risk model is defined as AR=IR x CR x DR. The risk of assessing control risk too low can lead to: a. The auditor performing more work than needed, thus wasting resources. B . The auditor failing to do additional work that should be done. c. Poor choice of procedures. d. Expanding sample sizes required for statistical sampling of account balances. 4. The purpose of tests of controls is to determine whether A . Internal control policies and procedures are working as prescribed. b. Substantive testing can be kept to a minimum.
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This note was uploaded on 01/10/2010 for the course MANAGEMENT adm 3349 taught by Professor Church during the Fall '09 term at University of Ottawa.

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ADM 3349A Fall 2009 Mid-Term 2 Marking Key - Mid-Term...

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