Chapter 7 Audit Planning: Assessment of Control Risk Audit Planning: Assessment of Control Risk MULTIPLE CHOICE: 1.Which of the following is ordinarily considered a test of internal control procedures? a. Send confirmation letters to banks. b. Count and list cash on hand. c. Examine signatures on checks. d. Obtain or prepare reconciliations of bank accounts as of the balance sheet date. ANSWER: C 2.When obtaining an understanding of an entity's control environment, an auditor should concentrate on the substance of management's policies and procedures rather than their form because 3.After the study and evaluation of a client's internal control policies and procedures has been completed, an auditor might decide to 96
Chapter 7 Audit Planning: Assessment of Control Risk 4. A conceptually logical approach to the auditor's evaluation of internal accounting control consists of the following four steps: I. Determine whether the necessary procedures are prescribed and are being followed satisfactorily. II. Consider the types of errors and fraud that could occur. III. Determine the internal control policies and procedures that should prevent or detect errors and fraud. IV. Evaluate any weakness to determine its effect on the nature, timing, or extent of auditing procedures to be applied and suggestions to be made to the client. What should be the order in which these four steps are performed? a. III, IV, I, II b. III, I, II, IV c. II, III, I, IV d. II, I, III, IV ANSWER: C
You've reached the end of your free preview.
Want to read all 26 pages?
- Spring '14