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Unformatted text preview: . relevance and reliability.
c. appropriateness and sufficiency.
d. independence and effectiveness. 11.
c Three common types of confirmations used by auditors are (1) negative confirmations, (2) blank
form positive confirmations, and (3) positive confirmations with information included. Place the
confirmations in order of reliability from highest to lowest.
a. 1, 2, 3.
b. 3, 2, 1.
c. 2, 3, 1.
d. 3, 1, 2. 12.
c When auditors use documents to support recorded transactions, the process is often called:
d. physical examination. 13.
b An example of an external document is:
a. employees’ time reports.
b. bank statements.
c. purchase order for company purchases.
d. carbon copies of checks. 14.
c An example of a document the auditor receives from the client, but which was prepared by
someone outside the client’s organization, is a(n):
a. confirmation. 1-113 b.
d. sales invoice.
bank reconciliation. 15.
a “Evaluations of financial information made by a study of plausible relationships among
financial and nonfinancial data involving comparisons of recorded amounts to expectations
developed by the auditor” is a definition of:
a. analytical procedures.
b. tests of transactions.
c. tests of balances.
d. auditing. 16. Often, auditor procedures result in significant differences being discovered by the auditor. The
auditor should investigate further if: Easy
d. Significant differences are not
expected but do exist
No Significant differences are expected but
do not exist
c Which of the following is not a purpose of analytical procedures?
a. Understand the client’s industry.
b. Assess the client’s ability to continue as a going concern.
c. Evaluate internal controls.
d. Reduce detailed audit tests. 18.
a Which of the following forms of evidence would be least persuasive in forming the auditor’s
a. Responses to auditor’s questions by the president and controller regarding the investments
b. Correspondence with a stockbroker regarding the quantity of client’s investments held in
street name by the broker.
c. Minutes of the board of directors authorizing the purchase of stock as an investment.
d. The auditor’s count of marketable securities. 19.
c Which of the following statements is not true? “The evidence-gathering technique of inquiry:
a. cannot be regarded as conclusive.”
b. requires the gathering of corroborative evidence.”
c. is the auditor’s principal method of evaluating the client’s internal control.”
d. does not provide evidence from an independent source.” 20. (SOX)
c Sarbanes-Oxley requires auditors of public companies to maintain audit documentation for what
period of time?
a. Not less than 3 years.
b. Not less than 5 years.
c. Not less than 7 years.
d. Through the issuance of the financial statements. 21.
medium Analytical procedures must be used during which phase(s) of the audit? b a.
c. Test of Controls
No 1-114 Completion
No d. No No No 22.
b Which of the following statements is not correct?
a. It is possible to vary the sample size from one unit to 100% of the items in the population.
b. The decision of how many items to test should not be influenced by the increased costs of
performing the additional tests.
c. The decision of how many items to test must be made by the auditor for each audit
d. The sample size for any given procedure is likely to vary from audit to audit. 23.
b Auditors will replace tests of details with analytical procedures when possible because the:
a. analytical procedures are more reliable.
b. tests of details are more expensive.
c. analytical procedures are more persuasive.
d. tests of details are more difficult to interpret. 24.
c Which of the following statements is not correct?
a. Persuasiveness of evidence is partially determined by the reliability of evidence.
b. The quantity of evidence obtained determines its sufficiency.
c. The auditor need not consider the independence of an information source when obtaining
d. Evidence obtained directly by the auditor is ordinarily more reliable than evidence
obtained from other sources. 25.
d Which one of the following is not one of the primary purposes of audit documentation?
a. A basis for planning the audit.
b. A record of the evidence accumulated and the results of the tests.
c. A basis for review by supervisors and partners.
d. A basis for determining work deficiencies by peer review teams. 26.
medium Which of the following is the most objective type of evidence?
a. A letter written by the client’s attorney discussing the likely outcome of outstanding
b. The physical count of securities and cash.
c. Inquiries of the credit manager about the collectibility of noncurrent accounts receivable.
d. Observation of cobwebs on some inventory bins. b 27.
b Which of the following statements regarding docum...
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- Fall '13