2 a all of the above b client has cash holdings in

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2. a . All of the above. b . Client has cash holdings in foreign currency in a politically unstable country. c . Client holds investments in complex financial instruments. d . Client has cash holdings in multiple U.S. financial institutions over a wide geographic area. QUESTION 10 1. Auditors should mail third-party confirmations through the client's mailroom. True False QUESTION 11 1. The auditor traces recorded sales to invoices, sales orders, and shipping documents in order to substantiate which assertion? a . Occurrence. b . Completeness. c . Legality. d . Cutoff. QUESTION 20 1. If materiality judgments change during the audit opinion formulation process, what happens to previous audit decisions that were based on the evidence obtained using the initial materiality setting? a . No action is required. b . The auditor repeats all audit procedures performed prior to the change in materiality judgments. c . The auditor modifies the audit opinion to note the change in materiality judgements. d . The auditor reassesses those previous decisions. QUESTION 3 1. Directional testing involves testing transactions or balances for which type of error?
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a . Neither overstatement nor understatement. b . Either overstatement or understatement. c . Overstatement. d . Understatement. QUESTION 4 1. Attributes sampling for testing controls should only be done by the auditor at the end of the fiscal period under audit. True False QUESTION 6 1. Substantive tests of details for revenue transactions focus primarily on the completeness assertion. True False QUESTION 9 1. The existence of debt covenants with restrictions related to cash or working capital increase the risks of material misstatement in cash accounts. True False QUESTION 10 1. Kiting is an example of a technique used to intentionally overstate cash. True False QUESTION 14 1. The auditor prepares a schedule for marketable securities. Which of the following is not one of the items in the schedule related to the value of the securities? 2. a . Cost. b . Interest and dividends. c . Carrying value for debt instruments. d . Year-end market value. QUESTION 16
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1. Planning analytical procedures for cash balances typically include trend analysis and ratios for comparison with the auditor’s expectations. True False QUESTION 17 1. The tolerable failure rate is the level at which the control’s failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor’s planned assessment of control risk in performing tests of account balances. True False QUESTION 4 1. The auditor has determined that the control risk for the existence assertion is low; therefore, the auditor may reduce the number of items tested on a substantive basis. True False QUESTION 6 1. Substantive tests of details for revenue transactions focus primarily on the completeness assertion.
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  • Fall '10
  • PHILLIPS

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