The Demand for Audit and Other Assurance Services
The relationship among audit services, attestation services, and
assurance services is reflected in Figure 1-3 on page 13 of the text. An
assurance service is an independent
If it is probable that the judgment of a reasonable person would have been changed or
influenced by the omission or misstatement of information, then that information is, by
definition of FASB Statement No. 2:
Assessment of Control Risk
Which of the following is ordinarily considered a test of
internal control procedures?
Send confirmation letters to banks.
Count and list cash on hand.
Examine signatures on checks.
Audit Risk and Materiality
An auditor compares 2002 revenues and expenses with those
the prior year and investigates all changes exceeding
10%. By this procedure the auditor would be most likely to
An increase in prope
1. easy c Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called: a. finance. b. auditing. c. accounting. d.
Which one of the following is not one of the three General Standards?
a. Proper planning and supervision.
b. Independence of mental attitude.
c. Adequate training and proficiency.
d. Due professional care.
1. easy a The objective of the ordinary audit of financial statements is the expression of an opinion on: a. the fairness of the financial statements. b. the accuracy of the financial statements. c. the accuracy of the
The IIA Code of Ethics is based on all but which of the following ethical principles?
Statements on Internal Auditing Standards are
The standards which govern the CPAs association with unaudited financial statements of
private companies are the:
a. AICPAs Code of Professional Conduct.
b. Statements on Auditing Standards (SASs).
Which of the following is not one of the three main reasons why the auditor should properly
a. To enable proper on-the-job training of employees.
b. To enable the auditor to obtain sufficient
Which of the following best defines fraud in a financial statement auditing context?
Fraud is an unintentional misstatement of the financial statements.
Fraud is an intentional misstatement of the finan
Other Assurance Services
1. A study and evaluation of internal control made in
connection with an annual audit is usually not sufficient
to express an opinion on an entity's internal control
Weaknesses in the system may go unno
An auditor would issue an adverse opinion if
The audit was begun by other independent auditors who
withdrew from the engagement.
A qualified opinion cannot be given because the
auditor lacks independence.
Which of the following is not a balance-related audit objective evaluated in the audit of
b. Realizable value
The two primary classes of tr
The payroll cycle consists of how many classes of transactions?
Which of the following statements is false?
a. The payroll cycle consists of one class of transactions.
Which of the following accounts is associated with a transaction cycle other than acquisition
a. Common stock.
b. Property, plant and equipment.
c. Accrued property taxes.
d. Income tax expense.
The classes of transactions in the acquisition and payment cycle include acquisition of:
b. goods and services.
c. goods and services, and cash disbursements.
d. goods and services, cash disbursemen
IT has several significant effects on an organization. Which of the following would not be
important from an auditing perspective?
a. Organizational changes.
b. The visibility of information.
c. The potential
A listing of all the things which the auditor will do to gather sufficient, competent evidence is
a. audit strategy.
b. audit program.
c. audit procedure.
d. audit risk model.
Shown below (1 th
Which of the following is not a condition for a contingent liability to exist?
a. There is a potential future payment to an outside party that would result from a current
b. There is uncertainty ab
Which of the following misstatements is most likely to be uncovered during an audit of a
clients bank reconciliation?
a. Duplicate payment of a vendors invoice.
b. Billing a customer at a lower price than ind
a.) SAS No. 122 Section AU-C240 indicates, An auditor conducting an audit in
accordance with GAAS is responsible for obtaining reasonable assurance that
the financial statements are free from material misstatement, whether caused by
fraud or er
The strengths of Preview Companys control environment include the following:
Hires competent employees.
Implements code of conduct.
Corporate management is of high integrity.
Management is conservative with accounting principles and practices.
The identification and explanation of the systems and control weaknesses are as
The purchase requisition is not approved and should have been approved by the
stores department. Once the approval is granted, the approver should confirm
A. According to FASB ASC Topic 450, Contingencies, States that when a contingent
liability exists, the likelihood that the future event will result in a loss is to be
assessed using the following three categories [Mes14]:
Probable: The future event is lik
A statistical sample in the test of controls should not eliminate professional
judgment by Baker.
If Baker intends to assess control risk at low level, a tolerable rate of deviation at
20% is too high.
Since Baker decided to apply an attribute sampling te
Five Accounting & Auditing Resources
AICPA (American Institute of Certified Public Accountants) It contains
information concerning the ethical standards in accounting and auditing standards
for the private, non-profit, and government sectors. Also, the as
A. Weaknesses in internal control include the following:
1. The employees should not be allowed to maintain their own time records or
submit their time records without approval. An appropriate authority should
approve the factory employees time records an
A. The elements necessary to establish negligence include the following:
A legal duty to protect the plaintiff, Musk, from any arbitrary risks.
An actual loss occurred as a result of the defendant, Apple & Company, CPAs,
not exercising due care.
What risks, if any, does offshore outsourcing of various information system functions pose to satisfying
the principles of confidentiality and privacy? What do you think an organizations duty or
responsibility to protect the privacy of its
I. Risk/Control Matrix
Customer pricing is
accurate and supports
company goals for
profitability and growth
Pricing is set to a level that does not
meet company goals for pr
On KnowledgeLeader.com you can view Audit Work Programs by Topic.
Under each topic you may find multiple subtopic programs. Explore at least five topics of
your choice and at least one audit program within each topic. Share the topics selected
with your s
Independence and Objectivity
The more controversial standards tend to be those that deal with auditor independence and
objectivity. After studying the text materials and related standards, reflect on what you have learned
about audit roles and th
Blog 1-2- Audit Interest
After studying the audit roles, in a small group reflect on what interests you about each role, the role
you find most interesting, and the skills needed to further develop or pursue a career or promotion
within the role identifie