1. As a result of analytical procedures, the auditor determines that the gross profit percentage has
declined from 30% in the preceding year to 20% in the current year. The auditor should:
Consider the possibility of a misstatement in the financial statem
1. Which of the following controls will most likely justify a reduced assessed level of
control risk for the existence assertion for equipment?
A. Internal auditors periodically select equipment items in the fixed assets master file and
Class Participation Chapter 7 Evidence
Problem 7-28 (Textbook page 213 in 16th edition)
Trace from receiving reports to
vendors invoices and entry in
Class Participation (Chapter 6) Using Hillsburg Hardware Financial Statements
Sales and collection cycle
Balance Sheet Line Items
Cash and cash equivalents
Income Statement Line Items
Chapters 4,6 &7
1. What is the meaning of the generally accepted auditing standard that requires the auditor
to be independent?
The auditor must be without bias with respect to the client under audit
2. The responsibility for the preparation of the finan
1. The audit step most likely to reveal the existence of contingent liabilities is
An inquiry directed to legal counsel
2. When a contingency is resolved subsequent to the issuance of audited financial statements,
which correctly contained disc
1. The accounting system will not post a sales transaction to the sales journal without a valid bill
of lading number. This control is most relevant to which transaction-related objective for sales?
2. The accounting system automatically obtains
1. If all other factors specified in a sampling plan remain constant, changing the ARO from 5%
to 10% will cause the required sample size to: Decrease.
2. If all other factors specified in a sampling plan remain constant, changing the TER from 9% to
1. The auditors principal objectives when using a sample of tests of detail of balances is whether
the: accounts balance being audited is fairly stated
2. In monetary sampling, a sampling interval of 900 means that: Every 900th dollar in the
1. The auditor looks for an indication on duplicate sales invoices to see whether the accuracy of
invoices has been verified. This is an example of Test of Controls
2. An auditors decision either to apply analytical procedures as substantive tests or to p
Final Comprehensive Exam Part 1 (Essay Portion)
Page 1 of 18
There are 15 essay/short-answer type questions in this portion of the Final Exam.
Part A: Describe the three types of audits: financial statement audits,
operational audits, and comp