Presentation on theme: "Inquiry 4-1 Which of the following statements concerning noncompliance by clients is correct? A. An auditor"s responsibility to detect noncompliance."— Presentation transcript:

1 Question 4-1 Which of the complying with statements concerning noncompliance by clients is correct? A.  An auditor"s duty to detect noncompliance that has actually a direct and material result on the financial statements is the exact same as that for errors and also frauds. B.  An audit in accordance via generally accepted auditing requirements usually has audit procedures particularly designed to detect noncompliance that has actually an indirect however material impact on the financial statements. C.  An auditor considers noncompliance from the perspective of the reliability of management"s representations quite than their relation to audit objectives acquired from financial statement assertions. D.  An auditor has actually no obligation for noncompliance that has an indirect result on the financial statements.

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2 Concern 4-2 Which of the adhering to statements best defines auditors" responsibility to detect errors and also frauds? A.  Auditors have no obligation to detect errors and also frauds bereason auditors are not insurers and also an audit does not constitute a guarantee. B.  Auditors are responsible to detect material errors however have no responsibility to detect material frauds that are hidden via employee collusion or management override of the inner control framework. C.  Auditors have actually no responsibility to detect errors and frauds unmuch less analytical steps or tests of transactions determine problems causing a fairly prudent auditor to suspect that the financial statements were materially misproclaimed. D.  Auditors must architecture an audit to carry out reasonable assurance of detecting errors and also frauds that are material to the financial statements.

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3 Question 4-3 The probability that an audit team will give an inproper opinion on financial statements best explains A.  Audit threat. B.  Inherent hazard. C.  Control threat. D.  Detection danger.

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4 Inquiry 4-4 If control hazard rises and also all various other dangers in the audit hazard version stay continuous other than the one referred to listed below, which of the following statements is correct?  A.  Audit threat will decrease. B.  Inherent danger will certainly boost. C.  Detection danger will decrease. D.  Detection risk will certainly boost.

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5 Concern 4-5 An audit team offers the assessed hazard of material misstatement to A.  Evaluate the efficiency of the entity"s inner control plans and also tasks. B.  Identify transactions and account balances wright here natural threat is at the maximum. C.  Indicate whether materiality thresholds for planning and also testimonial objectives are sufficiently high. D.  Determine the acceptable level of detection risk for financial statement assertions.

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6 Concern 4-6 Based on audit proof gathered and also evaluated, an auditor decides to boost the assessed level of manage hazard from that originally planned. To accomplish an in its entirety audit hazard level that is substantially the very same as the planned audit threat level, the auditor would A.  Decrease substantive trial and error. B.  Decrease detection danger. C.  Increase natural hazard. D.  Increase materiality levels

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7 Concern 4-7 The acceptable level of detection hazard is inversely pertained to the A.  Assurance provided by substantive tests. B.  Risk of misusing audit measures. C.  Preliminary judgment around materiality levels. D.  Risk of failing to find product misstatements.

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8 Concern 4-8 Normally accepted auditing standards state that analytical measures A.  Should be applied in the planning and last evaluation stages of the audit and also as a substantive test during the audit. B.  Should be used in the planning and also final evaluation steras of the audit and also have the right to be provided as a substantive test during the audit. C.  Should be applied in the planning phase and also can be used as a substantive test in the final evaluation stage. D.  Should be applied in the last testimonial phase and also deserve to be applied as a substantive test in the planning stage.

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9 Inquiry 4-9 In the planning stage, analytical procedures are provided to Identify potential difficulty locations. B.  Provide straight evidence about the balances in accounts. C.  Determine the mathematical correctness of the financial statements. D.  All of the over.

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10 Inquiry 4-10 Assume that application of analytical steps revealed substantial undefined distinctions between videotaped quantities and the expectations (estimates) arisen by the auditor. If monitoring is unable to administer an acceptable explanation, the auditor have to A.  Consider the issue a scope limitation. B.  Percreate additional audit steps to investigate the matter additionally. C.  Intensify the audit through the expectation of detecting management fraud. D.  Withattract from the engagement.

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11 Inquiry 4-11 Analytical steps provided in planning an audit need to emphasis on A.  Reducing the scope of tests of controls and substantive tests. B.  Providing assurance that potential material misstatements will certainly be established. C.  Enhancing the auditor"s expertise of the client"s organization. D.  Assessing the adequacy of the available evidential matter.

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12 Inquiry 4-12 The form of financial analysis that expresses balance sheet accounts as percentages of total assets is known as: A.  Horizontal evaluation. B.  Vertical evaluation. C.  Net worth analysis. D.  Expenditure evaluation.

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13 Question 5-1 In an issuer audit, an audit team"s obligation would not incorporate A.  assessing the efficiency of a client"s internal controls. B.  connecting interior manage deficiencies. C.  making client"s interior controls. D.  documentation of knowledge of a client"s internal controls.

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14 Question 5-2 Which of the following is not a component of internal controls? A.  Control setting B.  Control activities C.  Inherent risk D.  Monitoring

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15 Inquiry 5-3 Which of the complying with is a aspect in the manage environment? A.  Segregation of duties B.  Indevelopment processing C.  Performance reviews D.  Management"s ideology and also operating style

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16 Inquiry 5-4 The "obtaining an understanding" work-related phase of inner manage evaluation would certainly not give auditors an in its entirety acquaintance with the client"s A.  control setting. B.  indevelopment and communication mechanism. C.  manage task efficiency. D.  monitoring activities.

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17 Concern 5-5 When an auditor plans to rely on controls that have adjusted because they were last tested, which of the adhering to courses of activity would certainly be the majority of appropriate? A.  Test the operating performance of such controls in the current audit. B.  Document that reliance and proceed through the original audit strategy. C.  Inquire of monitoring as to the efficiency of the controls. D.  Report the reliance in the report on internal controls.

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18 Concern 5-6 Which of the adhering to actions is considered a test of controls? A.  An auditor reviews the entity"s check register for untape-recorded liabilities. B.  An auditor evaluates whether a general journal entry was tape-recorded at the correct amount. C.  An auditor interviews and also observes appropriate personnel to recognize segregation of duties. D.  An auditor reviews the audit workrecords to ensure correct sign-off.

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19 Question 5-7 Which of the adhering to payroll control activities would certainly the majority of properly ensure that payment is made only for work-related performed? A.  Require all employees to document arrival and also leave by using the moment clock. B.  Have a payroll clerk recalculate all time cards. C.  Require all employees to authorize their time cards. D.  Require employees to have actually their direct supervisors give their time cards.

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20 Inquiry 5-8 Which of the adhering to need to an auditor do once manage risk is assessed at the maximum level? A.  Percreate fewer substantive tests of details B.  Percreate even more tests of controls C.  Document the assessment D.  Document the control structure even more extensively

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21 Question 5-9 Which of the adhering to statements is correct regarding inner control? A.  A well-designed interior regulate setting ensures the success of an entity"s regulate objectives. B.  An inherent limitation to interior manage is the fact that controls have the right to be circumvented by monitoring override. C.  A well-designed and also operated interior manage setting have to detect collusion perpetrated by two human being.


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D.  Internal control is a vital business attribute and also have to be designed and operated to detect all errors and also fraud.

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