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Which objective achieved when auditor decides to employ classic variable sampling
To determine inventory quontities on hands
SUBSTANTIVE PROCEDURES:
- BANK/AR CONFIRMATION
- INQUIRY
- RECALCULATION
- ANALYTICAL PROCEDURES
Test of CONTROLS:
INSPECTION
OBSERVATION
REPERFORMANCE
SUB PROCEDURES
CONFIRMATION A/R,Bank
INQUIRY
RECALCULATION
Test of CONTROLS:
INSPECTION
OBSERVATION
REPERFORMANCE
Which is correct about PPS sampling
Auditor controls the risk of incorrect acceptance by specifying that risk level for sampling plan
Analytical procedures required for
Planning
Final review
When applying analytical procedures which is the best approach for developing expectations
Identify reasonable explanation before talking to client
Who’s is true about using analytical procedures as substantive test
Abalitical procedures not required to be used as sub test more used for PREDICTABLE ACCOUNTS
DOCUMENTATION REQUIREMENTS FOR ANALYTICAL PROCEDURES
Document BOTH:EXPECTATION AND FACTORS FOR EXPECTATION
If an auditors risk assessment based on the effective operation of controls, auditor will:
Identify Internal Controls that likely to detect or prevent material misstatement
Auditor used knowledge provided by the understanding of internal control and final assessed risk of material misstatement to determine NET of
SUB PROCEDURES
Which factor most important conserving auditor’s responsibility to detect errors and fraud
Risk that mistakes and falsification may cause FS to contain material misstatements
Analytical procedures required:
As substantive test-NO
In final review-YES
Analytical procedures in the overall review stage of audit performed by
Partner who has comprehensive knowledge of clients business and industry
After obtaining understanding of internal control and performing risk assessment auditor decideed to to perform test of controls. Why?
Additional evidence to support reduction in control risk was not cost beneficial to obtain
PCAOB standards state relevance of audit evidence DOES NOT DEPEND on
Auditor’s risk assessment. Auditor s risk assessment affects only NET
Which statement is correct about reliability of audit evidence?
The more effective IC STRUCTURE, THE MORE ASSURANCE
Which of the following procedures would be most effective in reducing attestation risk?
Examination of evidence
To determine the sample size for a test of controls auditor consider
TOLERABLE DEVIATION RATE
ALLOWANCE FOR ASSESSING RISK TOO LOW
EXPECTED DEVIATION RATE
Upper deviation rate used to evaluate a balance after sampling was performed
Which is correct concerning pps sampling
Auditor controls risk of incorrect acceptance by specifying that risk level for sampling plan
Auditor uses knowledge provided by the understanding of internal control and final assessed risk of Material misstatement to determine NET OF
Substantive procedures
As the acceptable level of detection risk decrease, an auditor may change
Nature of substantive tests to more effective
The objective test of details of transaction performed as test of controls
Evaluate Internal control operated effectively
Procedures to search unrecorded liabilities
Vouch a sample of cash disbursement recorded just AFTER year end
Auditor determines whether dividend income from publicly held investments is reasonable by computing the amount that should have been received by referring to
Records produced by investment services
