A3

Question 1

Internal control ONLY relevant to the entire entity, and NOT to any of it’s operating units or business functions. (T o F)

Answer 1

FALSE

Question 2

Reviewing the client’s lawyer’s letter for information would assit and audit in determining whether management has identified all accounting ____________ that could be __________ to the financial statements

Answer 2

ESTIMATES; MATERIAL

Question 3

Sample results must be projected to the population. Every 20th test is a (1/20= __) of the population. When projected onto population, it would equal number of overstatements divided by the percentage e.g $3,500/.05)

Answer 3

.05

Question 4

An example of a disclaimer provided within a response to an auditor’s confirmation request would included language like, __________ is furnished as a matter of courtesy without a duty to do so and ….

Answer 4

INFORMATION

Question 5

Reviewing ________ transactions reflected on the quarter-end Balance Sheet is not a procedure an auditor would perform to identify client contingencies

Answer 5

DERIVATIVE

Question 6

Reperformance gives an auditor evidence regarding ___________ effectiveness

Answer 6

OPERATING

Question 7

If an auditor unexpectedly discovers a high number of deviations, the auditor would increase ____________ risk of __________ misstatemnt

Answer 7

ASSESSED; MATERIAL

Question 8

Mean per unit estimation formula = avg _______ value * number of items in a ___________

Answer 8

AUDITED; POPULATION

Question 9

An inquiry to management regarding actual or potential litigation and the related assessment is classified as a ___________ procedure because it provides evidence regarding accruals and/or disclosures

Answer 9

SUBSTANTIVE

Question 10

Selecting voucher packages that had been approved and matched the invoice, purchase order and receiving report is considered a __________

Answer 10

REPERFORMANCE

Question 11

__________ Controls and policies and procedures that relate to many applications and support the effective functions and proper operation of the information system. This would ensure appropriate systems software acquisition

Answer 11

GENERAL

Question 12

When an auditor is testing a client’s pension benefit obligation, one of the most appropriate was of making sure the FS are fairly stated is by getting an ____________ valuation from an outside firm

Answer 12

ACTUARIAL

Question 13

When there is substantial doubt about an entity’s ability to continue as a going concern and every thing is properly disclosed, the auditor may issue a _________ of opinion

Answer 13

DISCLAIMER

Question 13

the sample size used by an auditor has an inverse relationship with __________ misstatement

Answer 13

TOLERABLE

Question 14

A file that has a high level of risk of data integrity is a file that has ________ inputs

Answer 14

MANUAL

Question 15

Sampling Interval = ___________ Misstatement/ _________ factor

Answer 15

TOLERABLE; RELIABILITY

Question 16

Sample size = Total __________ amount/ sampling _________

Answer 16

REPORTED; INTERVAL

Question 17

Auditor scanning for large, significant or unusual transactions is an __________ procedure

Answer 17

ANALYTICAL

Question 18

When an auditor finds a high number of deviations when performing procedures to sample test management’s review and approval of time sheets the auditor should __________ the assessed risk of ___________ misstatement

Answer 18

INCREASE; MATERIAL

Question 19

Substantive audit procedures, during an integrated audit are required in a ________ __________ audit but not in the audit of _________ control

Answer 19

FINANCIAL STATEMENT; INTERNAL

Question 20

An economy at the peak of the business cycle will be at the natural rate of ___________

Answer 20

EMPLOYMENT

Question 21

Income statement account balances tend to be more predictable than accounts that only include __________ _________ accounts

Answer 21

BALANCE; SHEET

Question 22

A likely benefit of information technology used for internal control will enhance _________ of information

Answer 22

TIMELINESS

Question 23

An auditor should design tests of details such that __________ audit evidence support the planned level of assurance at the __________ assertion level

Answer 23

SUFFICIENT; RELEVANT

Question 24

In assessing control risk, an auditor generally would select from a variety of techniques one of which being ____________

Answer 24

REPERFORMANCE

Question 25

Return on Assets

Answer 25

NET INCOME/ AVERAGE TOTAL ASSETS

Question 26

Auditor will most likely increase test of controls when a client's IT system is extensively ___________ throughout the company's accounting system

Answer 26

INTEGRATED

Question 27

To detect overstatements of sales using test of details (existence assertions) the auditor would ________ transactions from the accounting records to the _________ documents

Answer 27

TRACE; SOURCE

Question 28

To calculate tainting in sampling, divided the difference between the recorded amount and the amount ___________ by the __________ amount

Answer 28

AUDITED; RECORDED

Question 29

Compensating balance agreements might signify ___________ ___________ transactions

Answer 29

RELATED PARTY

Question 30

Business cycle:

Answer 30

PEAK, RECESSION, TROUGH, RECOVERY

Question 31

An auditor might chose to not to test control related to certain assertions because the auditor believes evaluating the _____________ of the control is ____________

Answer 31

EFFECTIVENESS; INEFFICIENT

Question 32

In testing assertions, _____________ is important in reviewing the collectability A/R

Answer 32

VALUATION

Question 33

Monetary unit sampling is typically used as a ___________ test and would be suitable in a scenario where transactions are of ____________ amounts to give a higher likelihood of selecting __________ value items

Answer 33

SUBSTANTIVE; VARYING; HIGHER

Question 34

Sampling method to allow selection of high value items and also used to test the existence of A/R

Answer 34

MONETARY UNIT SAMPLING

Question 35

Human judgement in the decision making process is an example of a __________ limitation to and entity's ___________ controL

Answer 35

INHERENT; INTERNAL

Question 36

When an account has minimal activity during the year, the auditor most likely would use ________ of ________ in designing audit procedures

Answer 36

TEST; DETAILS

Question 37

An advantage of statistical vs. nonstatistical sampling is that statistical sampling provides an objective basis for quantitatively evaluating sample risk (T o F)

Answer 37

True

Question 38

The primary objective of data security controls is to ensure that storage media are only _________ with prior approval

Answer 38

ALTERED

Question 39

Ratio estimation = _______ value of sample/ _______ value of sample) * Total book value

Answer 39

AUDITED; BOOK

Question 40

Auditor observing the use of registers and tapes by employees provides evidence for __________

Answer 40

COMPLETENESS

Question 41

A Walkthrough is following a transaction from it's origination until it is reflected in the ____________ statements

Answer 41

FINANCIAL

Question 42

performing an ___________ review procedure is an example of procedures used to test the completeness assertion

Answer 42

ANALYTICAL

Question 43

As sample size increases, expected population ____________ rate increases (same in opposite direction) and simultaneously, __________ rate decreases (same in opposite direction)

Question 43

An auditor will perform test of details if accounts being tested at interim are reasonably ______________

Answer 43

PREDICTED

Question 44

Auditor should use _________ sampling when auditor expects error rates to be low

Answer 44

DISCOVERY

Question 45

Material Weakness is when a potential misstatment may cause a _________ misstatement in the Financial Statements

Answer 45

MATERIAL

Question 46

Significant Deficiency is when a deficiency is less ________ than a material weakness but important enough to merit attention by those charged with governance

Answer 46

SEVERE

Question 47

Control Deficiency is when the design or operation of control doesn't allow __________, ___________ or allow for ____________ in a timely manner

Answer 47

PREVENTION, DETECTION, CORRECTION