Adaptive Drill 3

Question 0

In determining the effectiveness of an entity’s policies and procedures relating to the existence or occurrence assertion for payroll transactions, an auditor most likely would inquire about and…

Answer 0

Observe the segregation of duties concerning personnel responsibilities and payroll disbursement

Question 1

Segregating payroll related duties such as authorizing new hires and wage rates, as done by a personnel department, and disbursing payroll checks as done by treasurer, reduces the likelihood that…

Answer 1

Fictitious payroll transactions that did not occur will get recorded

Question 2

Authorizing new hires and wage rates, who is responsible for this?

Answer 2

Personnel department

Question 3

Disbursing payroll checks, who is responsible for this?

Answer 3

The treasurer

Question 4

An auditor using audit software probably would be least interested in which filed in s computerized perpetual inventory file?

Answer 4

Economic order quantity

Question 5

Economic order quantity would be the least interest to an auditor using audit software for evaluating computerized perpetual inventory files because…

Answer 5

Auditor would be least concerned with inventories purchased

Question 6

Warehouse location would be of interest to an auditor using audit software for evaluating computerized perpetual inventory files because…

Answer 6

He would be concerned with existence of inventory

Question 7

A CPA is permitted to disclose confidential client information without consent of client to…

Answer 7

A state CPA society voluntary control review board

Question 8

If management is using a financial reporting framework for its financial statements and management has no choice of using another financial reporting framework then…

Answer 8

No reference to responsibility for determining the applicable
framework is required

Question 9

Population size has very little effect on…

Answer 9

The determination of sample size

Question 10

In determining the sample size for a test of controls, an auditor should consider the likely rate of deviations, the allowable risk of assessing control risk too low and…

Answer 10

The tolerable deviation rate

Question 11

Accepting an engagement to compile an entity’s financial projection most likely would be inappropriate if the projection is to be included in…

Answer 11

An offering statement of the entity’s initial public offering of
common stock

Question 12

Financial projections can only…

Answer 12

Be provided to limited audiences

Question 13

Financial projections can only be provided to limited audiences, one that can…

Answer 13

Discern assumptions and limitations to the financial projections

Question 14

A mortgage company, bank, labor union or audit committee are…

Why?

Answer 14

All limited audiences

As entity is in direct relationship with each one

Question 15

Prospective buyers of an entity’s stock are…

Answer 15

A general audience

Question 16

In order to efficiently establish the correctness of the accounts payable cutoff, an auditor will be most likely to…

Answer 16

Coordinate cutoff tests with physical inventory observation

Question 17

By coordinating cutoff tests with the physical inventory, auditor’s can determine if…

Answer 17

Items are physically present

Question 18

Resolving differences reported by customers on confirmation request is an audit technique that…

Answer 18

Could not be performed through computer program

Question 19

Which of the following bodies promulgates standards for audits of federal financial assistance recipients?

Answer 19

General Accounting Office

Question 20

Control and distribution of unclaimed checks, the auditor would…

Answer 20

In auditing an entities computerized payroll transactions, least likely
use test data to test these controls

Question 21

Test data are…

Answer 21

Auditor contrived transactions designed to test controls that are
Imbedded in info technology driven processing programs

Question 22

Test data for an entity’s computerized payroll transactions would be useful in…3

Answer 22

1 calculation of hours worked

2 withholding of payroll taxes and

3 identifying employee numbers

Question 23

Test data of payroll transactions is important to identify employee numbers as this data can…2

Answer 23

1 Be fabricated by an auditor and

2 put to a test to determine if they would be detected by controls

Question 24

Idiots would be least likely to enter dummy checks to determine...

Answer 24

Control of unclaimed checks when whey can observe and inquire As to whereabouts and disposition of actual checks

Question 25

What is the correct statement Bout the circumstances under which a CPA firm may or may not disclose the names of its clients without the clients' express permission?

Answer 25

CPA firm may disclose this information unless disclosure would suggest that the client may be experiencing financial difficulties

Question 26

A CPA may not disclose the name of a client if doing so...

Answer 26

Disclosed confidential client information

Question 27

To satisfy the CPA of other auditing procedures when certain customary auditing procedures are not performed is...

Answer 27

Not a valid purpose for a representation letter in an audit

Question 28

Client representations in any for (written or oral) must be...

Answer 28

Supported by other audit evidence

Question 29

One example of a "special report" as defined by Statements on Auditing Standards, is a report issued in connection with...

Answer 29

Price-level basis financial statements

Question 30

There are four types of special reports, one of which in a definite set of criteria having...

Answer 30

Substantial support that is applied to all material items appearing in financial statements

Question 31

Price-level financial statements qualify as a...

Answer 31

Basis of accounting having substantial authoritative support

Question 32

What represents a quality control requirement under government auditing standards?

Answer 32

A CPA seeking to enter into a contract to perform an audit should provide the CPA's most recent external quality control review Report to the party contracting for the audit

Question 33

Government auditing standards include a general standard stating that each audit organization conducting government audits should have...2

Answer 33

1 an appropriate internal quality control system in place and 2 participate in an external quality control review program

Question 34

Planning and supervision is...

Answer 34

A general standard that applies to consulting service engagements

Question 35

4 general standards of Consulting Service engagements

Answer 35

1 professional competence 2 due professional care 3 planning and supervision 4 sufficient relevant data to support conclusions

Question 36

What is a computer assisted audit technique that permits an auditor to insert the auditor's version of a client's program to process data and compare the output with the client's output?

Answer 36

Parallel simulation

Question 37

A parallel simulation uses an auditor generated program using...

Answer 37

Generalized audit software into s client's data base

Question 38

A parallel simulation uses an auditor generated program using generalized audit software into a client's data base in use for...

Answer 38

Comparing results of the program to that of the client generated result using the same client database

Question 39

In parallel simulation the auditor's program should include the client database's... Why?

Answer 39

Edit checks So results of processing, rejections/errors related to data base, Should be same for auditor and the client's program

Question 40

Frame relay protocols are used for...

Answer 40

Quick and efficient transmission of information across networks

Question 41

A remote node router...

Answer 41

Directs network information to appropriate remote locations

Question 42

In statistical sampling methods used in substantive testing, an auditor most likely would stratify a population into meaningful groups if...

Answer 42

The population has highly variable recorded amounts

Question 43

A population is highly variable...

Answer 43

Spread out

Question 44

Example of a population being highly variable

Answer 44

Individual accounts receivable balances range from $10 to $1,000,000

Question 45

If Individual accounts receivable balances range from $10 to $1,000,000, the auditor would have to...

Answer 45

Select many items to get a representative sample

Question 46

To reduce the total sample size and thus be more efficient, the auditor may decide to...

Answer 46

Stratify a population that has highly variable recorded amounts By dividing it into subpopulations

Question 47

Stratify a population that has highly variable recorded amounts By dividing it into subpopulations. Example

Answer 47

$1 to $1,000, $1,000 to $10,000, and over $10,000

Question 48

PPS sampling automatically stratifies the population by...

Answer 48

Selecting all amounts greater than the sampling interval

Question 49

Allows the relative frequency of any interval to be determined by knowing only the mean and standard deviation

Answer 49

Normal distribution

Question 50

Standard deviation is used to...

Answer 50

Measure the extent to which values of items are spread about the Mean

Question 51

The mean is...

Answer 51

A measure of central tendency obtained by totaling all values And dividing by number of items

Question 52

A concept expressed either quantitatively or qualitatively

Answer 52

Determination of materiality

Question 53

The determination of materiality requires...

Answer 53

Auditor judgement

Question 54

Although materiality is often expressed in number terms, it can be expressed in qualitative terms such as...2

Answer 54

1 Key disclosures or 2 items related to laws and regulations that are less than the material amount