aud Flashcards
(129 cards)
1
Q
The assessment of the risks of material misstatement at the financial statement level is affected by the auditor’s understanding of the control environment. Weaknesses in the control environment ordinarily will lead the auditor to
a. Conduct some audit procedures at an interim date rather than at period end
b. Modify the nature of audit procedures to obtain more persuasive audit evidence
c. Decrease the number of locations to be included in the audit scope
d. Have more confidence in internal control and the reliability of audit evidence generated internally
A
b. Modify the nature of audit procedures to obtain more persuasive audit evidence
2
Q
What is the primary means of dealing with risk in planning decisions related to audit evidence?
a. Selection of more effective tests of details of balances
b. Application of the audit risk model
c. Establishing a lower preliminary judgment about materiality
d. Allocating materiality judgment to segments
A
b. Application of the audit risk model
3
Q
If an auditor establishes a relatively high level for materiality, then the auditor will
a. Accumulate approximately the same evidence as would be the case were materiality lower
b. Accumulate more evidence than if a lower level had been set
c. Accumulate less evidence than if a lower level had been set
d. Accumulate an undetermined amount of evidence
A
c. Accumulate less evidence than if a lower level had been set
4
Q
Which of the following best describes why an independent auditor reports on financial statements?
a. Independent auditors are likely to detect fraud
b. Misstated account balances are generally corrected by an independent audit
c. Conflict of interest may exist between management and the users of the statements
d. Ineffective internal controls may exist
A
c. Conflict of interest may exist between management and the users of the statements
5
Q
An audit in accordance with PSAs is performed on the premise that management and, where appropriate, those charged with governance have responsibilities that are fundamental to the conduct of the audit. Which of the following is not one of those responsibilities?
a. To provide the auditor with all information, such as records and documentation, and other matters that are relevant to the preparation and presentation of the financial statements
b. To provide unrestricted access to those within the entity from whom the auditor determines it necessary to obtain audit evidence
c. To comply with all relevant PSAs in the preparation and presentation of the entity’s financial statements
d. To design, implement, and maintain internal control relevant to the preparation and presentation of financial statements that are free from material misstatement, whether caused by fraud or error
A
c. To comply with all relevant PSAs in the preparation and presentation of the entity’s financial
statements
6
Q
Users of financial statements demand independent audits because
a. Management relies on the auditor to improve the entity’s internal control
b. Management may not be objective in reporting
c. Users expect auditors to correct errors of management
d. Users want assurance that fraud does not exist
A
b. Management may not be objective in reporting
7
Q
Among the possible reasons why an auditor will discontinue servicing an audit client is
a. Too many errors have to be adjusted to make the financial statements conform with GAAPs
b. The auditor is also rendering at the same time, a management advisory engagement for the same client, and the audit was the engagement contracted first
c. The auditor has to use a specialist in verifying inventory valuation
d. A change in the client management and the auditor is worried about the reputation of the new management
A
d. A change in the client management and the auditor is worried about the reputation of the new
management
8
Q
A CPA was engaged by a group of royalty recipients to apply agreed-upon procedures to financial data supplied by ABC Co. regarding its compliance with contractual requirements to pay royalties. The report on these agreed-upon procedures should contain a(an):
a. Disclaimer of opinion about the fair presentation of ABC’s financial statements
b. List of the procedures performed (or reference thereto) and the CPA’s findings
c. Opinion about the effectiveness of ABC’s internal control activities concerning royalty payments
d. Acknowledgement that the sufficiency of the procedures is solely CPA’s responsibility
A
b. List of the procedures performed (or reference thereto) and the CPA’s findings
9
Q
In which of the following order would the auditors perform the following steps?
a. Determine audit risk; assess control risk; determine detection risk; set materiality
b. Set materiality; determine audit risk; assess control risk; determine detection risk
c. Set materiality; assess control risk; determine detection risk; determine audit risk
d. Determine audit risk; set materiality; assess control risk; determine detection risk
A
b. Set materiality; determine audit risk; assess control risk; determine detection risk
10
Q
A CPA has been engaged to perform review services for a client. Identify which of the following is a correct statement
a. The CPA must perform the basic audit procedures necessary to determine that the statements are in conformity with the applicable financial reporting framework.
b. The financial statements are primarily representations of the CPA
c. The CPA may prepare the statements from the books but may not assist in adjusting and closing the books
d. The CPA is performing a limited assurance engagement
A
d. The CPA is performing a limited assurance engagement
11
Q
Which of the following statements concerning consulting services is false?
a. The performance of consulting services for audit clients does not, in and of itself, impair the auditor’s independence
b. Consulting services differ fundamentally from the CPA’s function of attesting to the assertions of other parties
c. Consulting services ordinarily involves external reporting
d. Most CPAs, including those who provide audit and tax services, also provide consulting services to their clients
A
c. Consulting services ordinarily involves external reporting
12
Q
When accountants are not independent, which of the following reports can nevertheless be issued?
a. Compilation report
b. Standard audit report
c. Review report
d. Examination report on a forecast
A
a. Compilation report
13
Q
Which of the following statements best describes what is meant by setting control risk at 100%?
a. Controls are effective
b. Controls are relevant
c. Controls are ineffective
d. Cannot be determined from the information given
A
c. Controls are ineffective
14
Q
Which of the following is most likely to occur at the beginning of an initial audit engagement?
a. Prepare a rough draft of the financial statements and of the auditor’s report
b. Study and evaluate the client’s system of internal control
c. Determine the client’s reason for an audit
d. Testing of the financial statement balances
A
c. Determine the client’s reason for an audit
15
Q
Of the following statements about internal controls, which one is least likely to be correct?
a. No one person should be responsible for the custodial responsibility and the recording responsibility
for an asset
b. Transactions must be properly authorized before such transactions are processed
c. Because of the cost-benefit relationship, a client may apply controls only on selected processes
d. Control procedures reasonably ensure that collusion among employees cannot occur
A
d. Control procedures reasonably ensure that collusion among employees cannot occur
16
Q
In obtaining an understanding of internal control relevant to the audit, the auditor may trace several transactions through the system, including how the transactions interface with any service organizations whose services are part of the entity’s information system. The primary objective of this procedure is to
a. Determine the effectiveness of internal control
b. Detect fraud
c. Evaluate the design of internal control and determine whether it has been implemented
d. Replace substantive tests
A
c. Evaluate the design of internal control and determine whether it has been implemented
17
Q
An audit program is created to specify which of the following?
a. The type of audit opinion to be rendered based upon procedures performed
b. The audit procedures that will be performed every year for the client
c. How an auditor should think while performing audit procedures
d. Audit objectives and procedures to be followed during the audit process
A
d. Audit objectives and procedures to be followed during the audit process
18
Q
Which of the following statements about internal control is not correct?
a. The costs of the control should not exceed the benefits
b. The auditor’s acceptable level of detection risk is inversely related to the assessment of control risk
c. Stronger internal controls result in an increase in the number of required substantive audit procedures
d. Management is responsible for the maintenance of internal control
A
c. Stronger internal controls result in an increase in the number of required substantive audit
procedures
19
Q
After obtaining an understanding of an entity’s internal controls, an auditor may assess control risk at the maximum for some assertions because the auditor
a. Determines that internal control is not well-documented
b. Performs tests of controls to restrict detection of risk to an acceptable level
c. Believes internal control activities are unlikely to be effective
d. Identifies control activities that are likely to prevent material misstatements
A
c. Believes internal control activities are unlikely to be effective
20
Q
In connection with the study of internal control, an auditor encounters the following flowcharting symbols The auditor would conclude that
a. A document has been generated by a manual operation
b. A master file has been created by a computer operation
c. A document has been generated by a computer operation
d. A master file has been created by a manual operation
A
a. A document has been generated by a manual operation
21
Q
The sets the scope, timing and direction of the audit, and guides the development of the more
detailed _____.
a. Overall audit strategy; audit plan
b. Audit plan; overall audit strategy
c. Audit risk plan; substantive tests
d. Audit plan; risk assessment procedures
A
a. Overall audit strategy; audit plan
22
Q
Which of the following statements correctly describes the objective of an auditor in an audit of financial statements?
a. To prepare the financial statements in accordance with the applicable financial reporting framework
b. To obtain reasonable assurance whether the financial statements are free from misstatements, whether due to fraud or error, in accordance with the applicable financial reporting framework
c. To express an opinion on the fairness ofthe financial statements in accordance with the PSAs
d. To provide reasonable assurance as to whether the financial statements are fairly stated in all material respects in accordance with applicable financial reporting framework such as the PFRSs
A
d. To provide reasonable assurance as to whether the financial statements are fairly stated in all
material respects in accordance with applicable financial reporting framework such as the PFRSs
23
Q
Which of the following is a step in an auditor’s decision to assess control risk at below the maximum?
a. Apply analytical procedures to both financial data and nonfinancial information to detect conditions that may indicate weak controls
b. Perform tests of details of transactions and account balances to identify potential errors and irregularities
c. Identify specific internal control policies and procedures that are likely to detect or prevent material misstatements
d. Document that the additional audit effort to perform tests of controls exceeds the potential reduction in substantive testing
A
c. Identify specific internal control policies and procedures that are likely to detect or prevent material
misstatements
24
Q
This element of system of quality management requires a CPA firm to establish policies and procedures to provide it with reasonable assurance that engagements are performed in accordance with professional standards and regulatory and legal requirements, and that the firm or the engagement partners issue reports that are appropriate in the circumstances
a. Ethical requirements
b. Monitoring and remediation
c. Engagement performance
d. Engagement resources
A
c. Engagement performance
25
Which of the following is not an appropriate implication of this decision?
a. More evidence needs to be obtained
b. Less evidence needs to be obtained
c. Special care is required in selecting audit staff
d. Review of audit documentation is performed by personnel not assigned to the engagement
b. Less evidence needs to be obtained
26
The internal auditor recognizes that certain limitations are inherent in any internal control system. Which one of the following scenarios is the result of an inherent limitation of internal control?
a. The firm sells to customers on account, without credit approval
b. An employee, who is unable to read, is assigned custody of the firm's computer tape library and run manuals that are used during the third shift
c. The comptroller both makes and records cash deposits
d. A security guard allows one of the warehouse employees to remove company assets from the premises without authorization
d. A security guard allows one of the warehouse employees to remove company assets from the
premises without authorization
27
Which statement is correct relating to a potential successor auditor's responsibility for communicating with the predecessor auditors in connection with a prospective new audit client?
a. The successor auditors have no responsibility to contact the predecessor auditors
b. The successor auditors should contact the predecessors regardless of whether the prospective client authorizes contact
c. The successor auditors need not contact the predecessors if the successors are aware of all available relevant facts
d. The successor auditors should obtain permission from the prospective client to contact the predecessor auditors
d. The successor auditors should obtain permission from the prospective client to contact the
predecessor auditors
28
The accounts payable department usually has the responsibility for verifying the propriety of acquisitions by comparing the details on the
a. Vendor’s invoice and the purchase requisition
b. Purchase order, receiving report, and vendor’s invoice
c. Vendor’s invoice and the receiving report
d. Purchase requisition, purchase order and receiving report
b. Purchase order, receiving report, and vendor’s invoice
29
The risk that the audit will fail to uncover a material misstatement is eliminated .
a. If client has good internal control
b. If client follows the Philippine Financial Reporting Standards (PFRS)
c. When the auditor has complied with Standards on Auditing
d. Under no circumstances
d. Under no circumstances
30
Which of the following factors most likely would cause a CPA to not accept a new audit engagement?
a. The prospective client has fired its prior auditor
b. The prospective client is unwilling to make financial records available to the CPA
c. The CPA lacks a thorough understanding of the prospective client's operations and industry
d. The CPA is unable to review the predecessor auditor's working papers
b. The prospective client is unwilling to make financial records available to the CPA
31
Reports on compilation engagements should contain the following, except
a. A statement that the engagement was performed in accordance with the PSA applicable to compilation
b. A statement that the accountant does not express an opinion but expresses only limited assurance on the financial statements
c. A statement that management is responsible for the financial information compiled by the accountant
d. Identification of the financial information noting that it is based on information from the management
b. A statement that the accountant does not express an opinion but expresses only limited assurance
on the financial statements
32
In the purchasing/disbursement cycle, of the order of activities listed, which is in the best order of a typical sequence of activities?
a. Ordering goods, receiving vendor’s invoice, receiving goods, payment activity
b. Selecting authorized vendor, receiving vendor’s invoice, receiving goods, payment activity
c. Ordering goods, receiving vendor’s invoice, selecting authorized vendor, payment activity
d. Ordering goods, receiving goods, receiving vendor’s invoice, cash pay
d. Ordering goods, receiving goods, receiving vendor’s invoice, cash pay
33
Which of the following procedures regarding notes payable would an accountant most likely perform during a review engagement?
a. Confirming the year-end outstanding note payable balance with the lender
b. Examining records indicating proper authorization of the notes payable
c. Making inquiries of management regarding maturities, interest rate, and collateral
d. Documenting control procedures for payment calculations of the notes’ principal and interest
c. Making inquiries of management regarding maturities, interest rate, and collateral
34
Which of the following constitutes the most significant risk within the purchasing cycle?
a. Large quantities of relatively inexpensive parts are stored in open areas near work stations to reduce production slow-downs
b. Poor records of transfers between warehouses often result in unnecessary purchases and excess inventories
c. Receiving department personnel sign receiving documents without inspecting or counting the goods
d. Warehouse personnel do not compare quantities received to quantities shown on transfer tickets
c. Receiving department personnel sign receiving documents without inspecting or counting the goods
35
Which of the following is a correct relationship?
a. Audit risk and detection risk have an inverse relationship
b. Control risk and detection risk have a direct relationship
c. Detection risk and inherent risk have an inverse relationship
d. All of the above are correct relationships
c. Detection risk and inherent risk have an inverse relationship
36
Which of the following procedures is a practitioner least likely to perform during a review engagement?
a. Comparing the financial statements with anticipated results in budgets and forecasts
b. Studying the relationships of financial statement elements expected to conform to predictable patterns
c. Inquiring of management about actions taken at the board of directors’ meetings
d. Observing the safeguards over access to and use of assets and records
d. Observing the safeguards over access to and use of assets and records
37
An auditor should design the audit plan so that
a. All material transactions will be selected forsubstantive testing
b. Substantive tests prior to the balance sheet date will be minimized
c. The audit procedures selected will achieve specific audit objectives
d. Each account balance will be tested under either tests of controls or tests of transactions
c. The audit procedures selected will achieve specific audit objectives
38
In comparing management fraud with employee fraud, the auditor’s risk of failing to discover the fraud is
a. Greater for management fraud because managers are inherently more deceptive than employees
b. Greater for management fraud because of management’s ability to override existing internal controls
c. Greater for employee fraud because of the higher crime rate among blue collar workers
d. Greater for employee fraud because of the large number of employees in the organization
b. Greater for management fraud because of management’s ability to override existing internal controls
39
The concept of reasonable assurance implies that an auditor
a. Does not guarantee the accuracy of the financial statements
b. Is not accountable for the fairness of the financial statements
c. Is solely responsible for providing an opinion on the financial statements
d. Is in charge of identifying every misstatement
a. Does not guarantee the accuracy of the financial statements
40
An auditor has identified the controller’s review of the bank reconciliation as a control to test. In connection with this test, the auditor interviews the controller to understand the specific data reviewed on the reconciliation. In addition, the auditor verifies that the bank reconciliation is properly prepared by the accountant and reviewed by the controller as evidenced by their respective sign-offs. Which of the following types of audit procedures do these actions illustrate?
a. Observation and inspection of records
b. Confirmation and reperformance
c. Inquiry and inspection of records
d. Analytical procedures and reperformance
c. Inquiry and inspection of records
41
The four major steps in conducting an audit are:
1. Testing internal controls
2. Audit report
3. Planning
4. Testing transactions and balances
The proper sequence in applying the above steps is:
a. 1, 4, 3, 2
b. 2, 3, 4, 1
c. 3, 4, 1, 2
d. 3, 1, 4, 2
d. 3, 1, 4, 2
42
When engaged to compile the financial statements of an entity, an accountant is required to possess a level of knowledge of the entity’s accounting principles and practices. This requirement most likely will include obtaining a general understanding of the
a. Internal control awareness of the entity’s senior management
b. Risk factorsrelating to misstatements arising from illegal acts
c. Design of the entity’s internal controls implemented
d. Nature of the entity’s business transactions, the form of its accounting records and the accounting
policies used
d. Nature of the entity’s business transactions, the form of its accounting records and the accounting
policies used
43
The following are the benefits claimed for the practice of determining materiality in the initial planning stage of starting an audit, except
a. Avoiding the problem of doing too little work (underauditing)
b. Avoiding the problem of doing more work than necessary (overauditing)
c. Being able to decide early what kind of audit opinion to express
d. Being able to fine tune the audit work for effectiveness and efficiency
c. Being able to decide early what kind of audit opinion to express
44
The auditor's judgment concerning the overall fairness of the presentation of financial position and results
of operations is applied within the framework of
a. Generally accepted auditing standards
b. Generally accepted accounting principles
c. Internal control
d. Information systems control
b. Generally accepted accounting principles
45
An entity’s management is responsible for the preparation and fair presentation of the financial statements. Its responsibility includes the following, except
a. Designing, implementing, and maintaining internal control relevant to the preparation and presentation of financial statements
b. Making accounting estimates that are reasonable in the circumstances
c. Selecting and applying appropriate accounting policies
d. Assessing the risks of material misstatement of the financial statements
d. Assessing the risks of material misstatement of the financial statements
46
An audit of financial statement is conducted to determine if the
a. Client’s internal control is functioning as intended
b. Organization is operating efficiently and effectively
c. Overall financial statements are stated in accordance with an applicable reporting framework
d. Auditee is following specific procedures or rules set down by some higher authority
c. Overall financial statements are stated in accordance with an applicable reporting framework
47
The following are examples of error, except
a. A mistake in gathering or processing data from which financial statements are prepared
b. An incorrect accounting estimate arising from oversight or misinterpretation of facts
c. A mistake in the application of accounting principles relating to measurement, recognition, classification, presentation, or disclosure
d. Misrepresentation in the financial statements of events, transactions or other significant information
d. Misrepresentation in the financial statements of events, transactions or other significant information
48
After considering internal control, an auditor might decide to .
a. Increase the extent of tests of controls and substantive tests in areas where internal control is strong
b. Reduce the extent of tests of controls in areas where internal control is strong
c. Reduce the extent of both substantive tests and tests of controls in areas where internal control is strong
d. Increase the extent of substantive tests in areas where internal control is weak
d. Increase the extent of substantive tests in areas where internal control is weak
49
The accounts payable department receives a purchase order form to accomplish all of the following except
a. Comparing invoice price to purchase order price
b. Comparing quantity ordered to quantity purchased
c. Ensuring that the goods had been received by the party requesting the goods
d. Ensuring that the purchase had been properly authorized
c. Ensuring that the goods had been received by the party requesting the goods
50
Which one of these is not a type of evidence that would be used for both obtaining an understanding of the control structure and testing the controls?
a. Reperformance
b. Inquiries
c. Inspection
d. Observation
a. Reperformance
51
Which of the following best describes the responsibility of the CPA in performing compilation services for a company?
a. The CPA must understand the client’s business and accounting methods, and read the financial statements for reasonableness
b. The CPA has only to satisfy himself or herself that the financial statements were prepared in conformity with PFRS
c. The CPA should obtain an understanding of internal control and perform tests of controls
d. The CPA is relieved of any responsibility to third parties
a. The CPA must understand the client’s business and accounting methods, and read the financial statements for reasonableness
52
The most effective control for ensuring that customers are billed only for goods shipped is to
a. Require that carriers sign properly completed bills of lading
b. Implement a policy that prevents the mailing of sales invoices to customers in the absence of a properly approved shipping order and a bill of lading signed by the carrier
c. Require that all shipments be approved by accounting
d. Prohibit goods from leaving the warehouse without being accompanied by a signed bill of lading and a properly approved shipping order
b. Implement a policy that prevents the mailing of sales invoices to customers in the absence of a
properly approved shipping order and a bill of lading signed by the carrier
53
On the basis of audit evidence gathered and evaluated, an auditor decides to increase the risk of material misstatement, from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor would .
a. Decrease detection risk
b. Decrease substantive testing
c. Increase inherent risk
d. Increase materiality level
a. Decrease detection risk
54
What is the meaning of the principle that requires the auditor to be independent?
a. The auditors must be without bias with respect to the client under audit
b. The auditor must adopt a critical attitude during the audit
c. The auditor’s responsibility is to third parties
d. The auditors may have a direct ownership interest in their client’s business if it is not material
a. The auditors must be without bias with respect to the client under audit
55
Which of the following statements correctly defines the term reasonable assurance?
a. A substantial level of assurance to allow an auditor to detect a material misstatement
b. A significant level of assurance to allow an auditor to detect a material misstatement
c. An absolute level of assurance to allow an auditor to detect a material misstatement
d. A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement
d. A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement
56
Which of the following is not typically included in initial audit planning?
a. Client acceptance
b. Sending confirmation letters to customers
c. Obtain an understanding with the client
d. Determination of the purpose of the audit
b. Sending confirmation letters to customers
57
When inherent risk is high, there will need to be
A lower assessment of audit risk More evidence accumulated by the auditor
a. Yes Yes
b. Yes No
c. No Yes
d. No No
c. No Yes
58
Engagement letters are widely used in practice for professional engagements of all types. The primary purpose of the audit engagement letter is to
a. Remind management that the primary responsibility for the financial statements rests with management
b. Satisfy the requirements of the auditor’s liability insurance policy
c. Provide a starting point for the auditor’s preparation of the audit program
d. Provide a written record of the agreement with the client as to the services to be provided
d. Provide a written record of the agreement with the client as to the services to be provided
59
The auditor looks for an indication on duplicate sales invoices to see if the invoices have been verified. This is an example of
a. A test of details of balances
b. A test of control
c. A substantive test of transactions
d. Both a test of control and a substantive test of transactions
b. A test of control
60
Which of the following statements is not true?
a. Inherent risk is the susceptibility of the financial statements to material error, assuming no internal controls
b. Control risk is inversely related to evidence
c. Inherent risk is inversely related to detection risk
d. None of the above
b. Control risk is inversely related to evidence
61
Which of the following is an effective internal accounting control measure that encourages receiving department personnel to count and inspect all merchandise received?
a. Quantities ordered are excluded from the receiving department copy of the purchase order
b. Internal auditors periodically examine, on a surprise basis, the receiving department copies of receiving reports
c. Vouchers are prepared by accounts payable department personnel only after they match item counts on the receiving report with the purchase order
d. Receiving department personnel are expected to match and reconcile the receiving report with the purchase order
a. Quantities ordered are excluded from the receiving department copy of the purchase order
62
Which of the following statements concerning materiality thresholds is incorrect?
a. Aggregate materiality thresholds are a function of the auditor's preliminary judgments concerning audit risk
b. Materiality thresholds may change between the planning and review stages of the audit. These changes may be due to quantitative and/or qualitative factors
c. The smallest aggregate level of errors or fraud that could be considered material to any one of the financial statements is referred to as a "materiality threshold"
d. In general, the more misstatements the auditor expects, the higher should be the aggregate materiality threshold
d. In general, the more misstatements the auditor expects, the higher should be the aggregate
materiality threshold
63
A system of internal control, regardless of how carefully designed and implemented, contains certain inherent limitations. Which of the following errors or irregularities is not caused by an inherent limitation.
a. The president and chief executive officer, with the assistance of the corporate controller, inflated earnings by recording fictitious sales at year-end
b. A newly-installed electronic data processing system failed to provide for a comparison of sales order amount with prior customer balance and credit limit. This resulted in numerous sales to customers
who had already exceeded their credit limits
c. Numerous recording errors occurred because persons analyzing and recording transactions did not have the necessary accounting background
d. A computer programmer and a computer operator conspired to divert funds from the company to an account controlled by the dishonest employees
c. Numerous recording errors occurred because persons analyzing and recording transactions did not have the necessary accounting background
64
According to PSA 520, “analytical procedures” means the analysis of significant ratios and trends including the resulting investigation of fluctuations and relationships that are inconsistent with other relevant information or deviate from predicted amounts. These procedures are used for the following purposes, except
a. As substantive procedures when their use can be more effective or efficient than tests of details in reducing detection risk for specific financial statement assertions
b. To assist the auditor in planning the nature, timing and extent of other audit procedures
c. As tests of control to determine the effectiveness of the design and operation of the entity’s accounting and internal controls
d. As an overall review of the financial statements in the final review stage of the audit
c. As tests of control to determine the effectiveness of the design and operation of the entity’s
accounting and internal controls
65
Which of the following statements correctly describes the objective of an auditor in an audit of financial statements?
a. To prepare the financial statements in accordance with the applicable financial reporting framework
b. To obtain reasonable assurance whether the financial statements are free from misstatements, whether due to fraud or error, in accordance with the applicable financial reporting framework
c. To express an opinion on the fairness ofthe financial statements in accordance with the PSA
d. To provide reasonable assurance whether the financial statements are fairly stated in all material respects in accordance with applicable financial reporting framework such as the PFRS
d. To provide reasonable assurance whether the financial statements are fairly stated in all material respects in accordance with applicable financial reporting framework such as the PFRS
66
Which of the following best describes why an independent auditor is asked to express an opinion on the fair presentation of financial statements?
a. It is difficult to prepare financial statements that fairly present a company’s financial position, financial performance, and cash flows without the expertise of an independent auditor
b. It is the management’s responsibility to seek available independent aid in the appraisal of the financial
information shown in its financial statements
c. The opinion of an independent party is needed because a client may not be objective with respect to its own financial statements
d. It is a customary courtesy that all shareholders o
c. The opinion of an independent party is needed because a client may not be objective with respect to its own financial statements
67
In performing an attestation engagement, a CPA typically
a. Supplies litigation support services
b. Assesses control risk at a low level
c. Expresses a conclusion on an assertion about some type of subject matter
d. Provides management consulting advice
c. Expresses a conclusion on an assertion about some type of subject matter
68
Which of these comes first?
a. Set the desired level of audit risk
b. Establish the terms of the engagement
c. Establish the materiality level
d. Plan the audit
b. Establish the terms of the engagement
69
Which of the following is least likely considered by the auditor in developing the overall audit plan?
a. Relevant risk and materiality
b. The involvement of other auditors in the audit of major component of financial statements
c. Understanding of the accounting and internal control systems
d. The general level of competence of audit assistants
c. Understanding of the accounting and internal control systems
70
Which of the following statements regarding quality management policies and procedures is incorrect?
a. Quality management policies and procedures should be implemented at both the level of the audit firm and
on an individual audits
b. The audit firm should implement quality management policies and procedures designed to ensure that all
audits are conducted in accordance with PSAs or relevant standards or practices
c. Quality management policies are objectives and goals while quality management procedures are steps to be taken to accomplish the policies adopted
d. The policies and procedures adopted by individual audit firms should not vary since there is an applicable PSA that prescribes quality management policies and procedures that must be adopted by all auditing firms
d. The policies and procedures adopted by individual audit firms should not vary since there is an applicable PSA that prescribes quality management policies and procedures that must be adopted by all auditing firms
71
Which of the following auditor concerns most likely would be so serious that the auditor would conclude that a financial statement audit cannot be performed?
a. The CPA lacks experience in the client’s operations and industry
b. A portion of supporting evidence stored at an offsite storage facility was destroyed by a typhoon
c. Management has imposed a restriction that the auditor believes will result in a qualified opinion
d. There is a substantial risk of management intentionally manipulating accounting records
d. There is a substantial risk of management intentionally manipulating accounting records
72
To maximize independence, the audit team should report to the
a. Chief financial officer
b. Controller
c. Internal auditor
d. Audit committee
d. Audit committee
73
The auditor is studying internal control policies and procedures within the sales, shipping, and billing subset of the revenue cycle. Which of the following conditions suggests a need for additional testing of controls?
a. Internal control is found to be weak with regard to shipping and billing
b. Internal control over billing and shipping is thought to be strong and the auditor considers additional testing of selected controls will result in a major reduction in substantive testing
c. Internal control over sales, billing, and shipping appears strong, but 80% of sales revenue is attributable to three major customers
d. Internal control over the recording of sales is found to be weak and the sales are evenly divided among a
large number of customers
b. Internal control over billing and shipping is thought to be strong and the auditor considers additional testing of selected controls will result in a major reduction in substantive testing
74
An auditor is required to obtain a basic understanding of the client’s internal control to plan the audit. The auditor may then decide to perform tests of controls on all internal control procedures:
a. That would aid in preventing fraud
b. Documented in the flowchart
c. Considered to be weaknesses that might allow errors to enter the accounting system
d. Considered to be strengths for which the auditor desires further reduction in the assessed level of control risk
d. Considered to be strengths for which the auditor desires further reduction in the assessed level of control risk
75
Which of the following best describes the purpose of the engagement letter?
a. The engagement letter relieves the auditor of some responsibility for the exercise of due care
b. The engagement letter should be signed by both the client and the CPA and should be used only for independent audits
c. By clearly defining the nature of the engagement, the engagement letter helps to avoid and resolve misunderstandings between CPA and client regarding the precise nature of the work to be performed and the type of report to be issued
d. The engagement letter conveys to management the detailed steps to be applied in the audit process
c. By clearly defining the nature of the engagement, the engagement letter helps to avoid and resolve misunderstandings between CPA and client regarding the precise nature of the work to be performed and the type of report to be issued
76
Which of the following is not a way in which auditors use the concept of overall materiality?
a. As a guide to planning the audit
b. As a guide to the evaluation of evidence
c. As a guide for making decisions about the type of opinion to be issued
d. As a guide for assessing control risk
d. As a guide for assessing control risk
77
Which of the following is the best way to compensate for the lack of adequate segregation of duties in a small organization?
a. Disclosing lack of segregation of duties to the external auditors during the annual review
b. Replacing personnel every three or four years
c. Requiring accountants to pass a yearly background check
d. Allowing for greater management involvement and oversight of incompatible activities
d. Allowing for greater management involvement and oversight of incompatible activities
78
When developing the overall strategy for the audit, the auditor will
a. Decide whether to accept a new client
b. Determine if any outside experts will be needed
c. Identify why the auditor needs an audit
d. Obtain an engagement letter
b. Determine if any outside experts will be needed
79
Which of the following is not an example of analytical evidence?
a. Compared inventory turnover by major class with the prior year on a monthly and quarterly basis
b. Compared gross profit percentages by major product classes with the prior year
c. Examined invoices for plant asset additions to determine whether the client had erroneously recorded ordinary repairs as plant assets
d. Examined monthly performance reports and investigated significant variances from budgeted amounts
c. Examined invoices for plant asset additions to determine whether the client had erroneously recorded ordinary repairs as plant assets
80
Which of the following least likely identifies an inherent limitation to internal control?
a. Breakdowns in internal control because of employee mistakes
b. Collusion involving two or more employees
c. Cost-benefit criterion
d. An override of internal controls by a low-level employee
d. An override of internal controls by a low-level employee
81
In response to an increased level of assessed risk of material misstatement, an auditor would generally:
a. Not make changes to the nature, timing, or extent of further audit procedures
b. Increase the emphasis on professional skepticism when gathering and evaluating audit evidence with the audit team
c. Perform more substantive audit procedures at an interim date instead of at period end
d. Perform additional tests of controls at an interim date to eliminate the need for substantive tests at period end
b. Increase the emphasis on professional skepticism when gathering and evaluating audit evidence with the
audit team
82
Which of the following questions would be inappropriate for an auditor to ask a client when exhibiting an appropriate level of professional skepticism while completing an audit procedure related to the internal control system?
a. What can go wrong in this process?
b. Which of your employees is a fraudster?
c. What else is important to know about this process?
d. What happens when a key employees goes on vacation?
b. Which of your employees is a fraudster?
83
If differences of opinion arise between the engagement partner and the engagement quality management reviewer,
then the engagement partner should
a. Follow the firm's policies and procedures for resolving differences of opinion
b. Issue a disclaimer of opinion and report the issue to the entity's audit committee
c. Discuss the differences of opinion with the entity's management and issue a modified auditor's report
d. Withdraw from the engagement when permissible under law or regulation
a. Follow the firm's policies and procedures for resolving differences of opinion
84
The objective of the System of Quality Management (SOQM) is/are
I. To provide the firm with reasonable assurance that the firm and its personnel fulfill their responsibilities in accordance with professional standards and applicable legal and regulatory requirements, and conduct
engagements in accordance with such standards and requirements;
II. To provide the firm with absolute assurance that engagement reports issued by the firm or engagement
partners are appropriate in the circumstances.
a. Only statement 1 is correct
b. Both statements are correct
c. Only statement 2 is correct
d. Both statements are incorrect
a. Only statement 1 is correct
85
The following relates to an entity’s internal control. Which statement is true?
a. Internal control helps an organization eliminate the risk of failing to provide users with reliable financial information
b. Internal control is a process designed to guarantee the achievement of the objectives of reliable financial reporting, compliance with laws and regulations, and operating efficiency
c. A deficiency in design of internal controls exists when an existing control is not properly designed so that, even if the control operates as designed, the control objective would not be met
d. Effective internal control requires an organization to establish an appropriate structure and clearly defined lines of responsibility and authority where everyone in the organization has equal responsibility for the effective
operation of internal control
c. A deficiency in design of internal controls exists when an existing control is not properly designed so that, even if the control operates as designed, the control objective would not be met
86
Which of the following is not one of the underlying principles of an effective control environment?
a. The organization demonstrates a commitment to integrity and ethical values
b. The board of directors demonstrates independence from management and exercises oversight for the
development and performance of internal control
c. Management establishes, with board oversight, structures, reporting lines, and appropriate authorities and
responsibilities in pursuit of objectives
d. The organization assesses business risks to the achievement of objectives
d. The organization assesses business risks to the achievement of objectives
87
Which of the following is not a reason why an auditor obtains an understanding of internal controls?
a. Understanding the entity's internal control is a requirement of professional auditing standards
b. The auditor must use the information to assess the risk of material misstatements arising from the lack of internal control
c. It is the primary basis for the audit opinion
d. It assists the auditor in designing the nature, timing, and extent of further audit procedures
c. It is the primary basis for the audit opinion
88
Which statement is true concerning materiality?
a. Materiality guidelines are specifically prescribed by the law
b. Materiality is not a useful concept in assessing internal control effectiveness
c. Misstatements are material if they could reasonably be expected to influence the decisions of users of the financial statements
d. Materiality is a concept applied to financial statement presentation but not to disclosures
c. Misstatements are material if they could reasonably be expected to influence the decisions of users of the financial statements
89
Which of the following statements best describes what is meant by setting control risk at high level?
a. Controls are effective
b. Controls are relevant
c. Controls are ineffective
d. Controls are inefficient
c. Controls are ineffective
90
An increase in the risk of material misstatement would lead to which of the following responses?
a. Increase in the extent of audit procedures
b. Decrease in the extent of audit procedures
c. Earlier performance of audit procedure
d. No change in the extent or timing of audit procedures
a. Increase in the extent of audit procedures
91
What is the first phase in an audit?
a. Understanding the client
b. Understanding internal control
c. Client acceptance or continuance
d. Testing of account balances
c. Client acceptance or continuance
92
Which item is correct concerning the risk of material misstatement?
a. Risk of material misstatement arises because audit procedures have been misapplied
b. Risk of material misstatement can be controlled and changed by the auditor
c. Risk of material misstatement must be assessed in non-quantitative terms
d. Risk of material misstatement is controllable by the client
d. Risk of material misstatement is controllable by the client
93
Which of the following statements is false?
a. Inherent risk is directly related to the amount of evidence required in account testing
b. Inherent risk is the susceptibility of the financial statements to material misstatement, assuming no internal controls
c. Inherent risk is inversely related to the level of control risk
d. Inherent risk and control risk are assessed by the auditor and controlled by the client
c. Inherent risk is inversely related to the level of control risk
94
it does not ordinarily involve an assessment of accounting and internal control systems, tests of records, and of responses to inquiries by obtaining corroborating evidence through inspection, observation, confirmation, and
computation.
a. Compilation
b. Review
c. Agreed-upon procedures
d. Advisory
b. Review
95
Which of the following most accurately describes the process of a walkthrough?
a. Testing and documenting the results of tests of selected controls
b. Inspection of selected documents, records, and internal control documentation
c. Observation of an entity's activities and operations
d. Following a transaction from its origination until it is reflected in the financial statements
d. Following a transaction from its origination until it is reflected in the financial statements
96
Which of the following statements correctly defines the term reasonable assurance?
a. A substantial level of assurance to allow an auditor to detect a material misstatement
b. A significant level of assurance to allow an auditor to detect a material misstatement
c. An absolute level of assurance to allow an auditor to detect a material misstatement
d. A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement
d. A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement
97
Which of the following situations represents a limitation, rather than a failure, of internal control?
a. A jewelry store employee steals a small necklace from a display cabinet
b. A bank teller embezzles several hundred dollars from the cash drawer
c. A purchasing employee and an outside vendor participate in a kickback scheme
d. A movie theater cashier sells reduced-price tickets to full-paying customers and pockets the difference
c. A purchasing employee and an outside vendor participate in a kickback scheme
98
Which of the following is a correct relationship?
a. Audit risk and detection risk have an inverse relationship
b. Control risk and detection risk have a direct relationship
c. Detection risk and inherent risk have an inverse relationship
d. Inherent risk and control risk have a direct relationship
c. Detection risk and inherent risk have an inverse relationship
99
The reliance placed on substantive tests in relation to the reliance placed on internal control varies in a relationship that is ordinarily
a. Parallel
b. Inverse
c. Direct
d. Equal
b. Inverse
100
Which of the following situations will normally result to a decrease in the extent of audit procedures?
a. Increase in the risk of material misstatement
b. Increase in the degree of assurance the auditor plans to obtain
c. Increase in control risk assessment
d. Increase in materiality level
d. Increase in materiality level
101
Which of the following control objectives is of least concern for auditors of financial statements?
a. Customer orders are subject to approval by the credit department manager after checking the credit limit of the customer
b. Deliveries to customers are made accurately
c. Customer orders are subject to approval by the warehouse department after checking the availability of good
being ordered by the customer
d. Control totals for shipping documents and sales invoice are compared on a daily basis
c. Customer orders are subject to approval by the warehouse department after checking the availability of good
102
An auditor should design the audit plan so that
a. All material transactions will be selected for substantive testing
b. Substantive tests prior to the balance sheet date will be minimized
c. The audit procedures selected will achieve specific audit objectives
d. Each account balance will be tested under either tests of controls or tests of transactions
c. The audit procedures selected will achieve specific audit objectives
103
Which of the following characteristics most likely would heighten an auditor’s concern about the risk of material
misstatement arising from fraudulent financial reporting?
a. There is a lack of interest by management in maintaining an earnings trend
b. Computer hardware is usually sold at a loss before being fully depreciated
c. Management had frequent disputes with the auditor on accounting matters
d. Monthly bank reconciliations usually include several large checks outstanding
c. Management had frequent disputes with the auditor on accounting matters
104
An auditor assesses control risk because it
a. Is relevant to the auditor's understanding of the control environment
b. Provides assurance that the auditor's materiality levels are appropriate
c. Indicates to the auditor where inherent risk may be the greatest
d. Affects the level of detection risk that the auditor may accept
d. Affects the level of detection risk that the auditor may accept
105
One purpose of establishing quality control policies and procedures for acceptance and continuance of client relationships and specific engagements is to
a. Undertake engagements only that the accounting firm is competent to perform
b. Monitor significant deficiencies in the design and operation of the client’s internal control
c. Identify noncompliance with aspects of contractual agreements that affect the financial statements
d. Provide reasonable assurance that personnel will be adequately trained to fulfill their assigned responsibilities
a. Undertake engagements only that the accounting firm is competent to perform
106
Which of the following is a step in an auditor's decision to assess control risk at below the maximum?
a. Apply analytical procedures to both financial data and nonfinancial information to detect conditions that may indicate weak controls
b. Perform tests of details of transactions and account balances to identify potential errors and irregularities
c. Identify specific internal control policies and procedures that are likely to detect or prevent material
misstatements
d. Document that the additional audit effort to perform tests of controls exceeds the potential reduction in substantive testing
c. Identify specific internal control policies and procedures that are likely to detect or prevent material
misstatements
107
Which of the following statements most likely would be included in an engagement letter from an auditor to a client?
a. The CPA firm will provide absolute assurance about whether the financial statements are free of material misstatement
b. The CPA firm is responsible for ensuring that the client complies with applicable laws
c. The CPA firm will involve information technology specialists in the performance of the audit
d. The CPA firm will adjust the financial statements to correct misstatements before issuing a report
c. The CPA firm will involve information technology specialists in the performance of the audit
108
In which of the following order would the auditors perform the following steps?
a. Determine audit risk; assess control risk; determine detection risk; set materiality
b. Set materiality; determine audit risk; assess control risk; determine detection risk
c. Set materiality; assess control risk; determine detection risk; determine audit risk
d. Determine audit risk; set materiality; assess control risk; determine detection risk
b. Set materiality; determine audit risk; assess control risk; determine detection risk
109
Generally Accepted Auditing Standards (GAAS) and Philippine Standards on Auditing (PSA)should be looked upon by practitioners as
a. Ideals to work for, but which are not achievable
b. Maximum standards which denote excellent work
c. Minimum standards of performance which must be achieved on each audit engagement
d. Benchmarks to be used on all audits, reviews, and compilations
c. Minimum standards of performance which must be achieved on each audit engagement
110
If the auditor sets the preliminary judgment about materiality level at a relatively low peso amount,
a. The same amount of evidence will be required as for a high level
b. The amount of evidence required will not be affected
c. More evidence will be required than for a high level
d. Less evidence will be required than for a high level
c. More evidence will be required than for a high level
111
The concept of reasonable assurance implies that an auditor
a. Is not accountable for the fairness of the financial statements
b. Is solely responsible for providing an opinion on the financial statements
c. Does not guarantee the accuracy of the financial statements
d. Is in charge of identifying every misstatement
c. Does not guarantee the accuracy of the financial statements
112
Which of the following procedures should an accountant perform during an engagement to compile prospective financial statements?
a. Test the entity’s internal controls to determine if adequate controls exist so that financial projections can be reasonably achieved
b. Make inquiries prior to the date of the report about possible future transactions that may impact the forecast once the report is issued
c. Make inquiries about the accounting principles used in the preparation of the prospective financial statements
d. Compare the prospective financial statements with the entity’s historical results for the prior year
c. Make inquiries about the accounting principles used in the preparation of the prospective financial statements
113
Which of the following is least likely to be included in an agreed-upon procedures attestation engagement report?
a. The engaging party takes responsibility for the sufficiency of procedures
b. Use of the report is restricted
c. Limited assurance on the information presented
d. A summary of procedures performed
c. Limited assurance on the information presented
114
Which of the following control procedures will likely prevent the concealment of a cash shortage that was perpetrated by improperly writing off a trade account receivable?
a. Write off must be supported by an aging schedule showing that only receivables that are several months overdue have been written off
b. Write off must be approved by a responsible officer after reviewing the credit department’s
recommendations and supporting evidence
c. Write off must be approved by the cashier
d. Write off must be authorized by field sales representatives
b. Write off must be approved by a responsible officer after reviewing the credit department’s
recommendations and supporting evidence
115
Assessing control risk at a low level most likely would involve
a. Performing more extensive substantive tests with larger sample sizes than originally planned
b. Reducing inherent risk for most of the assertionsrelevant to significant account balances
c. Changing the timing of substantive tests by omitting interim-date testing and performing the tests at year end
d. Identifying specific controls relevant to specific assertions
d. Identifying specific controls relevant to specific assertions
116
A requirement that working papers be reviewed by the supervisor, and any deficiencies be discussed with the preparer is an example of a quality management procedure in the area of
a. Acceptance and continuance of client relationships and specific engagements
b. Engagement performance
c. Human resources
d. Relevant ethical requirements
b. Engagement performance
117
Which of the following statements applies to consulting services engagements?
a. A practitioner should obtain an understanding of the internal control to assess control risk
b. A practitioner is not permitted to compile a financial forecast
c. A practitioner is to maintain an appearance of independence
d. A practitioner should obtain sufficient relevant data to complete the engagement
d. A practitioner should obtain sufficient relevant data to complete the engagement
118
Which of the following is the best explanation of the difference, if any, between audit objectives and audit
procedures?
a. Audit procedures establish broad general goals; audit objectives specify the detailed work to be performed
b. Audit objectives are tailor-made for each assignment; audit procedures are generic in application
c. Audit objectives define specific desired accomplishments; audit procedures provide the means of achieving audit objectives
d. Audit procedures and audit objectives are essentially the same
c. Audit objectives define specific desired accomplishments; audit procedures provide the means of achieving audit objectives
119
The auditor should perform tests of controls when the auditor’s risk assessment includes an expectation
__________.
a. That the controls are not being applied
b. That the controls are not suitably designed
c. Of the operating effectiveness of internal control
d. Of a low level of inherent risk
c. Of the operating effectiveness of internal control
120
An auditor has identified the controller’s review of the bank reconciliation as a control to test. In connection with this test, the auditor interviews the controller to understand the specific data reviewed on the reconciliation. In
addition, the auditor verifies that the bank reconciliation is properly prepared by the accountant and reviewed by the controller as evidenced by their respective sign-offs. Which of the following types of audit procedures do these
actions illustrate?
a. Observation and inspection of records
b. Confirmation and reperformance
c. Inquiry and inspection of records
d. Analytical procedures and reperformance
c. Inquiry and inspection of records
121
When approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor.
This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining
a. Whether the predecessor’s work should be used
b. Whether the company follows the policy of rotating its auditors
c. Whether in the predecessor’s opinion internal control of the company has been satisfactory
d. Whether the engagement should be accepted
d. Whether the engagement should be accepted
122
Which of the following best describes the responsibility of the CPA in performing compilation services for a company?
a. The CPA must understand the client’s business and accounting methods, and read the financial statements for reasonableness
b. The CPA has only to satisfy himself or herself that the financial statements were prepared in conformity
with PFRS
c. The CPA should obtain an understanding of internal control and perform tests of controls
d. The CPA is relieved of any responsibility to third parties
a. The CPA must understand the client’s business and accounting methods, and read the financial statements for reasonableness
123
As the acceptable level of detection risk decreases, an auditor may
a. Reduce substantive testing by relying on the assessments of inherent risk and control risk
b. Postpone the planned timing of substantive tests from interim dates to the year-end
c. Eliminate the assessed level of inherent risk from consideration as a planning factor
d. Lower the assessed level of control risk from the maximum level to below the maximum
b. Postpone the planned timing of substantive tests from interim dates to the year-end
124
Auditors are often requested to perform a review engagement on interim financial statements. A review of interim financial information consists primarily of
a. Vouching and tracing
b. Reconciliation and reperformance
c. Inquiries and analytical procedures
d. Confirmation and observation
c. Inquiries and analytical procedures
125
An entity’s management is responsible for the preparation and fair presentation of the financial statements. Its responsibility includes the following, except
a. Designing, implementing, and maintaining internal control relevant to the preparation and presentation of financial statements
b. Making accounting estimates that are reasonable in the circumstances
c. Selecting and applying appropriate accounting policies
d. Assessing the risks of material misstatement of the financial statements
d. Assessing the risks of material misstatement of the financial statements
126
The maximum reliance an auditor may place on control procedures in reducing the extent of substantive procedures is determined by
a. The results of tests of controls over operating effectiveness
b. Their design and implementation subject to sufficient evidence from tests of controls that are operating
effectively
c. Their design effectiveness in providing assurance the errors will be prevented or detected on a timely basis
d. The reduction in audit effort that could be achieved through reliance on controls
b. Their design and implementation subject to sufficient evidence from tests of controls that are operating
effectively
127
Which of the following controls would most likely ensure that all deliveries are invoiced?
a. The accounting department supervisor controls the mailing of monthly statements to customers, and investigates any differences reported by customers
b. The invoicing department supervisor matches pre-numbered shipping documents with entries in the sales journal
c. All orders are required to be approved by the credit controller before the goods are delivered
d. Customers are required to acknowledge receipt of the goods by signing a copy of the delivery note
b. The invoicing department supervisor matches pre-numbered shipping documents with entries in the sales journal
128
To determine whether the system of internal accounting control operated effectively to minimize errors of failure to invoice a shipment, the auditor would select a sample of transactions from the population represented by the
a. Open invoice file
b. Sales invoice file
c. Customer order file
d. Bill of lading file
d. Bill of lading file
129
Which of the following observations, made during the preliminary survey of a department store's disbursement cycle, reflects a control strength?
a. Individual department managers use pre-numbered forms to order merchandise from vendors
b. The receiving department is given a copy of the purchase order complete with a description of goods,
quantity ordered, and extended price for all merchandise ordered
c. The treasurer's office prepares checks for suppliers based on vouchers prepared by the accounts payable department
d. Individual department managers are responsible for the movement of merchandise from the receiving dock to storage or sales areas as appropriate
c. The treasurer's office prepares checks for suppliers based on vouchers prepared by the accounts payable department
