info gotten wrong - QB

Question 1

true or false: Internal auditors should not get involved in operational matters

Answer 1

true

Question 2

what do the working papers show?

Answer 2

1. name of the client
2. date the work was carried out
3. date the work was reviewed

Question 3

to help in establishing this year’s overall audit strategy

valid reason for preparing doc?

Answer 3

not valid

Question 4

when can audit software be used

Answer 4

1. when checking calculators on a selection of invoices
2. when extracting a sample of invoices over a certain value
3. when extracting all invoices to specific customers

Question 5

true or false

1. when testing for overstatement, the assurance provider tests items from accounting records to supporting doc
2. when testing for understatement, items outside the accounting records are selected and traced to records

Answer 5

true

Question 6

true or false

test data can be used to ensure controls in client system are operating as expected

Answer 6

true

Question 7

least persuasive method to gather evidence on an assurance engagement

Answer 7

inspecting a sales invoice

Question 8

affect on sample size?

1. increase in number of invoices in population
2. decrease in auditor’s required confidence level

Answer 8

1. negligible effect

2. decrease

Question 9

true/false?

decrease in expected misstatement will decrease sample size

Answer 9

true

Question 10

direct confirmation of receivable or payable balance?

a balance which is overstated may be agreed because it favours the respondent

Answer 10

direct confirmation of a payables balance

Question 11

increase or reduce reliability of results?

1. budgeted figures in past have been highly optimistic
2. significant deficiencies in internal control system have previously been identified

Answer 11

both reduce reliability

Question 12

true/false?

1. test data are a type of substantive procedure
2. test data can include real and dummy data
3. test data can be used to help calculate ratios

Answer 12

1. false
2. true
3. false

Question 13

true/false

1. positive confirmation always asks respondent to reply on whether they agree/disagree with info provided
2. sample of confirmation requests drawn from client’s lists of balances is more appropriate for receivable than payable balances
3. positive confirmation request usually provides more reliable audit evidence than a negative confirmation request

Answer 13

1. false
2. true
3. true

Question 14

true/false

1. when verifying controls over petty cash, inquiry is a strong evidence when assessing risk of fraud from poor SoD
2. recalculation of a dep. expense by auditor, using client’s stated estimation technique is a strong audit evidence
3. observing an employee of the client re-performing a control is enough to determine it is operating satisfactorily

Answer 14

1. false
2. true
3. false

Question 15

2 things auditors must get a written representation about

Answer 15

1. management’s belief that they fulfilled responsibility for the preparation of FS
2. that FS record and reflect all transactions

Question 16

true/false

if written representations given don’t agree with other evidence, auditors shouldn’t trust any other representations made by management during the course of the audit

Answer 16

false

Question 17

written representation required or not required?

1. accounting policies selected and applied by management are appropriate
2. a material item, subject to management judgement, for which no other evidence could reasonable by expected to exist

Answer 17

not required for both

Question 18

auditors should seek a written representation for :
1. whether there are plans to abandon product lines that will result in obsolete inventory

2. whether there are any undisclosed subsequent events

true/false?

Answer 18

true

Question 19

true/false

written confirmations are required from all client staff who have made oral representations

Answer 19

false

Question 20

true or false

prescriptive rules of ethical guidance are beneficial because they place the onus on the accountant to actively consider independence in every given situation

Answer 20

false

Question 21

identified by IESBA code or FRC?

1. self interest threat
2. management threat
3. familiarity threat
4. self-review threat

Answer 21

1. both
2. FRC
3. both
4. both