auditing exam 2 MC

Which of the following are components of the risk of misstatement?

Option D

Further audit procedures include:

Option C

Which of the following is not an assertion relating to classes of transactions?

Reliability

Which of the following is not considered to be an analytical procedure?

Comparisons of financial statement amounts with source documents.

Applying substantive tests to the details of asset and liability accounts as of an interim date, rather than as of the balance sheet date:

Potentially increases the risk that errors which exist at the balance sheet date will not be detected.

Which transaction would not necessarily be considered a related party transaction?

Payment of the chief executive’s salary.

Which of the following situations would be most likely to cause a CPA to not accept a new audit engagement?

The prospective client is unwilling to make financial records available to the CPA.

Which of the following situations would be most likely to heighten an auditor's concern about the risk of fraudulent financial reporting?

Management failure to correct known internal control significant deficiencies.

To best test existence, an auditor would sample from the:

General ledger to source documents.

Which of the following would be least likely to be considered an audit planning procedure?

Perform preliminary substantive procedures.

he risk that the auditors' procedures will lead them to conclude that a material misstatement does not exist in an account balance when in fact such a misstatement does exist is referred to as:

Detection risk.

Which of the following is most likely to be an overall response to fraud risks identified in an audit?

Use less predictable audit procedures.

Which of the following matters would an auditor most likely consider to be a significant deficiency to be communicated to the audit committee?

Evidence of a lack of objectivity by those responsible for accounting decisions.

Which is most likely when the assessed level of control risk increases?

Change from performing substantive procedures at an interim date to performing them at year end.

Which of the following would be least likely to be regarded as a test of a control?

Review of a confirmation of accounts payable.

Which of the following is not considered one of the five major components of internal control?

Segregation of duties.

The effectiveness of controls is not generally tested by:

Performance of analytical procedures.

When tests of controls reveal that controls are operating as anticipated, it is most likely that the assessed level of control risk will:

Equal the preliminary assessed level of control risk.

During financial statement audits, the auditors' consideration of their clients' internal control is integral to both assessing the risk of material misstatement and:

Designing further audit procedures.

For effective internal control, which of the following functions should not be assigned to the company's accounting department?

Authorizing payments.