auditing exam 2 T/F

The professional standards consider calculating depreciation expense a "routine" transaction.

False

The most reliable form of documentary evidence generally is considered to be documents created by the client.

False

A vendor's invoice is an example of documentary evidence created by a third party and held by the client.

True

The existence of cognitive biases eliminates the need for a proper application of professional skepticism on audits.

False

When the risk of material misstatement for an account is high, the auditors may perform additional substantive procedures to restrict detection risk to a lower level.

True

Both adjusting journal entries and reclassifying journal entries are ordinarily recorded by the client.

False

Analytical procedures are seldom used during the risk assessment stage of an audit engagement because they are substantive procedures.

False

An audit plan includes a detailed listing of the audit procedures to be performed in the verification of items in the financial statements.

True

The auditors' tests of controls are designed to substantiate the fairness of specific financial statement accounts.

False

The auditors' consideration of internal control is required to be performed at the balance sheet date.

False

The completeness of recording of assets is generally verified by tracing from the source documents to the recorded entry.

True

Vouching the acquisition of assets is an audit procedure that is often performed to establish the existence of the assets.

True

Internal control is a process that provides reasonable assurance concerning reliability of financial information.

True

Internal auditors should preferably report to the chief accounting officer of the company.

False

The auditors' communication of internal control significant deficiencies should be addressed only to senior management of the company.

False

If the auditors' assessment of the design of internal control reveals that it cannot be relied upon, the auditors are not required to prepare any documentation of internal control for their working papers.

False

The relatively low number of employees of small firms makes the segregation of duties impossible.

False

In a financial statement audit, CPAs are required to assess the operating effectiveness of most significant accounting oriented controls.

False