Audit Quiz 1

Which of the following is not a way in which auditors use the concept of overall materiality? 

 

As a guide for assessing control risk

The confirmation of an account payable balance selected from the general ledger provides primary evidence regarding which management assertion?

Existence

Audit evidence is usually considered sufficient when 

there is enough quantity to afford a reasonable basis for an opinion on financial statements.

During a physical inventory observation, the auditor selected a random item of inventory from the warehouse floor. The auditor then traced this item into the detailed inventory listing that ultimately agreed to the financial statements. This procedure most likely provided evidence concerning management's assertion of 

completeness

An auditor selected items from the client's detailed inventory listing (that agreed to the financial statements). During the physical inventory observation, the auditor then found each item selected and counted the number of units on hand. Assuming that the amount on hand was the same as the amount in the client's detailed inventory listing, this procedure most likely would provide evidence concerning management's assertion of 

existence

The auditor's judgment concerning the overall fairness of the presentation of financial position, results of operations, and cash flows is applied within the framework of 

the applicable financial reporting framework (i.e., GAAP in the United States).

Generally accepted auditing standards states that analytical procedures 

Must be applied in the planning and final review stages of the audit and can be used as a substantive test during the audit.

Looking at vendors' invoices for particular information is an example of 

inspection of documents.

Inquiries of warehouse personnel concerning possible obsolete or slow moving inventory items provide assurance about the PCAOB assertion of 

valuation or allocation.

The Sarbanes-Oxley Act of 2002 requires that the key company officials certify the financial statements. Certification means that the company CEO and CFO must sign a statement indicating 

All of these.

The responsibilities principle under generally accepted auditing standards does not include which of the following? 

 

Planning and supervision

Which of the following procedures would provide the most reliable audit evidence? 

 

Inspection of bank statements obtained directly from the client's financial institution

The audit objective that all transactions are recorded near the end of the period are recorded in the correct period is related most closely to which of the Audit Standards Board (ASB) transaction assertions? 

Cutoff

Which of the following would most likely be a violation of the independence requirement found in the responsibilities principle under generally accepted auditing standards? 

An auditor on the engagement owns a financial interest in the stock of the client.

Which of the following is not a concept from the performance principle under generally accepted auditing standards? 

The auditor must express an opinion in accordance with the auditor's findings.

The audit objective that balances include all items for which the client has legal ownership is related most closely to which one of the ASB balance assertions? 

Rights and obligations

The state of mind that characterizes the auditors' appropriate questioning and critical assessment of audit evidence is referred to as 

professional skepticism.

The concept of _________ recognizes that a GAAS audit may fail to detect all material misstatements. 

reasonable assurance

Documentation prepared by independent parties and sent to the client.

External-internal evidence

Proceeding forward through the accounting and control system from the evidence to the financial statements

Tracing

Test of details of transactions and balances

Substantive procedures

Audit procedure that provides the MOST compelling evidence of existence of inventory

inspection of tangible assets

Direct correspondence with independent parties

confirmation

A list of audit procedures

audit plan