Auditing A Risk Based Approach to Conducting a Quality Audit 10Th Edition By Johnstone - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below 1. The auditing standards issued by the PCAOB are identical to the auditing standards issued by the AICPA. a. True …
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Auditing A Risk Based Approach to Conducting a Quality Audit 10Th Edition By Johnstone – Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
1. The auditing standards issued by the PCAOB are identical to the auditing standards issued by the AICPA.
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2. The standards of the PCAOB consist of seven principles.
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3. The PCAOB’s general standards provide guidance to audit firms in selecting and training their professionals.
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4. The PCAOB’s second fieldwork standard requires auditors develop an understanding of the client’s controls as an important prerequisite to developing specific audit tests.
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5. The AICPA’s fundamental principles can be divided into four sections: purpose of the audit, responsibility of the auditor, performance of the audit, and reporting of the results.
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6. Auditors are responsible for having the appropriate competence and capabilities to perform the audit, should comply with ethical requirements, and maintain professional skepticism throughout the audit.
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7. An audit must be performed by persons who can make sound judgments relating to complex accounting issues.
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8. The auditor needs to obtain absolute assurance as to whether the financial statements are free from material misstatement.
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9. The Clarity Project is an initiative of the PCAOB to clarify the links between the standards of the PCAOB and the AICPA.
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10. The ten standards of auditing, adopted by the PCAOB encompass three broad categories including: general standards, fieldwork standards and reporting standards.
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11. The common purpose of audit standards created by the various authorities is to provide reasonable assurance that audits are conducted in a quality manner.
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12. The AICPA principles governing an audit explicitly state that an audit has inherent limitations prohibiting an auditor from obtaining reasonable assurance that the statements are free from misstatement.
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13. If controls are effective, there is a higher likelihood that the financial statements are free of material misstatement.
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14. The reporting standards of the ten generally accepted audit standards of the PCAOB includes consistency, disclosure, and due professional care.
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15. Within each cycle, the audit is designed around the specific audit procedures required by the PCAOB general standards.
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16. Comparability is one of the five management assertions.
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17. The PCAOB requires the audit be conducted with due professional care, which is a standard of care that would be expected of a reasonably prudent auditor.
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18. An auditor should give equal emphasis to all management assertions when testing accounts.
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19. The nature of an audit procedure indicates when the procedure is performed during the audit.
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20. An auditor typically indicates in the engagement letter that the audit will result in an unqualified report on the financial statements.
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21. Evidence is required to be sufficient and appropriate in order to provide a reasonable basis for audit conclusions.
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22. U.S. auditing standards recommend that a successor auditor on an initial audit obtain client permission to communicate with the predecessor auditor.
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23. Developing an understanding of the client’s business and industry is essential to proficiency as discussed in the PCAOB’s general standards.
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24. Test of controls are a type of substantive procedure.
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25. The Public Company Accounting Oversight Board (PCAOB) does not set specific standards for audits of public companies.
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26. Recalculation involves independently performing procedures or controls that were originally performed by the client, such as reperforming a bank reconciliation.
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27. Scanning is a type of analytical procedure which involves reviewing accounting data to identify significant or unusual items, such as examining a credit balance in an account that typically has a debit balance.
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28. Audit procedures can be classified as risk assessment procedures, test of controls or substantive tests.
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29. Assertions about existence address whether assets and liabilities exist and assertions about occurrence address whether recorded transactions, such as sales transactions, have occurred
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30. The first stage in an audit is performing a risk assessment.
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31. Physically examining a client’s assets is an audit procedure.
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32. Audit documentation is frequently called working papers.
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33. Control risk refers to the risk that a misstatement could occur in an assertion about a class of transaction, account balance, or disclosure and that could be material, either individually or when aggregated with other misstatements, will not be prevented, or detected and corrected, on a timely basis by the entity’s internal control.
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34. Inherent risk refers to the susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be immaterial, either individually or when aggregated with other misstatements, before consideration of any related controls.
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35. There is an inverse relationship between the assessment of risk of material misstatement in an account and the amount of evidence required.
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36. The purpose of the audit program is to list the audit procedures to be followed in gathering audit evidence and to help those in charge of the audit to monitor the progress and supervise the work.
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37. The effectiveness of entity-wide controls may reduce the extent of testing of transaction controls.
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38. When assessing the effectiveness of controls for relevant assertions the auditor tests only transaction controls.
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39. The auditor is not required to test every control related to relevant assertions in a significant account.
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40. For an integrated audit, the auditor’s opinion about internal control effectiveness is based on control effectiveness at year-end as opposed to throughout the year.
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41. Research indicates that weaknesses in control components other than control activities do not cause fraud and other misstatements in financial statements.
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42. Assertions are relevant to the audit process because they are the representations of management embodied in the financial statements.
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43. Presentation and disclosure assertions imply that all transactions and balances are properly presented, disclosures represent what actually happened, and the footnote disclosures are appropriate and adequate.
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44. The PCAOB does not currently have a mandate for convergence with other auditing standards.
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45. Substantive analytical procedures are optional for significant tests and disclosures.
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46. In performing substantive tests on account balances, the auditor performs tests for all five assertions.
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47. If the auditor assesses internal controls to be effective, less substantive testing is likely.
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48. If the auditor’s assessment is that there is high risk due to the subjectivity of the accounting process, substantive procedures should be more rigorous.
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49. An Integrated Audit requires the issuance of separate reports for the opinions expressed on the financial statements and on internal control..
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50. In an integrated audit, the auditor issues an opinion on both the financial statements and internal control.
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51. The first general standard of the PCAOB requires that an audit be performed by which type of person?
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52. Which auditing standards apply to private companies?
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53. The AICPA Principles Governing an Audit include which of the following categories that guide the conduct of an audit?
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54. What is the scope of applicability of the auditing standards of the AICPA?
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55. To satisfy the fieldwork standards, what must an auditor do?
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56. Which one of the following organizations provides auditing standards for public companies?
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57. Which one of the following has the most affect on the reliability of financial statements?
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58. The standards of competence, independence, and due professional care are covered by which section of the generally accepted auditing standards?
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59. What are the PCAOB standards that present guidance in testing assertions and planning for the audit are known as?
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60. Which of the following is the primary assertion related to testing inventory on hand to see if it includes consignment goods ?
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61. Which assertion is most closely related to the determination of the adequacy of the allowance for doubtful accounts?
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62. Which assertion addresses whether all transactions and accounts that should be included in the financial statements are included?
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63. Which assertion addresses whether the financial statements items are properly classified in the financial statements?
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64. Which of the following groups are committed to the convergence of the auditing standards?
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65. Which of the following is a procedure that requests a direct written response to the auditor form a third party?
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66. Which of the following is a procedure which analyzes plausible relationships among financial and nonfinancial data?
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67. What does the quality of the evidence an auditor collects depend upon?
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68. Which of the following terms describes procedures designed to detect material misstatements in accounts ?
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69. The proper supervision of audit assistants is a requirement found in which section of the Generally Accepted Auditing Standards?
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70. Which one of the following is a requirement pf the reporting standards included in the generally accepted auditing standards?
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71. Which of the following statements about the auditing standards issued by the AICPA is true?
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72. Which of the following is a reason why an auditor needs an understanding of internal controls?
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73. Which of the following is not a reason why an auditor obtains an understanding of internal controls?
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74. Which type of audit documentation is required by PCAOB standards?
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75. Which of the following is not a typical accounting cycle?
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76. Which of the following statements about assertions is true?
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77. Which of the following assertions would the auditor usually consider most relevant for accounts payable?
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78. Which of the following is a use of audit documentation?
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79. Which of the following factors influence the risk of material misstatement?
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80. What does business risk include?
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81. At what level does the auditor assess the risk of material misstatement?
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82. What does the effectiveness of internal controls influence?
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83. Which of the following is not a control that the PCAOB has identified that auditors should consider in evaluating whether or not an organization has sufficiently addressed fraud risk?
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84. Which statement is true concerning materiality?
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85. Which document is used by auditors to formally accept a new client?
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86. Which of the following items is not included in the engagement letter?
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87. With a substantive audit strategy, what is an auditor likely to do?
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88. Which of the following is not a question an auditor considers in deciding whether to pursue a lower control risk approach prior to substantive testing?
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89. Which of the following would not affect an auditor’s judgment concerning internal controls?
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90. With a dual purpose test, what is an auditor likely to do?
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91. Which statement is correct?
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92. Which of the following factors affect the substantive procedures performed in an audit?
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| 93. If the auditor’s assessment of the materiality of the account balance is high, what would be the respective effect on the extent of substantive testing and the nature of procedures performed? Extent of Tests Nature of Procedures
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| 94. An auditor gathers evidence on internal controls for which respective time periods for the purposes of expressing an opinion on control effectiveness and for testing controls in the financial statement period? Control Effectiveness Financial Statement
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95. Which of the following would not be a factor in whether a control weakness would be considered to be a material weakness as opposed to a significant deficiency?
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96. Which of the following statements is correct concerning the auditor’s opinion on internal control effectiveness?
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| 97. The auditing standards Under the clarified auditing standards, what is the structure of each auditing standard issued by the ASB? What is the purpose of each section?
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98. What are the AICPA’s fundamental principles?
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| 99. Audit phases
Identify at least five steps involved in an audit.
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| 100. PCAOB Assertions
Discuss the five management financial statement assertions identified in the PCAOB Standards. Provide examples.
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101. Write the three general auditing standards of the PCAOB.
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102. Explain the meaning of due professional care.
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103. What are the three broad types of audit procedures? What is the purpose of each test?
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104. There are nine specific actions an auditor can undertake to collect evidence. Identify each action and provide an example.
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
