The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the;A. factors that raise doubts about the auditability of the financial statements.;B. operating effectiveness of internal control policies and procedures.;C. risk that material misstatements exist in the financial statements.;D. possibility that the nature and extent of substantive tests may be reduced.;34. Proper segregation of duties reduces the opportunities to allow persons to be in positions to both;A. journalize entries and prepare financial statements.;B. record cash receipts and cash disbursements.;C. establish internal controls and authorize transactions.;D. perpetuate and conceal errors and fraud.;25. Select the description that best illustrates sampling risk.;A. Applying audit procedures, which are inappropriate for the audit objectives.;B. Failing to recognize misstatements or deviations in the documents examined.;C. Arriving at incorrect statistical conclusions due to computational errors.;D. Choosing a sample which has proportionately more errors than the population.;21. The Orange Corporation was audited for the year ended December 31 and the reports were delivered on February 15. After the fieldwork was completed on January 25, the auditor learned of a two-for-one stock split on February 1. If dual dating is used, what are the proper dates for the audit reports?;A. December 31 and January 25.;B. January 25 and February 1.;C. January 25 and February 15.;D. February I and February 15.;22. A second-partner review of the audit documentation and financial statements is performed to ensure that the;A. "To-do lists" are reviewed and cleared.;B. Audit program procedures are "signed off.;C. Tick-mark notations are cleared.;D. Audit work meets the quality standards of the firm.;23. The primary objective of analytical procedures used in the final review stage of an audit is to;A. Obtain evidence from details tested to corroborate management assertions.;B. Obtain evidence on the validity of the assessment of control risk.;C. Assist the auditor in evaluating the overall financial statement presentation.;D. Identify areas that represent specific risks relevant to the audit.;15. Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment (fixed asset) account are not understated?;A. Depreciation expense.;B. Gain on disposal of equipment.;C. Accounts payable.;D. Repairs and maintenance expense.;16. An auditor wishes to perform tests of controls on a client's cash disbursements procedures. If the control procedures leave no audit trail of documentary evidence, the auditor most likely will test the procedures by;A. confirmation and observation.;B. observation and inquiry.;C. analytical procedures and confirmation.;D. inquiry and analytical procedures.;8. Confirmations of accounts receivable provide the most evidence for which of the following assertions?;A. Existence.;B. Valuation or Allocation.;C. Rights and obligations.;D. Completeness.
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