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Chapter 8 Audit Planning Flashcards - Quizlet
Chapter 8 Audit Planning Flashcards - Quizlet
249 solutions
a. Supervision b. Audit
procedures c. Directing d.
Planning
Chapter
2. The auditor8 Audit
should Planning
consider D Study
the nature, extent, and timing of
the work to be performed and
should prepare a written audit
program for every audit. Which
audit standard is most closely
related to this requirement?
a. Inquiry of predecessor
auditor regarding the client.
d. Review of predecessor
auditor working papers.
Chapter 8understanding
4. To obtain an Audit Planning
of B Study
a continuing client's business in
planning an audit, an auditor
most likely would
c. A planning memorandum
establishing the timing of the
audit procedures and
coordinating the assistance of
entity personnel.
d. An internal control
questionnaire identifying
policies and procedures that
assure specific objectives will
be achieved.
Chapter 8 following
6. Which of the Audit Planning B Study
procedures would an auditor
most likely perform in planning
a financial statement audit?
c. Examining computer
generated exception reports to
verify the effectiveness of
internal controls.
c. Arrange a preliminary
conference with the client to
discuss audit objectives, fees,
timing, and other information.
c. Writing a conclusion in
individual working papers
indicating how the results of the
audit will affect the auditor's
report.
b. An auditor considers
materiality for planning
purposes in terms of the largest
aggregate level of
misstatements that could be
material to any one of the
financial statements.
d. An auditor's consideration of
materiality is influenced by the
auditor's perception of the
needs of a reasonable person
who will rely on the financial
statements.
Chapter 8 the
14. The risk that Audit Planning
assertion A Study
contains material misstatements
that, when aggregated with
misstatements in other
assertions, could make the
entire financial statements
materially misstated is:
a. Gathering of all
corroborating audit evidence.
a. Understanding of the
accounting and internal control
systems.
a. Identification of complex
accounting areas including
those involving accounting
estimates.
b. Methodology and
technology used by the auditor.
c. The entity's form of business
organization.
a. Audit objective
a. Obtaining a sufficient
knowledge of the business of
his client.
b. Understanding of accounting
and internal control.
d. Obtaining a representation
letter from the client
management.
b. Document material
weaknesses in accounting and
internal control systems.
c. A level of knowledge of
business ordinarily less than that
possessed by management.
d. A knowledge of business
which is used in assessing
inherent and control risk.
A B C D
Prior to acceptance of
engagement No No Yes Yes
a. Consideration of how it
affects the financial statements
taken as a whole.
d. Assessing the
appropriateness of using
statistical sampling instead of
judgmental sampling.
Chapter 8 Audit
16. Which of the followingPlanning A Study
factors is inappropriately
relevant to the management's
assessment of the going
concern assumption?
d. Changes in legislation or
government policy expected to
adversely affect the entity.
Chapter 8 Audit
18. When events Planning
or conditions D Study
have been identified which may
cast significant doubt on the
entity's ability to continue as a
going concern, the auditor
should:
a. Rescheduling of loan
payments.
d. In order to shorten
assessment period.
Chapter 8 disclosure
22. If adequate Audit Planning
is not C Study
made by the entity regarding
substantial doubt about its
ability to continue as a going
concern, the auditor should
include in his report specific
reference to the substantial
doubt as to ability of the
company to continue as a going
concern and should express:
d. A disclaimer of opinion.
b. Qualified opinion. d.
Disclaimer of opinion.
Chapter 8 Audit
24. If the auditor believes Planning
that D Study
management should extend its
assessment but the latter
refuses to do so, the auditor
should:
d. Consider a modification of
the report as a result of the
limitation in the scope of the
auditor's work.
Chapter 8 Audit
25. The management Planning
denied the A Study
auditor's request that the
management has to extend its
assessment of its going concern
ability. However, the auditor's
other procedures are sufficient
to assess the appropriateness of
management use of the going
concern assumption in the
preparation of the financial
statements. he auditor should
issue:
a. Unqualified opinion c.
Adverse opinion
B. Direction D, Pre-engagement
Chapter 8 Audit
2. Proper planning assuresPlanning
that D Study
(select the exception ):
A. Appropriate attention is
devoted to important areas of
the audit.
C. Work is completed
expeditiously,
D. An unqualified opinion
isexpressed.
B. Discussion among
engagement team members
about the risk of material
misstatement in the financial
statements.
A. Physical examination of
tangible assets. or the
examination of records or
documents, whether internal or
external, in paper form.
electronic form, or other media.
B. Looking at a process or
procedure being performed by
others,
C. Seeking information of
knowledgeable persons, both
financial and non-
financialinformation.
D. Evaluating financial
information through a study of
plausible relationships among
both financial and non-financial
data.
Chapter 8 understanding
8. The auditor's Audit Planning D Study
of the entity and Its
environment consists an
understanding of the following
aspects:
D. All of these
Chapter 8 Audit
9. An auditor obtains an Planning D Study
understanding of the entity and
Its environment in order to
A. Make constructive
suggestions concerning
improvements to the client's
Internal control.
B. Develop an attitude of
professional skepticism
concerning management's
financial statement assertions
A. Application of accounting
methods in computing inventory
balances.
A. Materiality C. Reasonable
assurance.
B. Comparative analysis D.
Relative risk.
Chapter 8 Audit
13. In considering Planning
materiality for D Study
planning purposes, an auditor
believes that misstatements
aggregating P10,000 would
have a material effect on an
entity's profit and loss, but that
misstatements would have to
aggregate P20,000 to materially
affect the statement of financial
position. Ordinarily, it would be
appropriate to design auditing
procedures that would be
expected to detect
misstatements' that aggregate:
A. P30,000 B. P20,000 C.
P15,000 D. P10,000
A. Direct. B. Inverse. C.
Indeterminable. D. None of
these.
D. There is no relationship
between it and the peso
amount of evidence needed.
Chapter 8 Audit
18. These are events or Planning B Study
conditions that provide an
opportunity, a motive or a
means to commit fraud, or
indicate that fraud may already
have occurred,
A. Turnover of senior
accounting personnel is low
C. Management places
substantial emphasis on
meeting earnings projections
A. Make constructive
suggestions concerning
improvements to the client's
internal control.
B. Develop an attitude of
professional skepticism
concerning management's
financial statement assertions.
B. Determine whether to
equitably reduce the audit fee
due to lower audit effort
expended during the
engagement.
B. Provide reasonable
assurance that the objectives of
the organization are achieved.
A. Inherent risk.
C. Control risk.
D. Detection risk.
A. Reliability of financial
reporting.
D. Assurance of elimination of
business risk.
Chapter 8 following
3. Which of the Audit Planning C Study
statements concerning the
relevance of various types of
controls to a financial statement
audit is correct?
B. A sales manager's
authorization for a sales return.
A. Additional evidence to
support a further reduction in
control risk is not available.
B. It is not possible or
practicable to reduce the risks
of material misstatement at the
assertion level to an acceptably
low level with audit evidence
obtained only from substantive
test procedures.
A. Reperformance and
observation.
C. Comparison and
confirmation.
C. Determining materiality
involves the exercise of
professional judgment.
C. Computing accounts
receivable turnover by dividing
credit sales by the average net
receivables.
A. Inspecting correspondence
with lawyers for evidence of
unreported contingent
liabilities.
C. Reviewing confirmations of
loans receivable and payable
for indications of guarantees.
D. Performing analytical
procedures for indications of
possible financial difficulties.
C. Depending on a single
product for the success of the
entity.
D. Borrowing money at an
interest rate significantly below
the market rate.
Chapter
7. If the results8ofAudit Planning
the auditor's B Study
expert's work do not provide
sufficient appropriate audit
evidence or are not consistent
with other audit evidence, the
auditor should
D. Express an unqualified
opinion with reference to the
work of the expert.
B. Preliminary engagement
activities
D. Reporting and
communication
reasonable protection is a
combination of three separate
risks at the account balance or
class of transactions level. The
first risk is inherent risk. The
second risk is that material
misstatements will not be
prevented or detected by
internal control. The third risk is
that
A. Reviewing investment
transactions of the audit period
to determine whether related
parties were credited
B. Performing analytical
procedures to identify areas
that may represent specific risks
D. Obtaining a written
representation letter from the
client to emphasize
managements responsibilities.
Chapter 8 following
12. Which of the Audit Planning D Study
statements is correct
concerning an auditor's use of
the work of a specialist?
a. Supervision b. Audit
procedures c. Directing d.
Planning
a. Inquiry of predecessor
auditor regarding the client.
d. Review of predecessor
auditor working papers.
4. To obtain an understanding of B
a continuing client's business in
planning an audit, an auditor
most likely would
c. A planning memorandum
establishing the timing of the
audit procedures and
coordinating the assistance of
entity personnel.
d. An internal control
questionnaire identifying
policies and procedures that
assure specific objectives will
be achieved.
Chapter 8 following
6. Which of the Audit Planning B Study
procedures would an auditor
most likely perform in planning
a financial statement audit?
c. Examining computer
generated exception reports to
verify the effectiveness of
internal controls.
c. Arrange a preliminary
conference with the client to
discuss audit objectives, fees,
timing, and other information.
c. Writing a conclusion in
individual working papers
indicating how the results of the
audit will affect the auditor's
report.
b. An auditor considers
materiality for planning
purposes in terms of the largest
aggregate level of
misstatements that could be
material to any one of the
financial statements.
d. An auditor's consideration of
materiality is influenced by the
auditor's perception of the
needs of a reasonable person
who will rely on the financial
statements.
Chapter 8 the
14. The risk that Audit Planning
assertion A Study
contains material misstatements
that, when aggregated with
misstatements in other
assertions, could make the
entire financial statements
materially misstated is:
a. Gathering of all
corroborating audit evidence.
a. Understanding of the
accounting and internal control
systems.
a. Identification of complex
accounting areas including
those involving accounting
estimates.
b. Methodology and
technology used by the auditor.
c. The entity's form of business
organization.
a. Audit objective
a. Obtaining a sufficient
knowledge of the business of
his client.
b. Understanding of accounting
and internal control.
d. Obtaining a representation
letter from the client
management.
b. Document material
weaknesses in accounting and
internal control systems.
c. A level of knowledge of
business ordinarily less than that
possessed by management.
d. A knowledge of business
which is used in assessing
inherent and control risk.
A B C D
Prior to acceptance of
engagement No No Yes Yes
a. Consideration of how it
affects the financial statements
taken as a whole.
d. Assessing the
appropriateness of using
statistical sampling instead of
judgmental sampling.
Chapter 8 Audit
16. Which of the followingPlanning A Study
factors is inappropriately
relevant to the management's
assessment of the going
concern assumption?
d. Changes in legislation or
government policy expected to
adversely affect the entity.
Chapter 8 Audit
18. When events Planning
or conditions D Study
have been identified which may
cast significant doubt on the
entity's ability to continue as a
going concern, the auditor
should:
a. Rescheduling of loan
payments.
d. In order to shorten
assessment period.
Chapter 8 disclosure
22. If adequate Audit Planning
is not C Study
made by the entity regarding
substantial doubt about its
ability to continue as a going
concern, the auditor should
include in his report specific
reference to the substantial
doubt as to ability of the
company to continue as a going
concern and should express:
d. A disclaimer of opinion.
b. Qualified opinion. d.
Disclaimer of opinion.
Chapter 8 Audit
24. If the auditor believes Planning
that D Study
management should extend its
assessment but the latter
refuses to do so, the auditor
should:
d. Consider a modification of
the report as a result of the
limitation in the scope of the
auditor's work.
a. Unqualified opinion c.
Adverse opinion
B. Direction D, Pre-engagement
A. Appropriate attention is
devoted to important areas of
the audit.
C. Work is completed
expeditiously,
D. An unqualified opinion
isexpressed.
Chapter
3. The outputs8ofAudit Planning
audit planning D Study
are:
B. Discussion among
engagement team members
about the risk of material
misstatement in the financial
statements.
A. Physical examination of
tangible assets. or the
examination of records or
documents, whether internal or
external, in paper form.
electronic form, or other media.
B. Looking at a process or
procedure being performed by
others,
C. Seeking information of
knowledgeable persons, both
financial and non-
financialinformation.
D. Evaluating financial
information through a study of
plausible relationships among
both financial and non-financial
data.
Chapter 8 understanding
8. The auditor's Audit Planning D Study
of the entity and Its
environment consists an
understanding of the following
aspects:
D. All of these
Chapter 8 Audit
9. An auditor obtains an Planning D Study
understanding of the entity and
Its environment in order to
A. Make constructive
suggestions concerning
improvements to the client's
Internal control.
B. Develop an attitude of
professional skepticism
concerning management's
financial statement assertions
A. Application of accounting
methods in computing inventory
balances.
A. Materiality C. Reasonable
assurance.
B. Comparative analysis D.
Relative risk.
Chapter 8 Audit
13. In considering Planning
materiality for D Study
planning purposes, an auditor
believes that misstatements
aggregating P10,000 would
have a material effect on an
entity's profit and loss, but that
misstatements would have to
aggregate P20,000 to materially
affect the statement of financial
position. Ordinarily, it would be
appropriate to design auditing
procedures that would be
expected to detect
misstatements' that aggregate:
A. P30,000 B. P20,000 C.
P15,000 D. P10,000
A. Direct. B. Inverse. C.
Indeterminable. D. None of
these.
D. There is no relationship
between it and the peso
amount of evidence needed.