Questions and Answers of Auditing A Practical Approach

When examining sales transactions, the following is not possible using generalized audit software:(a) inquiring about segregation of duties for invoicing customers.(b) selecting a sample of
The following is a cut-off test:(a) selecting a sample of shipping documents around the year end and agreeing to sales invoice to ensure it is included in the appropriate period.(b) selecting a
Confirming accounts receivable is required whenever:(a) they are material in amount.(b) it is reasonable to presume accounts receivable customers will respond.(c) they are material and it is
What are three key issues auditors face when auditing the purchases and payables cycle?
What risk is of particular concern when auditing payroll?
Define the audit objective of cut-off with respect to purchases and payables.
List the six steps involved in the purchasing and accounts payable cycle.
What is a packing slip?
What are three controls an entity should have in place over the preparation and signing of cheques and electronic funds transfers?
List the six steps involved in the payroll cycle.
What is a payroll register?
What are four controls over paying the payroll?
List four inherent risks over the purchases and payables cycle.
What are three controls that should be in place over payment transactions?
What are three possible tests of controls over the payroll cycle?
What is the biggest risk with payables? Why?
Explain how accounts payable is affected by purchase and payment transactions
Explain how the control risk for completeness is impacted by the control risk assessments for purchases and cash transactions.
What is the purpose of payables cut-off testing?
What are three tests of details for accounts payable?
The confirmation of accounts payable is performed less frequently than the confirmation of receivables. Why?
The auditor selects a sample of items from the purchase order file to determine that the goods and services were received and recorded. This relates to the:(a) existence or occurrence assertion.(b)
The receiving department should be instructed not to accept goods without having on file a properly authorized:(a) purchase requisition.(b) invoice.(c) receiving report.(d) purchase order.
The audit objective of “All amounts included in accounts payable relate to amounts due to suppliers at the balance sheet date” relates to the account balances assertion of:(a) completeness.(b)
Responsibility for determining that unpaid suppliers’invoices are processed for payment on their due dates generally lies with the:(a) chief financial officer’s department.(b) accounting
The following is a test of control that would provide audit evidence for the management assertion of occurrence of credit purchases:(a) selecting a sample of purchase invoices and ensuring there is
Controls over the preparation and signing of cheques include all of the following except:(a) authorized personnel in the finance department should be responsible for signing the cheques.(b) the
Controls over the recording of cash payments include:(a) an independent check by the accounting supervisor of the agreement of the amounts journalized and posted to accounts payable with the cheque
Requiring a special supervisor’s password in order to add a new employee to the personnel data master file relates to the:(a) existence or occurrence assertion.(b) completeness assertion.(c) rights
A programmed routine in the edit run for payroll that lists all employees who worked more than 50 hours during the week for review is an example of:(a) a reasonableness test.(b) a validity test.(c) a
When test data may be used to test application controls over accepting and recording data for unpaid suppliers’ invoices, the following conditions would not be relevant:(a) numerical characters in
What are two key issues auditors face when auditing inventory?
What is completeness with respect to inventory?
Define the audit objective of cut-off with respect to inventory.
What four functions should be segregated with respect to inventory?
Describe the eight procedures applicable to a full inventory count.
List the procedures required to cost manufactured inventory.
Describe some of the inherent risks for inventory.
In verifying the existence (and completeness) assertions, the auditor has the choice of which three audit strategies?
Is it possible for the auditor to rely on tests of controls for inventory?
What three possible strategies are available to the auditor to determine inventory quantity?
What are four controls that should be in place over inventory?
What is the auditor's responsibility with respect to a client’s inventory count?
What items are considered property?
What are the key issues in auditing property, plant, and equipment?
Explain the completeness assertion for property, plant, and equipment.
Why is a control risk assessment rarely performed for property, plant, and equipment?
What audit approach is generally used for property, plant, and equipment? Why?
Explain the purpose of a capital asset sub-ledger.
What substantive procedures are normally performed over property, plant, and equipment additions?
Why does the auditor review the repairs and maintenance account?
What audit tests are normally performed over accumulated depreciation?
An important procedure for the conduct of a physical inventory count is to maintain control over the count records. The following is not a common count system:(a) use of pre-printed inventory count
The following audit strategy would be most appropriate when an auditor has assessed that a substantive approach is necessary to determine inventory quantity:(a) inventory quantities determined by
If preliminary assessment of control risk supports management’s intended reliance on inventory records, the auditor is most likely to design an audit program that:(a) excludes testing the
Observation of an inventory count is a required audit procedure whenever:(a) inventories are material.(b) it is practicable to do so.(c) inventories are material and it is practicable to do
During the observation of the inventory count, the auditor has no responsibility to:(a) observe the count by client personnel.(b) make some test counts of inventory quantities.(c) supervise the
The auditor’s strategy in performing test counts during the observation of the inventory count is to:(a) test all large-dollar items.(b) randomly select all test items.(c) concentrate tests on
The auditor identifies the specific audit objective:“determine that property, plant, and equipment assets are in productive use at the end of the reporting period.” This objective is derived
The following statement about inherent risk assessments for property, plant, and equipment is inaccurate:(a) normally low for the presentation and disclosure assertion for plant assets acquired
When expenditures for property, plant, and equipment are processed as routine purchase transactions, the auditor:(a) must include some of these transactions in the tests of controls over the
The following represents an existence test for property, plant, and equipment:(a) select a sample of items of machinery in the factory and agree that they are correctly recorded in the machinery
Discuss the different ways of identifying production overheads and methods of apportionment to determine the cost of inventory. Consider the audit implications of each method.
What items are included in cash balances?
What are the key issues when auditing cash and investments?
What are two control procedures over cash?
Explain an imprest petty cash fund.
What are the key issues when auditing cash and investments?
Why are analytical procedures not often useful when auditing the cash balance?
What is kiting?
Describe the purpose of the subsequent bank statement.
What are three auditing procedures for lapping?
Describe substantive procedures relevant for imprest bank accounts.
Describe the various types of investments.
Define the rights and obligations assertion with respect to investments.
Explain completeness with respect to presentation and disclosure for investments.
What is an investment subsidiary ledger?
List six controls that should be implemented over investments.
What is the most important audit risk when investments are classified as non-strategic?
List four substantive procedures usually performed for investments.
When inspecting securities, what things should the auditor note?
Describe the disclosure requirements over investments.
What is the common audit approach for auditing consolidated financial statements?
What things should the auditor consider when group entities are audited by other auditors?
Discuss the substantive procedures normally performed over intercompany balances.
In the planning of an audit, it was decided that cash would not be audited because it made up only 1 percent of total assets. You respond to this decision by saying:(a) Whether or not this was
The main evidence regarding year-end bank balances is documented in the:(a) bank deposit schedule.(b) interbank transfer schedule.(c) bank reconciliation.(d) standard bank confirmation.
In reviewing the bank reconciliation prepared by the client, the auditor finds a “miscellaneous reconciling item.” From discussion with the client, the auditor is told that this relates to
The assertion that is the highest risk for an auditor in auditing investments is:(a) valuation.(b) existence.(c) completeness.(d) presentation and disclosure.
The control that would be the most effective in assuring that the proper custody of assets in the investing cycle is maintained is:(a) the purchase and sale of investments are executed on the
An auditor testing the reasonableness of long-term investments would ordinarily use analytical procedures to ascertain the reasonableness of the:(a) existence of unrealized gains or losses in the
If a client is not deemed to have “significant influence” in an investee company, to obtain audit evidence to verify the investment balance, the auditor should:(a) review the audited accounts of
When the client has control over an investee company, the most appropriate audit procedure to obtain evidence to verify the investee company’s accounts is to:(a) re-perform the audit of the
Explain why it is important to reassess materiality at the end of the audit.
What is the goal in evaluating audit evidence?
Provide three considerations when evaluating the sufficiency and appropriateness of audit evidence.
Provide one consideration management should take into account when assessing the going concern assumption.
Provide one consideration the auditor should take into account when assessing the going concern assumption.
Does the going concern assumption always apply to all audits?
What are management's responsibilities with respect to contingent liabilities?What are the auditor’s responsibilities?

Showing 200 - 300 of 888