9) General controls must be evaluated and their impact considered upon the human resources and payroll transaction cycle because

A) there are frequently weaknesses in internal controls in the payroll cycle.

B) automated techniques are normally used to create and post payroll transactions.

C) the best way to test payroll transactions is usually by using test data.

D) the best way to test payroll transactions is usually by using generalized audit software.

10) The Federal Auditor General provides the results of operational audits to Parliament in Auditor General reports. What type of engagements are these?

A) direct reporting

B) attest engagement

C) review engagement

D) compilation engagement

11) After the bank confirmation has been received by the auditor, the auditor should

A) recalculate the bank reconciliation in its entirety.

B) verify that cash cutoff was correct for that bank account.

C) trace the general ledger cash account balance to the amount confirmed.

D) trace the bank reconciliation cash amount to the amount confirmed.

12) Which of the following situations would indicate increased inherent risk in the accounts payable and acquisition cycle?

A) good quality internal controls for cash handling

B) the use of packaged software for accounting (including accounts payable)

C) the use of clear, standard terms when negotiating vendor discounts

D) significant related party transactions

13) When several staff are working together on an audit engagement, what type of quality control review is conducted on a daily basis?

A) the partner reviews the electronic files

B) team review by interview

C) second partner review

D) manager review of sections

14) Comparing bad debt expense as a percentage of gross sales with previous years will detect what kind of possible misstatement?

A) uncollectible accounts receivable not provided for

B) overstatement of sales and accounts receivable

C) understatement of sales and accounts receivable

D) understatement of allowance for uncollectible accounts

15) Your client has experienced a major data breach with lawsuits and fines pending of significant and uncertain amounts. These events are disclosed in the client's financial statements and are clearly explained in the notes. How do these events affect the independent auditor's report?

A) The auditor would issue an unmodified auditor's report.

B) The auditor would include an Emphasis of Matter paragraph titled "Data Breach" to highlight the events.

C) The auditor would include an Other Matters paragraph titled "Data Breach" to highlight the amounts.

D) The auditor issue a modified audit opinion due to the size of the uncertainty.