LATIHAN MID SEMINAR AUDIT hiday

Number 1 Auditing can best be described as An accounting function. A reporting function. A measurement function. A regulatory function.

Number 2 In terms of the agency relationship, what role does the auditor play? Steward. Agent. Principal. Monitor.

Number 3 Assurance services Include services performed by both internal and external auditors. Are very specific types of financial statement audits. Include any services provided by a public accounting firm. Are not governed by professional standards.

Number 4 What is the difference between audit and attest services? Audits result in a written report whereas attest services do not. Audits examine assertions about subject matter whereas attest services do not. Audits are limited to economic events or actions whereas attest services are not. Audits require the accountant to gather evidence whereas attest services do not.

Number 5 Which of the following is not a management assertion? Existence. Completeness. Validation. Statement presentation.

Number 6 The existence of audit risk is recognized by the statement in the auditor’s standard report that the Auditor obtains reasonable assurance whether the financial statements are free of material misstatement. Financial statements are the responsibility of the company’s management. Auditor’s conducted the audit in accordance with generally accepted auditing standards. Financial statements are presented fairly, in all material respects.

Number 7 Evidence is relevant if it Is sufficient. Can be trusted. relates to the audit objective being tested. Is received from an independent third party

Number 8 Which of the following best describes why auditors obtain an understanding of a prospective new client? To serve as a basis for providing business advice. To determine the number of hours to allocate to the audit. To avoid dealing with clients who lack integrity. To evaluate the predecessor auditor’s work

Number 9 Auditors typically rely on evidence that is persuasive rather than convincing because of all of the following except Auditors often use sampling. Because of the nature of audit evidence, some is not perfectly reliable. It is cost prohibitive to always obtain convincing evidence. Due to client confidentiality, auditors cannot obtain evidence from parties other than the audit client.

Number 10 Of the following, the least reliable type of evidence typically is Analytical procedures. Documentation. Confirmation. Observation

Number 11 An auditor’s audit documentation should Never be shared with client management. Not contain critical comments concerning management. Be destroyed immediately after completion of the audit. Support the auditor’s report

Number 12 Which of the following statements is generally correct about the appropriateness of audit evidence? The auditor’s direct personal knowledge, obtained through physical examination, is more persuasive than information obtained from independent outside sources. To be appropriate, evidence matter must be either reliable or relevant but need not be both. Accounting data alone may be considered appropriate evidence upon which to issue an unqualified opinion on financial statements. Appropriateness of evidential matter refers to the amount of corroborative evidence to be obtained.

Number 13 Which of the following statements relating to the appropriateness of audit evidence is always true? Evidential matter gathered by an auditor from outside an enterprise is reliable. Accounting data developed under satisfactory conditions of internal control are more relevant than data developed under unsatisfactory internal control conditions. Oral representations made by management are not appropriate evidence. Evidence gathered by auditors must be both relevant and reliable to be considered appropriate

Number 14 Which of the following factors most likely would cause a public accountant to decide not to accept a new audit engagement? The public accountant's lack of understanding of the prospective client's internal audit department Management's disregard of its responsibility to maintain an adequate internal control environment. The public accountant's inability to determine the existence of related party transactions. Management's refusal to permit the public accountant to perform substantive tests before the year- end

Number 15 An auditor who accepts an audit engagement and does not possess industry expertise pertaining to the business entity should Engage financial experts familiar with the nature of the business entity. Ensure that audit team members receive the training necessary to complete the engagement. Refer a substantial portion of the audit to another audit firm, who will act as the principal auditor. Inform management that an unqualified opinion cannot be issued

Number 16 What is the responsibility of the successor auditor with respect to communicating with the predecessor auditor in connection with a prospective new audit client? The successor auditor has no responsibility to contact the predecessor auditor. The successor auditor has no responsibility to contact the predecessor auditor, if the prospective client has made the successor auditor aware of all relevant information. The successor auditor should obtain permission from the prospective client to contact the predecessor auditor. The successor auditor should obtain permission from the prospective client’s lawyer to contact the predecessor auditor.

Number 17 When an auditor finds internal control weaknesses that are significant (unlikely to prevent or detect material misstatement), he or she must Include such findings in the management letter. Report these findings to the audit committee. Withdraw from the engagement. Seek the advice of legal counsel

Number 18 Risks related to internal controls in an IT environment include all of the following except Unauthorized changes to programs. Inappropriate manual intervention. Higher likelihood of inconsistent application of business rules. Potential loss of data.

Number 19 What is “lapping” as it pertains to the revenue process? An employee manipulates transfers between bank accounts to hide a misappropriation of cash. A company and its auditor agree to allow the company to depart from GAAP to record sales because of unique industry practices. A salesperson induces distributors to buy substantially more inventory than they can promptly resell. An employee applies cash from one customer’s account against another customer’s account to cover a cash shortage

Number 20 Customers are most likely to complain to the client if which of the following internal control objectives for cash receipts is violated? Validity. Completeness. Authorization. Rights and obligations