Auditing Midterm

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Auditing Midterm
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2010-06-08 15:05:18
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Auditing Midterm
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  1. Auditing Standards Board (ASB), a body established by the AICPA to formulate auditing standards
    • Presentation and disclosure
    • Eistence or occurrence
    • Rights and obligations
    • Completness
    • Valuation or allocation
    • I PERCV the need to pass the CPA exam
  2. PCAOB - provide auditing standards of public companies
    • GAO - government
    • AICPA - nonpublic companies
  3. Auditing standards issued by the AICPA's Auditing Standards Board
    Are recognized by the PCAOB as a starting point
  4. Public accounting profession bring about the problems that resulted in Congress passign the Sarbanes-Oxley Act of 2002 because they
    • Failed to detect egregious grauds
    • Emphasized generating revenues over audit quality
    • Viewed helping the clients find an auditing solution to show increased earnings as value-added auditing
    • (All of the above)
  5. To develop an effective audit program, an auditor would
    Develop an understanding of the client's business and industry
  6. Which of the following is NOT a Sarbanes-Oxley requirement of audit committees of public companies?
    The audit committee must be chaired by the chair of the board of directors
  7. SOX requirements
    • Audit committee members must be financially literate
    • Audit committee members must be outside directors
    • The audit committee should view itself as the "client" of the external auditor
  8. An auditor engaged to audit the financial statements of a client obtaines a sufficient understanding of the client's internal control for all of the following reasons EXCEPT
    It is the primary basis for the audit report
  9. An auditor engaged to audit the financial statements of a client obtaines a sufficient understanding of the client's internal control because
    • Understanding the entity's internal control is a requirement of GAAS
    • The auditor must use the information to assess the risk of material misstatements arising from the lack of internal control
    • It assists the auditor in disigning the nature, timing adn extent of further audit procedures
  10. The Sarbanes-Oxley Act of 2002 requires management of public companies to
    • Certify the accuracy of financial statements
    • Establish a corporate code of conduct
    • Take accountability for restated earnings
    • (All of the above)
  11. An audit committee must be comprised of outside directors
    A director who is not a member of the management and has no other relationship to the organization
  12. According to the Sarbanes-Oxley Act of 2002, how often must audit managers and partners rotate off an engagement of a public company
    Every 5 years
  13. Which is the most accurate statement regardign the relation ship of the PCAOB adn the FASB
    • The PCAOB has chosen to let the FASB continue to set accounting standards even though it has the authority ot set them
    • PCAOB sets auditing standards for public companies
  14. The financial statement auditor must understand the client's internal control as a component of the fieldwork standares; one reason for this understanding is so that the auditor may
    Assess the risk of possible misstatements in the financial statements
  15. The proper supervision of audit assistants is a requirement of which of the Generally Accepted Auiting Standards
    Standards fo Fieldwork
  16. A change from FIFO to LIFO for inventory valuation purposes would be relevant to the standards of reporting because
    It is a change in accounting principle that requires footnote disclosure by the client and mention in the audit report
  17. A member of the AICPA must safeguard the confidentiality of client information. Auditors, however, must disclose information to non-clients for the following reasons EXCEPT to
    Explain to members of the press whether a client is likely to miss payroll
  18. A member of the AICPA must safeguard the confidentiality of client information. Auditors, however, must disclose information to non-clients for the following reasons
    • Discuss information relating to inadequate disclosure in an audit report
    • Comply with a validly issued and enforceable subpoena or summons
    • Accommodate the review of client audit workpapers under AICPA, PCAOB, or State Board of Accountancy authority
  19. In the Code of Professional Conduct, Rule 101 is interpreted by 101-1 gives guidance as to the types of activities that will cause impairement to the independence of a firm or its members and it includes all of the following impairement issues EXCEPT
    Audit fees paid by the client company
  20. In the Code of Professional Conduct, Rule 101 is interpreted by 101-1 gives guidance as to the types of activities that will cause impairement to the independence of a firm or its members and it includes all of the following impairement issues
    • Direct financial interests in the client
    • Material indirect financial interests in the clients
    • Loans from the client company or its officers
  21. Julie Webb, CPA takes out an automobile loan with First National Bank of Wellville (FNBW) while attending the University of Wellville. Julie graduates one year later and is hired as an auditor by Best and Driftwood, LLP. Her first assigned audit engagement is with First National bank of Wellville, a client fo Best and Driftwood. As a new audit assistant, Julie continues to pay her automobile loan payments each month. According to the AICPA, Julie's independence would be considered
    Not impaired because Julei is permitted to take normal auto loans from FNBW
  22. Immaterial
    • Unimportant
    • Less significant
  23. Material
    Important
  24. William Tyler, CPA may not accept a commission for recommending a product or service to
    An attestant client
  25. Brenda Hursch, an auditor, would be considered independent for purposes of an audit of Microship Company even though her spouse worked for Microship Company as an
    Order entry staff
  26. Barnes is a partner in a CPA firm adn the firm performs an audit of Ovats Co.
    Barns practices in the same office as the lead engagement partner for th eOvats Co audit but does not work on the audit. barnes' wife owns stock in Ovats Co.
    • Violation of Rule of Conduct 101
    • Covered member
  27. Barnes is a partner in a CPA firm adn the firm performs an audit of Ovats Co.
    Barnes practices in the same office as the lead engagement partner for the Ovats Co. audit but does not work on the audit. Barnes
    wife ownes stock in Ovats Co.
    • Violation of Rule of Conduct 101
    • Covermember's immediate family
  28. Putts is a new staff person and works on the audit of the Tate Corp. Putts owns a few shares of tate Corp.'s stock
    • Violation of Rule of Conduct 101
    • Cover member cannot own any if he's working onf the audit
  29. Nels is an audit senior and participates in the audit of Varsity, Co. His non-dependent mother owns shares of stock in Varsity that are material to her net worth and of which Nels has knowledge
    • Violation of Rule of Conduct 101
    • Covered member's immediate family
  30. Kard is an audit senior but does not participate in the audit of the Loonev Corp. Kard owns 6% of Loonev's stock.
    • Violation of Rule of Conduct 101
    • Not a partner
    • Does not audit
    • No one, no professional member can own more than 5%
  31. To satisfy the valuation assertion when auditing an investment account for by the equity method, an auditor most likely would
    Examine the audited financial statements of the investee company
  32. Major steps in the systematic process of auditing
    • Planning
    • Control testing
    • Substantive Testing
    • audit report
  33. Control testing
    • Evaluate internal control
    • Study and test internal control
    • Determine the nature, timing, and extent of substantive tests to be performed
  34. Substantive Testing
    • Test transactions adn balances
    • Examine transactions
    • Evaluate fairness of financial statement components
  35. As a result of the Sarbanes-Oxley Act of 2002
    Public companies must report on the quality of their internal controls
  36. Accounting Standards are set by
    FASB
  37. Auditing Standards are set by
    PCAOB
  38. When, in the auditor's judgment, the financial statements are not presented fairly in conformity with generally accepted accounting principles, the auditor will issue an
    Adverse Opinion (NOT)

    • (Qualified opinion - Everything's fine, EXCEPT for)
    • (Unqualified opinion - everything's good)
  39. The following statements are correct regarding the setting of auditing standards in the United States
    • The AICPA is responsible for the setting of audit standards onluy for audits of nonpublic entities
    • The GAO is responsible for setting audit standards for audits of governmental entities
    • The PCAOB is responsible for setting audit standards for audits of public companies
    • (All of the above)
  40. The followign are true of the PCAOB EXCEPT
    It sets auditing standards for all CPAs engaged in the practice of auditing throughout the United States
  41. The followign are true of the PCAOB
    • No mroe than two of the members can be a CPA
    • It sets standards for the audits of internal control of public companies
    • It si responsible for quality revies of all CPA firms that audit public companies
  42. Auditing is a systematic process that includes all the following EXCEPT
    Providing important managerial decisions for a client - consulting
  43. Auditing is a systematic process that includes all the following
    • Communicating results to users
    • Procuring and evaluating evidence
    • Comparing evidence regarding assertions to certain established criteria
  44. In determining audit risk, the auditor decides how much risk will be taken on by the firm
    The auditor may decide not to take the audit engagement
  45. Which of the following is typically NOT a significant factor that an auditor will consider in the client acceptance of Stitch Magee Co.?
    Stitch Magee Co. is a manufacturing company
  46. Which of the following IS typically a significant factor that an auditor will consider in the client acceptance of Stitch Magee Co.?
    • Brad Stitch, the president and 50% owner of Stitch Magee was investigated for securities violations four years earlier
    • Stitch Magee Co. is a public company in the high technology industry
    • Stitch Magee Co. sells 25% of its investory to Nani, Inc. which is owned primarily by Nani Magee, the father of Stitch Magee's treasurer, vice president of finance and 50% owner
  47. The auditor commences to understand the client and related risks of the organization for what purpose?
    To determine whether the auditor has sufficient knowledge to perform the engagement
  48. What is the most value achieved by the auditor in requiring an engagement letter be entered into with the client?
    A communication and clarification of the responsibilities and expectations of the auditor and the client
  49. The preliminary use of analytical review procedures by the auditor is
    Required
  50. A stipulation in an agreement between and entity and its creditor that places documented restrictions on the organization is referred to as
    Debt covenants
  51. The risk that financial statements are likely to be misstated materially without regard to the effectiveness of internal control is
    Inherent risk
  52. An auditor compares year-to-year account balances in order to perform analytical procedures. Thsi is an example of
    Trend analysis
  53. In considering materiality for plannign purposes, an auditor believes that misstatements aggregating $10,000 would have a material effect on an entity's income statement, but that misstatements would have to aggregate $20,000 to materially affect the balance sheet. Ordinarily, it would be appropriate to design auditing procedures that would be expected to detect misstatements that aggregate
    • $10,000
    • Use the smaller one
  54. The risk that an auditor will conclude, based on substantive tests, that a material error does not exist in an account balance when, in fact, such error does exist is referred to as
    Detection risk
  55. Inherent risk and control risk differ from detection risk in that inherent risk adn control risk are
    Functions of the client and its environment while detection risk is not
  56. Which of the followign procedures would an auditor least likely perform in planning a financial statement audit
    • Coordinating the assistance of entity personnel
    • Discussing matters that may affect the audit with firm personnel
    • Selection a sample of vendors' invoices for comparison to receiving reports - Done during main audit
    • Readign the current year's interim financial statements
  57. Which of the following audit risk components may be assessed in non quantitative terms?
    • Control risk
    • Detection risk
    • Inherent risk
  58. Analytical procedures used in palning an audit should focus on identifying
    Areas that may represent specific risks relevant to the audit
  59. Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding
    Disagreements the predecessor had with the client concerning audit procedures adn accounting principles
  60. An auditor assesses control risk because it
    Affects the level of detection risk
  61. On the basis of audit evidence gathered adn evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned risk level, the auditor would
    Decrease detection risk
  62. As the acceptable level of detection risk decreases, the assurance directly provided from
    Substantive tests should increase
  63. As the acceptable level of detection risk decreases, an auditor may change the
    Nature of substantive tests from a less effective to a more effective procedure.
  64. Inherent risk
    • Susceptibility of an assertion to a material misstatement assuming there are no related internal control policies and procedures
    • The probability of material error or fraud assuming the absence of internal control
    • Increas by business complexity and industry instability
    • Increased by auditor suspicions regarding management integrity
  65. Control risk
    • Risk that a material misstatement in an assertion will not be prevented or detected on a timely basis by the client's internal control policies and procedures
    • The probability that material errors or fraud are not prevented or detected by existing internal control
  66. Detection risk
    • Risk that the auditor's procedures for verifying account balances will not detect a material misstatement that in fact exists
    • The probability that material errors or frauds that are not prevented or dected by internal controls are not detected by the independent auditor
    • A function of the auditor's assessment of inherent risk and control risk
    • Set such that the joint probability of the three risk elements produces the desired overall audit risk
    • Can be reduced through the application of substantive audit procedures
  67. Audit risk
    Risk that the auditor may unknowingly fail to appropriate modify the opinion on financial statements that are materially misstated
  68. Risk of mistatement/Environment risk
    • Inherent risk and control risk
    • Inherent risk and control risk, together, determine the probability of the financial statements containing material misstatements. Auditor analyzes these risk factors as input for designing audit programs
  69. The relationship between control risk and detection risk is ordinarily
    Inverse
  70. The risk that an auditor's procedures will lead to the conclusion that a material misstatement does NOT exist in an account balance when, in fact, such misstatement does exist is referred to as
    Detection Risk
  71. If the auditor has concerns about the integrity of management, which of the following would NOT be an appropriate action
    Raise the audit fees to compensate for the risk inherent in the audit, but do not plan anything extended audit procedures
  72. If the auditor has concerns about the integrity of management, which of the following would be an appropriate action
    • Refuse to accept the engagement because a client does not have an inalienable right to an audit
    • Expand audit procedures in areas where management representations are normally important by requesting outside verifiable evidence
    • Plan the audit with a higher degree of skepticism, including specific procedures that should be effective in uncovering management fraud
  73. Which of the following models expresses the general relationship of risks associated with the auditor's evaluation of control risk (CR), inherent risk (IR), and audit risk (AR) that would lead the auditor to conclude that additional substantive tests of details of an account balance are not necessary?
    • IR=20%, CR=40%, AR=10%
    • DR=1.25, therefore almost no more auditing effort is necessary
  74. AR=IR*CR*DR
    • AR=audit risk
    • IR=inherent risk
    • CR=control risk
    • DR=detection risk
  75. The susceptibility of an assertion to a material misstatemetn assuming there are not related internal controls, is best described as
    Inherent risk
  76. Account balances related to pensions result from complex calculations. The susceptibility to material errors in accounts of that nature is best defined as
    Inherent risk
  77. If control risk is assessed too high, this lead to
    audit inefficiency
  78. The relationship between the acceptable level fo detection risk as determined through use of the audit risk model and the assurance to be provided by substantive audit procedures is
    Inverse
  79. Internal control is a process designed to achieve objectives in which one of the following categories
    • Reliability of financial reporting
    • Compliance with applicable laws
    • (Both A and B)
  80. The tone of internal control typically originates internally with
    Management
  81. Which one of the followign components of the system of internal controls sets the tone for the organization
    Control environment
  82. The board of directors shoudl approve all of the following
    • Major new financing
    • Acquisition of other companies
    • Major divestitures
  83. The board of directors shoudl approve all of the following EXCEPT
    Acquisitions of desktop computers (Treasurer, VP Manufacturer, etc...)
  84. The PCAOB requires auditors of public companies to perform
    A financial statement audit and an examination on internal control
  85. Which of the following factors are included in an entity's control environment?
    • Audit commitee
    • Internal audit function
    • Organizational structure
  86. After obtaining an understandign of an entity's internal control system, an auditor may asses control risk at the maximum level for some seertions because the auditor
    Believes the internal control policies adn procedures are unlikely to be effective
  87. An advantage of using internal control flowcharts to document information about internal control instead of using internal control questionaires is that flowcharts
    Provide a visual depiction of clients' activities
  88. In a study adn evaluation of the control system policies and procedures, the completion of a questionnaire is most closely associated with which of teh following?
    Obtaining an initial understandign of the system
  89. To support an assessment that control risk is low, the auditor of financial statements must
    Achieve the same conclusion after appropriately testing internal control
  90. Which of the following would result in an adverse report issued by an auditor on an audit of internal control?
    There is a material weakness in the design or operation of controls
  91. Which one of the following is NOT a control activity implemented in most accounting systems
    Cinfirmation of cash balances
  92. Which one of the following is a control activity implemented in most accounting systems
    • Segregation of duties
    • Authorization procedures
    • Adequate documentation
    • Physical control to safeguard assets
    • Reconciliation
    • Competent, trustworthy employees
  93. An auditor obtaines evidence of the internal control over the accounting system by all of the following EXCEPT
    Making inquires of banks and attorneys
  94. An auditor obtaines evidence of the internal control over the accounting system by all of the following
    • Performing walk-throughs of the accounting system
    • Reviewing system flowcharts
    • Taking plant and operational tours
  95. Which of the following internal control activities most likely addresses the completeness assertion for inventory?
    Receiving reports are prenumbered adn periodically reconciled
  96. Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded?
    The billing department supervisor matches prenumbered shipping documents with entries in the sales journal
  97. The authority to accept incoming goods in receiving should be based on an
    Approved purchased order
  98. Proper segregation of functional responsibilities calls for separations of the
    • Authorization
    • Recording
    • Custodial functions
  99. Which of the following is a standard internal accounting control for cash disbursements?
    Checks should be sequentially numbered. The numerical sequence shoudl be accounted for by the person preparing bank reconsiliations
  100. Internal control is a functional of management, and effective control is based upon the concept of charge and discharge of responsibility and duty. Which of the following is one of the overriding principles of internal control?
    Responsibility for the performance of each duty must be fixed
  101. Effective internal control requires organizational independence of departments. Organizational independence would be impaired in which of the following situations?
    The controller reports to the vice president of production
  102. Internal control over cash receipts is weakened when an employee who receives customer email receipts also
    • Records credits to individual accounts receivable
    • (The one who receives receipts should not make recording)
  103. How does the extend of substantive tests required to constitute sufficient evidential matter vary with the auditor's reliance on internal control?
    Inversely
  104. Which of the following statements is true regarding the conduct of an integrated audit
    The auditor must perform a financial statement audit for th esame period of time covered by the internal control audit
  105. Which of th efollowing statements is correct regarding the auditor's report on internal control over financial reporting
    • The report must cover the same period of time for which the financial statements are prepared
    • The auditor must explicitly reference the criteria for evaluating internal control, e.g., the COSO framework
    • (Both a and b are true)
  106. Which of the following would NOT be a primary consideration of the auditor in determining whether a deficiency was a significang deficiency or material weakness?
    Whether the control is computerized or manual
  107. Which of the following would be a primary consideration of the auditor in determining whether a deficiency was a significang deficiency or material weakness?
    • The rate of failure of the control
    • The volume adn dollar amount of transactions affected by the control
    • Whether the control deficiency is mitigated by other control elements, e.g., the control environment
  108. Calculate the ratio fo Cost of Goods Sold to Sales as a test of overall reasonableness of the balance for Cost of Good Sole
    Analytical procedures
  109. Trace a sales transaction from the origination of an incoming sales order to the shipment of merchandise to an invoice adn to the proper recording in the sales journal
    Reprocessing
  110. Test the accuracy of the sales invoice by multiplying the number of items shipped by the authorized price list to determine extended cost. Foot the total and reconcile it wit hthe total invoiced
    • Recomputations
    • (Mathematical evidence)
  111. Select recorded sales invoices and vouch the corresponding shipping docuents to verify the existence of goods shipped
    • Vouching
    • (or Examination of documents)
  112. Examine canceled checks returned with the client's January bank statement as support of outstandign checks listed on the client's December year-end bank reconciliation
    • Examination of documents
    • (This is NOT a confirmation - signature)
  113. Perform test counts of the client's marketable securities held in a safe deposit box
    • Physical examination/Observation
    • (Physical evidence)
  114. Tour the plant to determine that a major equipment acquisitiong was received adn is in working condition
    • Physical examination (preferred)/Observation
    • (Pysical evidence)
  115. Review a lease contract to determine the items it covers adn its major provisions
    Examination of documents
  116. Request a statement from a major customer as to its agreement or disagreement with a year-end receivable balance shown to be due to the audit client
    Confirmation with outside personnel
  117. develop a spreadsheet to calculate an independent estimate of the client's warranty liability (reserve) based on production data and current warranty repair expenditures
    • Recomputation (preferred)/Analytical procedure
    • (mathematical evidence)
  118. Meet with the client's internal legal department to determine its assessment of the potential outcome of pending litigation regarding a patent infringement suit against the company
    Inquiry of company personnel
  119. Review all major past due accounts receivable with the credit manager to determine whether the client's allowance for doubtful accounts is adequate
    Inquiry of company personnel (preferred)/Examination of documents
  120. Make test counts of inventory items, adn record the items in the audit documentation for subsequent testing
    • Physical examination/Observation
    • (Physical evidence)
  121. Obtain information about the client's processing system and assoiated controls by asking the client's personnel to fill out a questionnaire
    Inquiry of company personnel
  122. Examine board fo directors' minutes for the approval of a major bond issued during the year
    Examination of documents
  123. Have the client's outside law firm send a letter directly to the auditor providing a description of any differences between the lawyer's assessment of litigation and that of the client
    Confirmation with outside personnel
  124. Programs written to accomplish specific processing tasks, such as computing payroll are
    Application programs
  125. An internal auditor creates a dummy dividion of the organization and sends test transactions through the system along with valid transactions. This is an example of
    An integrated test facility
  126. Data transmission controls include all of the following EXCEPT
    Input validation
  127. Data transmission controls include all of the following
    • Encryption of data
    • Echo back to sender for verification
    • Feedback to determine integrity fo data transmitted
  128. An auditor's use of electronic means to foot a large subsidiary ledger or to select a sample is an example of the utilization of
    Generalized audit software
  129. When an auditor tests a computerized accounting system, which of the following is tru of the test data approach
    Test data are processed by the client's computer programs under the auditor's control
  130. Internal control is ineffective when computer department personnel
    • Originate changes in master files
    • (Need ot have user's authorization)
  131. Tagging and tracing might best be used to test which of the following?
    All customer orders shipped were also invoiced and that cash was received
  132. Which of the following is a general control that would most likely assist an entity whose system analyst left the entity in the middle of a major project
    System documentation
  133. An internal auditor selects a random transaction and examines it through the processing routine. This activity is an example of
    A tagging and tracing approach
  134. To obtain evidence that user identification and password controls are functioning as designed, an auditor would most likely
    Attempt to sign on to the system using invalid user identifications adn passwords
  135. The audit team asks management for original documents related to sales contracts. Despite the team's persistence, management does not supply the document for over two weeks. With the use of professional skepticism, what should this audit team be most concerned with as it relates to the documents?
    Management's possible use of the time to fabricate the documents
  136. Which of the following represents fraud procedures by the auditors?
    The auditor cannot allow the client to pressure the timing of the audit for early release of earnings
  137. Which of the following is NOT an example of a type of defalcation?
    The chief financial officer of the company falsely adds $20 million ot the accounts receivable adn revenue accounts
  138. Which of the following is an example of a type of defalcation?
    • A warehouse employee takes home two units of electronic entertainment inventory each week without authorization
    • The president of the company utilizes the organization's cash to add a floor to her 15,000 square foot house
    • The treasurer of the company makes an unauthorized wire transfer from the organization's bank ot a personal account in Grand cayman
  139. Which of the following best represents financial statement fraud?
    The controller of the company increases a contingent liability by $3 million because the company will other beat analysts' expectation thsi quarter
  140. According to professional auditing standards, which of the following best represents a type of financial reporting fraud that might occur?
    Management intentionally excludes a subsidiary from its consolidated results that it controls significantly
  141. Which of the following best represents an example of fraud utilizing the lapping technique?
    An employee covers up the stealing of receipts by posting to the wrong customer accounts
  142. Which of the following computerized audit procedures best assists the engagement team in detecting fraud
    Search for duplicate payments
  143. Professional skepticism is best described as
    A questioning mind
  144. Protection transparency, Inc. is being audited by Messer adn Bromely, LLP. During the assessment of fraud, Messer and Bromely discover that the controller has been creating fictional sales adn posting them to the general ledger. Who should the auditors make aware of this issue?
    Teh chairman of protection Transparency's audit committee
  145. Self-checking digit
    • Multiply each digit in the number by a predetermined algorithm adn sume the products. Divide by a predetermined number. Add the generated self checking digit anywhere in the original number.
    • Detection of a transposition error - recalculate the self-checking digit on the transposed number (either a transposition error or the check digit was keyed in incorrectly if the self-checking number is different from the one displayed)
  146. The primary assertion that is satisfied by physically observing he client's count of inventory is
    Existence
  147. What is the primary determinate in the difference between fraud and errors in financial statement reporting
    The intent to deceive
  148. Which one of the following would be the most persuasive type of evidence?
    Observation of assets
  149. Which one of the following woulc be considered the most persuasive type of audit evidence
    Convirmations from banks
  150. The process of vouching helps establish that all recorded transactions
    Are valid (existence)
  151. Footing, crossing-footing, and tests of existensions are examples of which approach to gathering evidence?
    Recalculation/recomputation
  152. Sufficient evidence gathered by the auditor involves which of the following
    The amount of evidence to be obtained
  153. The primary support of an audit is (are)
    The audit working papers
  154. Directional testing is important ot an auditor because of which of the following factors
    Certain accounts are more prone ot be misstated by overstatement than others
  155. Which one of the following original documents would mostlikely be found in the audit working papers?
    Returned confirmation requests
  156. Which one of the following is primary reason for documenting audit work?
    To provide a stand-alone medium that gives audit conclusions adn supports the opinion
  157. An auditor ordinarily uses a working trial balance resembling the financial statements without footnotes, but containing columns for
    Reclassifications and adjustments
  158. Shelfco, Onc. has an inventory report that is approximately 4,000 pages. The audit program requires James Morris, the staff auditor, to test the report for accuracy. What is the most efficient and effective means for James to perform the procedure?
    Obtain an electronic copy of the file and use generalized audit software in footing and extending
  159. Which of the following is NOT an estimate that requires significant auditor judgment and skepticism?
    Common Stock and related additional paid-in capital
  160. Which of the following is an estimate that requires significant auditor judgment and skepticism?
    • Obligations for pension plans
    • Valuation of goodwill
    • Allowance for bad debt

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