Aud 2
Aud 2
Aud 2
35
Performance audits usually include (two answers)
a. Financial audits.
c. Compliance audits.
d. Program audits.
b&d
1.36
The objective in an auditor's review of credit ratings of a client's customers is to obtain
evidence related to management's assertion about
a. Completeness.
b. Existence.
e. Occurrence.
c
1.37
Jones, CPA, is planning the audit of Rhonda's Company. Rhonda verbally asserts to
Jones that all expenses for the year have been recorded in the accounts. Rhonda's
representation in the regard
b. Can enable Jones to minimize the work on the gathering of evidence to support
Rhonda's completeness assertion.
d. Is not considered a sufficient basis for Jones to conclude that all expenses have been
recorded.
d
1.38
The risk to investors that a company's financial statements may be materially
misleading is called
c. Moral hazard.
d. Business risk.
b
1.39
When auditing merchandise inventory at year-end, the auditor performs audit
procedures to ensure that all goods purchased before year-end are received before the
physical inventory count. This audit procedure provides assurance about which
management assertion?
a. Cutoff.
b. Existence.
e. Occurrence.
a
1.40
When auditing merchandise inventory at year-end, the auditor performs audit
procedures to obtain evidence that no goods held on consignment are included in the
client's ending inventory balance. This audit procedure provides assurance about which
management assertion?
a. Completeness.
b. Existence.
e. Occurrence.
d
1.41
When an auditor reviews additions to the equipment (fixed asset) account to make sure
that fixed assets are not overstated, she wants to obtain evidence as to management's
assertion regarding
a. Completeness
b. Existence.
e. Occurrence.
b
1.42
The Sarbanes-Oxley Act of 2002 generally prohibits public accounting firms from
b. Providing consulting work for another firm's audit client in exchange for the other
firm's providing consulting services to one of your clients.
d. Permitting a CPA to practice in another state without having to obtain a license in that
state.
d
1.44
Which of the following best describes the relationship between auditing and attestation
engagements?
b. Attestation is a subset of auditing that provides lower assurance than that provided by
an audit engagement.
c. Auditing is a subset of attestation engagements that focuses on providing clients with
advice and decision support.
During an audit of a company's cash balance on a company with operations in only one
country, the auditor is most concerned with which management assertion?
a. Existence.
c. Valuation or allocation.
d. Occurrence.
a
1.46
When auditing an investment in another company, an auditor most likely would seek to
conduct which audit procedure to help satisfy the valuation assertion?
c. Review the broker's advice or canceled check for the investment's acquisition.
d. Obtain market quotations from The Wall Street Journal or another independent
source.
d
1.47
Cutoff tests designed to detect valid sales that occurred before the end of the year but
have been recorded in the subsequent year would provide assurance about
management's assertion of
b. Completeness.
d. Existence.
b
1.48
Which of the following audit procedures probably would provide the most reliable
evidence related to the entity's assertion of rights and obligation for the inventory
account?
a. Trace test counts noted during physical count to the summarization of quantities.
c. Select the last few shipping advices used before the physical count and determine
whether the shipments were recorded as sales.
d. Inspect the open purchase order file for significant commitments to consider for
disclosure.
b
1.49
In auditing the accrued liabilities account on the Balance Sheet, an auditor's procedures
most likely would focus primarily on management's assertion of
a. Existence or occurrence.
b. Completeness.
d. Valuation or allocation.
b
1.50
Which of the following best describes the focus of the following engagements?
Auditing Engagement
Attestation Engagement
Assurance Engagement
a. Existence or occurrence.
b. Completeness.
c. Valuation or allocation.
a. Existence.
b. Completeness.
b. Completeness.
c. Existence.
d. Valuation.
b
1.55
An auditor's purpose in auditing the information contained in the pension footnote most
likely is to obtain evidence concerning management's assertion about
b. Existence.
d. Valuation.