Recap

Who is responsible for the true and fair representation of the amounts and disclosures included in the financial statements?

• EY

• Managemet

The basic objective of an audit of financial statements is to?

• Prepare the audited financial statements in accordance with the applicable financial reporting framework.

• Test all transactions to prevent and or detect fraudulent transactions initiated by management or the entity’s employees.

• Obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement.

Professional skepticism means that when management makes a statement to you, as an auditor, you should:

• Corroborate the statement with other audit evidence.

• Require the statement to be put in writing so you can complete your audit documentation.

• Believe in the statement to maintain the client relationship.

• A.Disregard the statement because it does not represent sufficient appropriate audit evidence.

What is the primary purpose of performing a walkthrough? Select the correct answer.

• To obtain evidence to support our assessment of control risk when relying on controls.

• To confirm that our understanding of the significant classes of transactions is as we have documented and to confirm the points where misstatements are most likely to occur.

When you consider the flow of information in the critical path, what is the correct order of the events?

• Initiated; Processed; Recorded; Reported.

• Reported; Processed; Initiated; Recorded.

• Initiated; Recorded; Processed; Reported.

• Initiated; Recorded; Reported; Processed.

If the audit team determines that internal controls are unlikely to detect and correct a material misstatement, the effect on the CRA would be

• CRA decreases as control risk changes to not rely on controls.

• CRA increases as control risk changes to not rely on controls.

• CRA increases as the inherent risk increases.

• CRA decreases as the inherent risk decreases.

Inquiry alone is sufficient to test the operating effectiveness of controls?

• Yes

• No

Read the following control:

The Assistant Controller reviews the Accounts Payable reconciliation on a monthly basis to ensure the data and reports from the system used in the operation of the control is complete and accurate and that reconciling items above 1,000 are supported by evidence.

What type of control is this control?

• Application.

• Manual.

• ITDM.

Which of the following assertions primarily deals with the risk of overstatement?

• Completeness.

• Existence.

• Presentation & Disclosure.

• Measurement.

What significant account were we assigned to perform the audit procedures in prior expedition?