
Understanding the Firm Environment
Authored by HENLY PAHILAGAO
Business
University
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12 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
One of the considerations in audit planning is obtaining a knowledge of the client’s business. An auditor obtains knowledge about a new client’s business and its industry to
One of the considerations in audit planning is obtaining a knowledge of the client’s business. An auditor obtains knowledge about a new client’s business and its industry to
Make constructive suggestions concerning improvements to the client’s internal control.
Develop an attitude of professional skepticism concerning management’s financial statement assertions.
Evaluate whether the aggregation of known misstatements causes the financial statements taken as a whole to be materially misstated.
Understand the events and transactions that may have an effect on the client’s financial statements.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following statements is not a reason for utilizing analytical review procedures?
Which of the following statements is not a reason for utilizing analytical review procedures?
To assess the entity’s ability to continue is a going concern.
To identify areas with no unusual fluctuations so that fewer detailed tests may be performed on those accounts.
To highlight changes from the prior year to the current year so that trends can be identified which will influence audit planning.
To determine the magnitude of errors in the financial statements.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When the continuing auditor intends to use information about the entity and its environment obtained in prior periods, the auditor should
When the continuing auditor intends to use information about the entity and its environment obtained in prior periods, the auditor should
Seek permission with the client in using the prior period information obtained by the auditor.
Determine whether to equitably reduce the audit fee due to lower audit effort expended during the engagement.
Determine whether changes have occurred that may affect the relevance of such information in the current audit.
Assess control risk as “high” for the assertions affected by the prior-period information.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Relevant industry conditions include the following, except:
Relevant industry conditions include the following, except:
The market and competition, including demand, capacity and price competition.
Cyclical or seasonal activity.
Product technology relating to the entity’s products.
Regulatory framework for a regulated industry.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following mattes is not included under “regulatory environment”?
Which of the following mattes is not included under “regulatory environment”?
Accounting principles and industry specific practices.
Legislation and regulation that significantly affect the entity’s operations.
Government policies currently affecting the conduct of the entity’s business.
General level of economic activity (for example, recession, growth)
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The nature of the entity refers to the following, except,
The nature of the entity refers to the following, except,
The entity’s operations, its ownership, and governance
The types of investments that it is making and plans to make.
The way that the entity is structured and how it is financed.
Other external factors, such as general economic conditions.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
These result from significant conditions, events, circumstances, actions or inactions that could adversely affect the entity’s ability to achieve its objectives and execute its strategies.
These result from significant conditions, events, circumstances, actions or inactions that could adversely affect the entity’s ability to achieve its objectives and execute its strategies.
Business failure
Information risk
Business obstacles
Business Risk
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