CFAB 2 - Chapter 11

Which TWO of the following statements are correct?

• A. Inspection of assets confirms rights and obligations

• B. Inspection of a purchase invoice confirms the cost of inventory

• C. Observation gives strong ongoing evidence of the matter being observed

• D. Inquiry of third parties gives better evidence than inquiries of entity insiders

In which THREE of the following situations could audit software appropriately be used?

• A. When checking calculations on a selection of invoices

• B. When extracting a sample of invoices over a certain value

• C. When extracting all invoices to specific customers

• D. When testing controls over invoice processing

Which THREE of the following statements are correct?

When using analytical procedures, assurance providers should:

• A. consider whether the information they might require will be available.

• B. consider the knowledge gained during previous assurance engagements.

• C. consider the source of the information and whether it is reliable.

• D. not use information that has been internally generated at the entity.

Which ONE of the following procedures would be the MOST appropriate for verifying the interest accrued on borrowings?

• A. Confirming the interest rate with the lender

• B. Vouching to the interest paid

• C. Testing internal controls over cash payments

• D. Recalculating the interest accrued on the basis of outstanding amount, interest rate and period to which it relates

Which TWO of the following statements are correct?

• A. When testing for overstatement, the assurance provider will test items from the accounting records to the supporting documents.

• B. When testing for understatement, the assurance provider will test items from the accounting records to the supporting documents.

• C. When testing for overstatement, the assurance provider will select items from outside the accounting records and trace to the records.

• D. When testing for understatement, the assurance provider will select items from outside the accounting records and trace to the records.

Which TWO of the following are factors that an assurance provider should take into account when determining the sample size for a test of details?

• A. The time available to complete the test

• B. The skill of the team member assigned to carry out the test

• C. A decrease in the assurance provider's assessment of the risk of material misstatement

• D. An increase in the level of expected misstatement

The assurance provider is using statistical sampling.

Which THREE of the following methods would be most appropriate to use to select a sample of accounts receivable?

• A. Random selection

• B. Systematic selection

• C. Haphazard selection

• D. Sequence selection

• E. Monetary unit selection

Assurance providers obtain evidence using procedures set out in ISA 500.

For each of the following tests, select the type of procedure which is being used.

The assurance provider writes to a sample of customers asking them to inform him of the balance they owe the company at the year end.

• Inspection

• Observation

• Confirmation

Assurance providers obtain evidence using procedures set out in ISA 500.

For each of the following tests, select the type of procedure which is being used.

The assurance provider looks at a share certificate to confirm that the company has an investment in Company A.

• Inspection

• Observation

• Confirmation

Assurance providers obtain evidence using procedures set out in ISA 500.

For each of the following tests, select the type of procedure which is being used.

The assurance provider attends the inventory count and ensures that it is being carried out in accordance with the issued instructions.

• Inspection

• Observation

• Confirmation