Recap D4 - Staff 2

When encountering discrepancies in financial reports, what is an auditor's first course of action?

• Adjust the financial statements immediately
• Discuss the findings with the audit team
• Ignore the discrepancies as immaterial
• Report the discrepancies to regulatory authorities

How should auditors approach changes in a client's business operations that occur after an interim audit?

• By considering the impact on the audit strategy
• By disregarding the changes as they are post-audit
• By solely focusing on the information available at the interim audit
• By updating the financial statements without further analysis

What is the role of Substantive Analytical Procedures (SAP) in an audit?

• To provide entertainment during the audit process
• To replace the need for any other audit procedures
• To assist in detecting potential misstatements in the financial statements
• To calculate the auditor's performance bonus

Why is it important for auditors to set a variance threshold during an audit?

• To determine the acceptable level of risk for audit assurance
• To establish the client's credit limit
• To decide on the auditor's vacation time
• To predict the company's future stock price

What is the significance of involving Financial Audit IT (FaIT) professionals during an audit?

• To ensure IT controls are properly assessed
• To manage the audit team's IT equipment
• To develop the client's IT strategy
• To provide entertainment with IT jokes

In the context of audit strategy, what does the term "materiality" refer to?

• The cost of office supplies
• The significance of an amount, transaction, or discrepancy
• The weight of the audit report
• The fabric used in the client's uniforms

An auditor should not disregard which of the following when setting a variance threshold?

• The color of the financial statements
• The risk of material misstatement
• The preferences of the audit team
• The industry benchmarks

During an audit, which of the following should not be a factor in determining materiality?

• The auditor's personal investment in the client's company
• The size of the transaction
• The nature of the transaction
• The circumstances surrounding the transaction

When revising an audit strategy, an auditor should not:

• Ignore significant changes in the client's business operations
• Consider new risks identified during the audit
• Reassess the materiality levels
• Update the audit plan to reflect changes in circumstances

When should an auditor consider revising the audit strategy?

• When there is a significant change in the client's environment or operations
• Only at the beginning of the audit
• Once every five years
• When the client requests a lower audit fee