What is the meaning of inquiries of the client?

Obtaining of written or oral information from the client in response to questions from the auditor

Auditors independent tests of client accounting procedures or controls that were originally done as part of the entity's accounting and internal control system

What are the key assertions in financial statements?

Existence, Completeness, Valuation, Rights and Obligations, Presentation and Disclosure.

Forecasting, Budgeting, Planning

Accuracy, Relevance, Consistency

Liquidity, Profitability, Solvency

Describe the audit procedures used to obtain audit evidence.

Audit procedures include planning, risk assessment, tests of controls, substantive tests, and gathering evidence through inquiries, observations, inspections, and confirmations.

Relying solely on financial statements for evidence

Only conducting interviews with management

Performing audits without a risk assessment

How do you assess the quality and quantity of audit evidence?

Quality is assessed by relevance, reliability, and sufficiency; quantity is assessed by the adequacy of evidence collected.

Quality is determined by the number of documents reviewed.

Quantity is irrelevant to the audit process.

Quality is only assessed by the auditor's opinion.

Define audit sampling and explain its necessity.

Audit sampling is the process of selecting a subset of items from a larger population to evaluate and draw conclusions about the entire population.

Audit sampling is the process of reviewing all items in a population without selection.

Audit sampling is only necessary for financial audits and not for compliance audits.

Audit sampling involves selecting items based on personal preference rather than statistical methods.

Discuss the audit approach for bank and cash balances.

The audit approach for bank and cash balances includes reconciliation, bank confirmations, internal control review, transaction testing, fraud risk assessment, and cash flow analysis.

Conducting interviews with bank staff

Analyzing historical interest rates

How should inventories be audited?

Inventories should be audited through physical verification, valuation assessment, record accuracy checks, obsolescence testing, and compliance review.

Inventories should be audited solely based on historical data.

Auditing inventories requires only digital record checks.

Physical verification is not necessary for inventory audits.

What procedures are involved in auditing payables and accruals?

The procedures involved in auditing payables and accruals include reviewing internal controls, verifying recorded liabilities, examining supporting documentation, confirming vendor balances, assessing accrual timing, and testing compliance.

Reviewing employee performance evaluations

Assessing market trends and forecasts

Calculating total revenue for the period

What are the key audit steps for tangible and intangible assets?

Key audit steps for tangible and intangible assets include verification of existence, valuation assessment, depreciation evaluation, impairment testing, ownership confirmation, and completeness testing.

Verification of cash flow statements

Assessment of employee performance

Purpose Of Auditing The Cash And Bank Balances

To determine all cash received is properly recorded

To ensure all disbursements are properly authorized and documented

To recorded cash balances matches cash on hand or on deposit

Select the correct match:

Completeness- Trace a sample of remittance advices and pay-in slip to cash receipt journal

Occurance- Select samples of cash receipts from cash book and trace to remittance advices, pay-in slips and bank statement

Accuracy- Agree the total of cash receipts and payments to general ledger

Valuation- Agree the adjusted book balance on the cash account lead scheudule

What is the overall objective of audit documentation?

Provide reasonable assurance that the audit was conducted in accordance with standards.

Provide a basis for reviewing the work of subordinates.

Defend against claims of a deficient audit.

The auditor obtains an understanding of the entity and its environment by performing all of the following assessment procedures except:

Compute the level of detection risk

Inquiries of management and others

The concept of materiality as it applies to a financial statement audit:

Is determined, in part, based on how financial statement users may be influenced in making decisions.

Relates primarily to the audit fees involved.

Generally involves less professional judgment for public companies.

Relates primarily to the quantity of audit procedures performed.

Can be gathered from many sources and is not limited to the underlying accounting data.

May only be gathered from parties external to the client to be reliable.

May only be gathered from the client to be reliable since the client is the most knowledgeable source of information.

May only be gathered from computerized sources to avoid human error.

The techniques used for gathering evidence include the following

Physically examining or inspecting assets or supporting documentation, Obtaining written confirmation from an independent source

Re-performing tasks or recalculating information

Observing the underlying activities

Making inquiries of company personnel

Analyzing financial relationships and making comparisons to determine reasonableness

Which of the following best describes the primary purpose of audit programmed preparation?

To gather sufficient appropriate evidence.

Which one of the following would be considered the most reliable type of audit evidence?

Customer accounts receivable files.

Which of the following best describes the concept of audit risk?

The risk that the auditor will provide a "clean" opinion on financial statements that are, in fact, materially misstated

The risk of the auditor being sued because of association with an auditee.

The overall risk that a material misstatement exists in the financial statements.

The risk that auditors use audit procedures that are inappropriate.

Which one of the following statements best describes the concept of materiality?

Materiality is largely a matter of professional judgment.

Materiality is determined by reference to specific quantitative guidelines established by the AICPA.

Materiality depends only on the dollar amount of an item relative to other items in the financial statements.

Materiality depends on the nature of an item but not on the dollar amount of the item.

Which of the following substantive procedures provides evidence over the COMPLETENESS of non-current assets?

Review the repairs and maintenance expense account to identify any items of a capital nature

Select a sample of assets included in the non-current asset register and physically verify them at the client premises

For assets disposed of, agree the sale proceeds to supporting documentation and cash book

Which one is the assertions relevant to the audit of tangible non-current assets?

Presentation and disclosure assertions

Which one is TRUE for the audit procedure that provides appropriate evidence for 'Existence' assertion in the tangible non-current assets?

Ensure non-current assets exist by taking a sample of assets from the register and physically seeing the asset.

Ensure assets are correctly valued by checking the reasonableness of depreciation calculations.

Ensure the company owns the asset by seeing appropriate document of ownership for example, a purchase invoice.

Ensure that all non-current assets are recorded in the non-current asset register by agreeing a sample of assets physically verified back to the register.

What is the use for 'Disposal' in audit procedures of non-current assets?

Investigate the possibility of disposing of non-current assets.

Authenticate using the prior year's balance sheet and audit files.

Justify the purchasing cost using actual evidence.

Policy adequacy and appropriateness were evaluated.

Which one is the assertions relevant to the audit of tangible non-current assets?

Presentation and disclosure assertions

Audit JCT Quiz

43 questions

Show all answers

1.

MULTIPLE SELECT QUESTION

45 sec • 1 pt

Select two assets

Cash in bank

Shares outstanding

Account payables

Notes receivables

2.

MULTIPLE SELECT QUESTION

30 sec • 1 pt

What assertion of "To ensure that there is no unrecorded cash"

Existence

Cut-off

Detail tie-in

Completeness

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Describe what is physical examination?

Receipt of a direct written response from a third parties verifying the accuracy of the information that was requested by auditor

Inspection or count by the auditor of a tangible asset

Rechecking a sample calculations made by a clients

4.

MULTIPLE SELECT QUESTION

30 sec • 1 pt

Cash is more susceptible to theft; therefore, there is high inherent risk for the (), (), and () objectives except:

Existence

Completeness

Cut-off

Accuracy

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What will increase the reliability of evidence?

Confirmation

Amount of information

Effective control

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What are the ways of gathering evidence?

Observation

Reliable

7.

MULTIPLE SELECT QUESTION

30 sec • 1 pt

What assertion for “Examine a sample of cash receipts and payments transactions for proper classification.”

Classification

Existence

Valuation

Completeness

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Audit JCT

Select two assets

What assertion of "To ensure that there is no unrecorded cash"

Describe what is physical examination?

Cash is more susceptible to theft; therefore, there is high inherent risk for the (), (), and () objectives except:

What will increase the reliability of evidence?

What are the ways of gathering evidence?

What assertion for “Examine a sample of cash receipts and payments transactions for proper classification.”

Select two determination of the persuasiveness of evidence

What is the source of notes payable

What is the meaning of inquiries of the client?

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