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WorksheetsGroup 3 Audit Documentation
Total questions: 20
Worksheet time: 13mins
Choose the types of Control Activities
a. Adequate separation of duties
b. Adequate documents and records
c. Comprised solely of independent directors
d. Independent checks on performance
What is the meaning of analytical procedure?
a. the written basis for the auditor's conclusions that provides the necessary support for the auditor's assertions and representations made in the auditor's report.
b. the reasonable rests used to gain an understanding of financial statement accounts and relationships.
c. a comprehensive list of the specific audit procedures that the audit team needs to perform to gather sufficient appropriate evidence on which to base their opinion on the the financial statements.
d.the chain of evidence provided through coding, cross-references, and documentation connecting account balances and other summary results with the original transaction source documents.
Audit trail is the chain of evidence provided through coding, cross-references, and documentation connecting account balances and other summary results with the original transaction source documents.
a. True
b. False
Audit documentation is the person with the final responsibility for the audit, and usually and industry specialist.
a. True
b. False
Termination letter is the documentation provided to former clients dealing with the subject of future services, in particular
a. access to audit documentation by new auditors
b. select an item of financial information usually from a journal or ledger
c. reissuance of the auditor's report when require for SEC reporting or comparative financial reporting
d. fee arrangements for such future services
Are customer orders evaluated for credit approval by someone independent of sales? State the transaction-related audit objectives being fulfilled if the control is in effect.
Accuracy
Completeness
Occurrence
Are online sales automatically recorded in the sales system? List a test of control to test its effectiveness.
Select a sample of sales recorded in the sales journal and determine if the appropriate individuals approved the corresponding customer order.
Review online sales system documentation and make inquiries of client personnel to determine that the automatic interface is a part of the system design. Enter a sample of test transactions of online sales to determine if test data is included in the sales journals. Reverse all test data items.
Inquire of shipping personnel about the process they use to forward shipping documents to accounting and observe the timeliness of when that occurs.
What are the types of audit evidence?
Reperformance
Investigation
Observation
Inspection
Two determinants of the persuasiveness and of evidence are appropriateness and sufficieny
TRUE
FALSE
4 decisions about what evidence to gather and how much to accumulate are:
What audit procedures to use
What sample size to select for a given procedures
What item to evaluate from the audit procedures
Which item to select from the population
A restriction on auditors from gathering sufficient appropriate evidence because of the client's deliberate refusal to provide them access to evidence or to otherwise limit the auditors' application of auditing procedures
Circumstance-Imposed Scope Limitation
Client-Imposed Scope Limitation
Disclaimer of Opinion
Division of Responsibility
The financial statements of more than one component (division, subsidiary, or other segment)
Date of the Auditor's Report
Group Auditors (Principal Auditors)
Component Auditor
Group Financial Statements
A restriction on auditors from gathering sufficient appropriate evidence because of a situation beyond control of both the auditors and client, such as late appointment of the auditors → Client-Imposed Scope Limitation
INCORRECT
TRUE
FALSE
Situation in which an entity does not follow GAAP in preparing its financial statements; auditors can issue qualified or adverse opinions for material departures from GAAP → Departure from GAAP
TRUE
FALSE
The auditors who perform the audit of a material portion of the assets, liabilities, revenues, and expenses of an entity's group financial statements
Component Auditor
Updated Report
Group Auditors (Principal Auditors)
Group Financial Statements
An auditor's permanent file audit documentation most likely will contain
An auditor's permanent file audit documentation most likely will contain.
Memorandum of conference with management.
Excepts of the corporate charter and bylaws.
The most recent engagement letter.
When initiating communications with predecessor auditors, prospective auditors should expect
To take responsibility for obtaining the client's consent for the predecessor to give information about prior audits.
To obtain copies of some or all of the predecessor auditors' audit documentation.
To conduct interviews with the partner and manager in charge of the predecessor public accounting firm's engagement.
None
The revenue cycle of a company generally includes which accounts?
Cash, accounts receivable, and sales
Inventory, general expenses, and payroll.
Inventory, accounts payable, and general expenses
Cash, notes payable, and capital stock.
When auditing the existence assertion for an asset, auditors proceed from the
Financial statement amounts back to the potentially unrecorded items
General ledger back to the supporting original transaction documents.
Potentially unrecorded items forward to the financial statement amounts.
Supporting original transaction documents to the general ledger.
Which of the following communications is most likely to be written before the balance-sheet date?
A report to the audit committee on the results of testing of internal control over cash receipts
Confirmation letters to vendors confirming the amounts they owe to the client
An engagement letter
