7. Analytical procedures:A. are not a type of audit evidence.B. are not required during the completion phase of the audit.C. performed during the planning phase of the audit are used as a substantive test insupport of account balances.D. do not provide reliable evidence unless it is corroborated with other evidence.8. Reasonable assurance allows for:A. low likelihood that material misstatements will not be prevented or detected byinternal controls.B. no likelihood that material misstatements will not be prevented or detected by internalcontrols.C. moderate likelihood that material misstatements will not be prevented or detected byinternal controls.D. high likelihood that material misstatements will not be prevented or detccted byinternal controls.9. Management implements internal controls to ensure that all required footnote disclosuresare accurate. Auditors tests those controls to provide evidence supporting thepresentation.A. completeness and valuationB. completeness and accuracyC. rights and obligations and existenceD. occurrence and accuracy10. "Independence" in auditing means:A. maintaining an indirect financial interest.B. not being financially dependent on a client.C. taking an unbiased viewpoint.D. being an advocate for a client.11. The trait that distinguishes auditors from accountants is the:A. auditor's ability to interpret generally accepted accounting principles.B. auditor's education beyond the Bachelor's degree.C. auditor's ability to interpret HKFRS Statements.D. auditor's accumulation and interpretation of evidence related to a company's financialstatements.12. Which of the following services provides higher level of assurance on a financialstatement?A. A reviewB. An auditC. Neither service provides assurance on financial statements.D. Each service provides the same level of assurance on financial statements.

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7. Analytical procedures: A. are not a type of audit evidence. B. are not required during the completion phase of the audit. C. performed during the planning phase of the audit are used as a substantive test in support of account balances. D. do not provide reliable evidence unless it is corroborated with other evidence.

7. Analytical procedures: A. are not a type of audit evidence. B. are not required during the completion phase of the audit. C. performed during the planning phase of the audit are used as a substantive test in support of account balances. D. do not provide reliable evidence unless it is corroborated with other evidence.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Applying substantive tests to the details of asset and liability accounts as of an interim date, rather than as the balance sheet date: Eliminates the use of certain statistical sampling methods that would otherwise be available, Presumes that the auditor will reperform the tests as of the balance sheet date, Should be especially considered when there are rapidly changing economic conditions, Potentially increases the risk that errors which exist at the balance sheet date will not be detected
Audit evidence obtained through inquiry of management about proper segregation of custodianship and recordkeeping functions is less reliable than evidence acquired through the auditor's personal observation. TRUE OR FALSE? WHY?
STATEMENT 1: Significant unexpected fluctuations identified by analytical review procedures will usually necessitate a review of internal control. STATEMENT 2: Working papers should generally contain the nature and extent of audit procedures done, the results of any testing, and the CPA's conclusion about how the findings will affect his report. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct
1. S1: The concept of materiality would be very important to an auditor in determining transactions that should be validated. S2: The level of assurance expected to be issued affects the amount of procedures to be performed by the practitioner. Group of answer choices Both S1 and S2 are incorrect. Only S2 is correct. Both S1 and S2 are correct. Only S1 is correct. 2. S1: Analytical procedures used as substantive test focuses on detecting material misstatements. S2: The responsible party always prepare a representation that will be subjected to the validation of the practitioner. Group of answer choices Only S1 is correct. Both S1 and S2 are incorrect. Both S1 and S2 are correct. Only S2 is correct. 3. S1: After conducting an audit and release of the audit report, the primary responsibility on the fairness of the financial statements remains with the management and those charged with governance of the entity. S2: In recurring audits, the auditor may not send a new…
Inquiries of clients and reperformance normally have a low cost to perform. True False When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of details of balance for that account. True False When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of controls for that account. True False Analytical procedures can be used to provide reliable evidence for all balance-related general audit objectives. True False One advantage of using statical techniques when performing analytical procedures is that they eliminate the need for auditor judgement. True False The type of audit evidence known as documentation involves the auditor’s examination of tangible assets with results of the examination being recorded, or “documented,” in the auditor’s work papers. True False If a company’s cash ratio is greater than 1.0, the company is…
The Auditor prepares a disclaimer of opinion: a. When he cannot find any misstatement in the report. b. When the financial statements are not following GAAP. c. When he finds some discrepancy in the treatment of some items. d. When he is not able to obtain sufficient appropriate audit evidences about an issue.
Which of the following recognizes that an audit conducted under generally accepted auditing standards may not detect all material misstatements?a. Absolute assurance.b. Professional judgment.c. Reliability of audit evidence.d. Reasonable assurance.
Auditor observations are not considered as audit evidence A. True B. False
The requirement for an attitude of scepticism means that the auditor should A) perform additional tests of controls to increase the probability of discovering fraud or errors. B) plan and conduct the audit with an attitude of distrust in management. C) not be blind to evidence that suggests the documents, books, or records have been altered or are incorrect. D) not consider management's explanation as evidence on any subject
23. Analytical procedures used to form an overall audit conclusion generally include A. Considering unusual or unexpected account balances that were not previously identified. B. Performing tests of transactions to corroborate management's financial statement assertions. C. Gathering evidence concerning account balances that have not changed from the prior year. D. Retesting controls that appeared to be ineffective during the assessment of control risk.
2) During the audit of a client you come to the conclusion that there is minimal likelihood that resolution of an uncertainty will have a material effect on the financial report. Accordingly, assuming nothing else has come to your attention, you should issue: a. A qualified opinion. b. An unmodified opinion. c. An adverse opinion. d. A disclaimer of opinion.