ditor is testing internal control procedures that are evidenced on an entity's vouchers by matching random numbers with voucher numbers. If a random number matches the number of a voided voucher, that voucher ordinarily should be replaced by another voucher in the random sample if the voucher Constitutes a deviation Cannot be located Has been properly voided. Represents an immaterial p

ditor is testing internal control procedures that are evidenced on an entity's vouchers by matching random numbers with voucher numbers. If a random number matches the number of a voided voucher, that voucher ordinarily should be replaced by another voucher in the random sample if the voucher Constitutes a deviation Cannot be located Has been properly voided. Represents an immaterial p

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle.

Section: Chapter Questions

Problem 21RQSC

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Similar questions

In a test of controls, auditors may trace receiving reports to vouchers recorded in the voucher register. This is a test fora. Occurrence.b. Completeness.c. Classification.d. Cutoff.
Audit sampling for tests of controls is generally appropriatewhen the application of the control leaves audit evidence of performance (for example, initials of the credit manager on a sales invoice indicating credit approval, or evidence of authorization of data input to a microcomputer based data processing system). TRUE OR FALSE? WHY?
How do bank confirmations differ from positive confirmations ofaccounts receivable? Distinguish between them in terms of the nature of the informationconfirmed, the sample size, and the appropriate action when the confirmation is notreturned after the second request. Explain the rationale for the differences between thesetwo types of confirmations
Which of the following is consistent with an assessed level of control risk at below the maximum level after completing the auditors consideration of the client's internal control over receivables? * a. Increased materiality level in selecting receivables to be confirmed and use a positive confirmation letter. b. Increased materiality level in selecting receivables to be confirmed and use a negative confirmation letter. c. Decrease materiality level in selecting receivables to be confirmed and use a negative confirmation letter. d. Decrease materiality level in selecting receivables to be confirmed and use a positive confirmation letter. e. None of the above
Attribute sampling enables the auditor to directly assess whether a rule is operating successfully or not, sampling is more reliable for assessing controls. This is crucial in circumstances where data accuracy or completeness are essential, such as when a credit-check control is used for consumer orders. The focus is on estimating the overall monetary value of a population, therefore monetary-unit sampling is more suitable for verifying the accuracy of financial statements or specific account balances. It is crucial to remember that the exact audit objectives and the type of data being checked will determine the sampling technique that is used. Do you believe monteray unit sampling can do the same thing?
Subject: Auditing & Assurance PrinciplesWhen performing audit procedures, the auditor is faced with an uncertainty of not detecting material errors in an account balance or class of transactions. This uncertainty arises because of sampling and non-sampling risks.a) Define sampling risk.b) Define non-sampling risk.c) How could the auditors control each type of risk?
In an audit sampling application, an auditora. Performs procedures on all items in a balance and makes a conclusion about the entirebalance.b. Performs procedures on less than 100 percent of the items in a balance and formulates aconclusion about the entire balance.c. Performs procedures on less than 100 percent of the items in a class of transactions tobecome familiar with the client’s accounting system.d. Performs analytical procedures on the client’s unaudited financial statements when planning the audit.
In auditing accounts receivable, the negative form of confirmations request is used when A. Response rate to positive confirmation request was low B. The total amount of account receivable is immaterial to the financial statement taken as a whole C. Recipients are likely to return positive confirmation without verifying the information D. The combined assessed level of both inherent risk and control risk relative to account receivable is low
Which of the following is appropriate about risk assessment? A. The assessed level of inherent and control risk can be sufficiently low, thus resulting to eliminating the need for substantive tests. B. Audit risk may be more effectively determined by assessing inherent and control risk separately. C. Detection risk is eliminated if an auditor were to examine 100 percent off the account balance or class of transactions. D. There is an iverse relationship between detection risk and the combined level of inherent and control risk
When making a decision about the dollar amount in an account balance based on a sample, the audit team considers the risk of incorrect acceptance to be more serious than the risk of incorrect rejection becausea. The incorrect rejection decision impairs the efficiency of the audit.b. The audit team will do additional work and discover the misstatement of the incorrect decision.c. The incorrect acceptance decision impairs the effectiveness of the audit.d. Sufficient appropriate audit evidence will not have been obtained.
When completing the audit of internal controls for an issuer, the severity of an internal control deficiency depends ona. Whether there is a reasonable possibility that the company’s controls will fail to prevent or detect a misstatement of an account balance or disclosure.b. Whether a misstatement has actually occurred as a result of the deficiency.c. The magnitude of the potential misstatement resulting from the deficiency or the deficiencies.d. Both a and c are correct.e. All of the above are correct.
Which of the following tests of controls is most useful in assessing the transaction-related audit objective related to completeness? Attempt to input transactions with valid and invalid vendors. Account for sequence of vouchers and ensure that the vouchers prenumbered. Examine supporting documents for indication of approval. Examine documents in voucher package for occurrence.