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Audit questions 1 Which of the following procedures would an auditor least likely perform before the balance sheet date? 2 An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive audit procedure most likely was to 3 Which of the following procedures would an auditor most likely perform in searching for unrecorded payables? 4 An auditor performs a test to determine whether all merchandise for which the client was billed was received. The population for this test consists of all 5. As an in-charge auditor you are reviewing a summary of control weaknesses in cash disbursement procedures. Which one of the following weaknesses, standing
alone, should cause you the least concern? 6. Which of the following procedures would normally be performed by the auditor when making tests of payroll transactions? 7. Which of the following circumstances most likely would cause an auditor to suspect an employee payroll fraud scheme? 8. An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that 9. An auditor most likely would extend substantive tests of payroll when 10. An auditor would consider internal control over a client's payroll procedures to be ineffective if the payroll department supervisor is responsible for 11. An auditor will usually trace the details of the test counts made during the observation of the physical
inventory taking to a final inventory schedule. This audit procedure is undertaken to provide evidence that items physically present and observed by the auditor at the time of the physical inventory count are 12. Which of the following audit procedures would provide the least reliable evidence that the
client has legal title to inventories? 13. An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement
assertion of 14. A client maintains perpetual inventory records in both quantities and dollars. If the assessed level of control risk is high, an auditor would probably 15. An auditor selected items for test counts while observing a client's physical inventory. The auditor then traced the test counts to the client's inventory listing. This procedure most likely obtained evidence concerning management's assertion of 16. A normal audit procedure is to analyze the current year's repairs and maintenance accounts to provide evidence in support of the audit proposition that 17. Determining that proper amounts of
depreciation are expensed provides assurance about management's assertions of valuation or allocation and 18. In testing plant and equipment balances, an auditor may inspect new additions listed on the analysis of plant and equipment. This procedure is designed to obtain evidence concerning management's assertions about 19. An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit assertion that all 20. In the examination of property, plant, and equipment, the auditor tries to determine all of the following except the 21. Several years ago Conway, Inc., secured a conventional real estate mortgage loan. Which of the
following audit procedures would be least likely to be performed by an auditor examining the mortgage balance? 22. During the course of an audit, a CPA observes that the recorded interest expense seems to be excessive in relation to the balance in the long-term debt account. This observation could
lead the auditor to suspect that 23. The auditor can best verify a client's bond sinking fund transactions and year-end balance by 24. An audit program for the examination of the retained earnings account should include a step that requires verification of the 25. An auditor most likely would inspect loan agreements under which an entity's inventories are pledged to support management's financial statement assertion of: 26. When auditing contingent liabilities, which of the following procedures would be least effective? 27. An auditor would be most likely to identify a contingent liability by mailing a(n) 28. An auditor is concerned with completing various phases of the examination after
the balance sheet date. This "subsequent period" extends to the date of the 29. As part of an audit, a CPA often requests a representation letter from the client. Which one of the following is not a valid purpose of such a letter? 30. After an auditor has issued an audit report on a nonpublic entity, there is no obligation to make any further audit tests or
inquiries with respect to the audited financial statements covered by that report unless 31. Which of the following procedures would an auditor ordinarily perform during the review of subsequent events? 32. Stone was asked to perform the first audit of a wholesale business that does not maintain perpetual inventory records. Stone has observed the current inventory but has not observed the physical inventory at the previous year-end date and concludes that the opening inventory balance, which is not auditable, is a material factor in the determination of cost of goods sold for the current year. Stone will probably 33. In connection with the examination of the consolidated financial statements of Mott Industries, Frazier, CPA, plans to refer to another CPA's examination of the financial statements of a subsidiary company. Under these circumstances,
Frazier's report must disclose. 34. An auditor's report on comparative financial statements should be dated as of the date of the 35. An auditor is reporting on cash-basis financial statements. These statements are best referred to in his or her opinion by which one of the following descriptions? 36. An auditor's report issued in connection with which of the following is generally not considered to be a special report? 37. When an auditor expresses an adverse opinion, the opinion paragraph should include: 38. Which of the following statements is correct with respect to ownership, possession, or access to a CPA firm's audit workpapers? 39. When performing an audit, a CPA will most likely be considered negligent when the CPA fails to 40. Under common law, which of the following statements most accurately reflects the liability of a CPA who fraudulently gives an opinion on an audit of a client's financial statements? https://brainmass.com/business/auditing/audit-40-questions-covering-a-wide-range-of-audit-topics-132334 Attachments
Solution PreviewI assumed the underlined choices are your answers. When not correct, I'll explain why. 1. Related parties should be identified when the audit is planned which is long before the balance sheet date. The only choice for an answer is accounts payable confirmations because the date to confim hasn't happened yet. 2. D is a test for fraud and one of the most common fraudulent transactions is to assign a bogus vender and then make payments to the vendor. Your choice of answer is a valid one but it is done when testing balances in accounts, not purchase order procedures. 3. The logical way to look for unrecorded expenses is to review payments and invoices recorded in the subsequent year. You really can't find anything unrecorded in the current year because...it is unrecorded. 4. You can't really audit merchandise received, but you can audit receiving reports which indicate that merchandise was received. 5. The distribution of signed checks should be of least concern because the assumption is that the procedures for approval, credit, receiving, etc have already been performed. Your choice could be the correct answer assuming the Treasurer has none of the supporting documentation when the check is signed. If it is only checking addresses, then no big deal. 6. Agreed - B 7. I don't like any of the answers, but yours is as good as any of them. The fraud issue is often where a bogus employee is set up and paid, and it could be that having a person higher up than the immediate supervisor would catch that problem. C might be a better answer. 8. Segregation of duties won't provide results the test wants. B. will: Employees work the number of hours for which they are paid. 9. The purpose of the substantive tests is to determine that the system procedures are working by producing accurate amounts. ... Solution SummaryThe solution presents an explanation for answers that differ with the student which is 75% of the questions. For those where we were in agreement, I have not included a narrative to explain the answer. These are more difficult questions and cover most of the chapters in an audit text. ADVERTISEMENTWhich of the following procedures would an auditor most likely perform in searching unrecorded payables?Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? Vouch a sample cash disbursements recorded jsut after year end to receiving reports and vendor invoices.
Which of the following audit procedures is best for identifying unrecorded accounts payable?Which of the following audit procedures is best for identifying unrecorded trade accounts payable? Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payable applies to the prior period.
When searching for unrecorded liabilities at year end an auditor most likely would examine?Terms in this set (30) In searching for unrecorded liabilities, an auditor most likely would examine the: - Files of purchase requisitions for items ordered just before the year end.
Which of the following is the most efficient audit procedure for the detection of unrecorded liabilities?Which of the following is the most efficient audit procedure for the detection of unrecorded liabilities? Compare cash disbursements in the subsequent period with the accounts payable trial balance at year-end.
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