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- Which of the following statements is incorrect? A. As the risk of material misstatement in the financial statements increases, the auditor relies more on substantive analytical procedures rather than tests of details of transactions and balances B. It is common, but not required, to use analytical procedures as substantive tests; C. Tests of transactions are often performed during the interim audit work D.Tests of details of balances are normally done during the year-end audit workWhich of the following conditions identified during fieldwork of an audit is most likely to affect the auditor's assessment of the risk of misstatement due to fraud? a. Computer generated documents. b. Year-end adjusting journal entries. O c. Checks for significant amounts outstanding at year-end. O d. Missing documents.The results of analytical procedures may identify previously unrecognized risk of material misstatement in that case an auditor requires to O a. Modify the engagement letter O b. Revise the assessment of the risk of material misstatement O C. Terminate the audit and client relationship O d. Unmodified the planned audit procedures
- Which of the following is NOT a reason the auditor performs some substantive procedures at an interim audit date? O increase the effectiveness of the overall audit O client may require it for reporting purposes O allow the audit firm to decrease the amount of work during their 'busy season' O increases the efficiency of the year-end auditTRUE OR FALSE Written representations are considered audit evidences. For recurring audits, management letters may include a follow-up of prior years recommendation and status of their resolutions. Related parties are generally unreliable in nature which leads to the auditor performing procedures to examine transactions with them. One of the ways to gain knowledge of any lirigations and claims is through an examination of professional and or legal expenses and related source documents. If lower detection risk is determined the auditor may reduce the extent of substantive procedures. Audit documentation should be done after the last day of audit field work and before the auditor's report date. Audit sampling is highly useful when identifying plausible relationships between account balances and classes of transactions. Review of tax returns and other information is an audit procedure responsive to the completeness of related party relationships and…Which of the following is correct about unmodified audit opinion? O a. Opinion issued once auditors examined and concluded that those financial statements are materially misstated and pervasive O b. Opinion issued once auditors could not obtain and unable to access the audit evidence for individual items c. Opinion issued once auditors make a conclusion after their testing that there is material misstatement found in the financial statements O d. Opinion issued once auditors obtain sufficient and appropriate audit evidence to the financial statements as the result of their testing
- Which of the following is an incorrect statement? a. The amount of audit work should vary inversely with the likelihood of material misstatements existing in the accounting records. b. The better the organization’s control structure, the less likely it is that material misstatements will be present c. Complex or unusual transactions are more likely to be recorded in error than recurring or routine transactions are d. If misstatements are likely to occur in the recording process, the auditor should develop procedures to detect misstatements.Which of the following statements is not true with respect to the performance principle?a. Auditors are required to prepare a written audit plan during the planning stages of initialaudits but are not required to do so in continuing audits.b. Audit teams consider materiality in planning the audit, performing the audit, and evaluating the effect of misstatements on the entity’s financial statements.c. In assessing the risk of material misstatements, the audit team considers the effectivenessof the entity’s internal controls in preventing and detecting misstatements.d. Auditors are required to consider both the relevance and the reliability of evidence inevaluating whether the evidence they have gathered is appropriate.Which of the following risk types increase when an auditor performs substantive analytical audit procedures for financial statement accounts at an interim date?a. Inherent.b. Control.c. Detection.d. Sampling.
- What will the auditor NOT consider when reaching a conclusion on the results of substantive procedures performed during an audit? O responses to inquires made during the performance of the procedures O resolution of any misstatements identified during the audit conclusion of prior year's substantive procedures O results of all the testing related to the account balancesWhy do auditors typically test internal controls at an interim audit date? O more effective to test at an interim date versus the year-end date O auditing standards require that timing O allows the auditor to adjust the nature and extent of planned audit procedures O management asks for auditors to perform testing at the interim dateIn response to an increased level of assessed risk of material misstatement, an auditor of anonissuer would generally A.Not make changes to the nature, timing, or extent of further audit procedures. B.Increase the emphasis on professional skepticism when gathering and evaluating auditevidence with the audit team. C.Perform more substantive audit procedures at an interim date instead of at period end. D.Perform additional tests of controls at an interim date to eliminate the need for substantivetests at period end