An auditor is examining a nonpublic company’s inventory procurement system and has decided to perform tests of controls. Under which of the following conditions do GAAS require tests of controls be performed by an auditor?a. Significant weaknesses were found in the company’s internal control.b. The auditor hopes to reduce the amount of work to be done in assessing inherent risk.c. The auditor believes that testing the controls could lead to a reduction in overall audit time and cost.d. Tests of controls are always performed when the auditor begins to assess control risk.

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A: Audit is the review and examination of books of account and financial information of the business in…

Q: How might an auditor use a client’s sales forecast for general familiarity with the production cycle…

A: Production Cycle:   The process that accounts the conversion of raw materials to work-in-progress…

Q: The company being audited has an internal auditor who is both competent and objective.The…

A: Answer:   Option b.

Q: Which of the following would be inappropriate during the risk assessment procedure of the audit…

A: We shall answer the first question, since the exact question wasn't specified.Please resubmit a new…

Q: Matters that could affect the necessary extent of testing for a control activity as it related tothe…

A: Auditor: An auditor is a person who is accountable for preparing and examining financial records.…

Q: Jamie is an auditor. While preparing to audit his client, FoodCourt, he finds a weakness in the…

A: Auditing is the process that is followed by a business to check the accuracy of the financial…

Q: . Inflated sales and bill-and-hold transactions. b.Bill-and-hold transactions and embezzlement of…

A: A Fraud Triangle is a framework that clearly indicates the motivation for an individual to commit…

Q: For each of the following situations, describe how the auditors’ report on internal control over…

A: a.

Q: ss activity is the assembly of circuit boards. One of the key materials used is copper wiring, all…

A: Business risk refers to the factors or situations that create a decline in the profits of the…

Q: Which of the following statements reflects an auditor’s responsibility for detectingfraud?(1) An…

A: Fraud in accounting means manipulation or modification of financial statements so that a false…

Q: Assume that the auditors find serious weaknesses in the internal control of Oak Canyon, Inc., a…

A: Internal controls: These are the rules, mechanisms and procedures which are being implemented by an…

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A: Physical evidence in auditing refers the existence and condition of the physical assets such as…

Q: An audit report contains the following observations: a.  A service department's location is not…

A: Audit- It refers to an independent examination of an organization's books of accounts, typically by…

Q: During planning phase of a client’s financial audit, the CPA firm of Arthur Smith, LLP discovered a…

A: The limited number of employees in the enterprise makes the segregation of duties difficult and…

Q: An internal auditor is examining the effectiveness of procedures management established to protect…

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Q: EXPLAIN.Which of the following is not done by an auditor when obtaining an understanding of an…

A: Internal controls are the mechanisms and standards that businesses use to protect their sensitive…

Q: An auditor has completed the risk assessment process for the firm and is evaluating the results. If…

A:

Q: Detection risk is the risk that O a client's system of internal controls will not prevent or detect…

A: Auditing means the independent checking of company operation by outsider. Auditor is  qualified and…

Q: Which of the following is not an internal audit objective designed to add value to a purchasing…

A: Internal Audit: It is an activity of independent nature that consults activities that are designed…

Q: Examples of Deviations. Madison Perry, CPA, is conducting an audit of Parker Inc. In sodoing, Perry…

A: Requirement a:

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Q: Where the auditor has assessed the risk of material misstatement of trade creditors as low, the…

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Q: If an audit of any of these companies is performed according to the AICPA auditing standards, and…

A: Auditing means the independent checking of company operation by outsider. Auditor is  qualified and…

Q: Explain why you agree or disagree with the following statement:“In most audits, it is more important…

A: I agree with the given statement as in most audits, it is much important to test carefully the…

Q: With respect to fraudulent financial reporting, which one of the following statements is not…

A: Auditor can obtain reasonable assurance only, not an absolute assurance.

Q: Which of the following is a test of control relating to purchases? a. None of the options b. Give…

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Q: If the auditor plans to assess control risk at less than the maximum and rely on controls, and the…

A:

Q: When considering the effectiveness of internal control, the auditor should recognize that inherent…

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Q: The auditor faces a risk that the examination will not detect material misstatements in the…

A: Introduction: An auditor verifies the accuracy of videoed commercial transactions. Auditors must…

Q: Assume that the auditors find serious weaknesses in the internal control of Oak Canyon, Inc., a…

A: Accounting records are invoices, vouchers, books, and statements that are used for recording and…

Q: 1) Internal auditing is going to be performing an assurance engagement dealing with controls over…

A: Assurance Engagement Assurance engagement which was conducted by the internal auditors to get the…

Q: Which of the following timing of inventory count is the best based on the auditor’s point of view…

A: Answer: Concept Control risk               Control risk means risk that the internal control…

Q: The following information pertains to internal controls at company A and company B respectively.…

A: What is meant by test controls? It is an audit procedure conducted to ensure the effectiveness of…

Q: Francona Madden, an audit manager, considered the control risk assessments listed in theleft column…

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Q: A client’s purchasing system ends with the recording of a liability and its eventual payment. Which…

A: Completeness Assertions: The completeness assertion is to check that all the activities occurred…

Q: Which of the following is consistent with an assessed level of control risk at below the maximum…

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Q: A major objective of written representations is toa. Shift responsibility for financial statements…

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Q: Which of the following would probably not be considered an indication of a material weakness?a.…

A:

Q: The tolerable rate of deviation set by the auditor for tests of controls depends primarily on which…

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Q: How does inventory control deficiencies affect the development of audit procedures for inventories

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Q: Which of the following would generally not be used ? Select one : O a. Re -perform client procedures

A: Internal control procedures means control procedures that are used for safeguarding of assets of the…

Q: Why is there a need on the part of the client entity to monitor internal controls over time? a.…

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Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.