Question 1

When Sheila Copes, CPA audited a new client she asked questions about what the client does, how the client functions, the ownership structure of the client and its sources of financing.
She was getting an understanding of the client at the

Accepted Answer

A)   entity level.
B)   industry level.
C)   economy level.
D)   all of the above.E) None of the above
F) All of the above

Question 2

When gaining an understanding of their client, at which level do auditors not usually consider the relevant issues?

Accepted Answer

A)   audit committee level
B)   economy level
C)   entity level
D)   industry levelE) A) and B)
F) A) and C)

Question 3

Which of the following is an example of information used by auditors in gaining an understanding of a client at the entity level?

Accepted Answer

A)   The level of competition in the client's industry
B)   Whether the client is an importer or exporter of goods
C)   The client's ability to withstand currency fluctuations
D)   The level of government support in the client's industryE) B) and C)
F) B) and D)

Question 4

If auditors identify risk factors that indicate that the going concern assumption is in doubt, they will:

Accepted Answer

A)   Undertake procedures to gather evidence regarding each risk factor.
B)   Refuse to continue as the auditor of their client.
C)   Report the client to the Canada Revenue Agency.
D)   Reduce the extent of further audit testing that they undertake.E) All of the above
F) A) and C)

Question 5

The execution stage of an audit involves:

Accepted Answer

A)   evaluating the results of the detailed testing and forming an opinion on the fair presentation of the client's financial statements.
B)   the assessment of the audit firm's quality control procedures.
C)   the performance of detailed tests of controls and substantive testing of transactions and accounts.
D)   gaining an understanding of the client.E) B) and C)
F) None of the above

Question 6

Auditors can assess the adequacy of their client's closing procedures by:

Accepted Answer

A)   Checking the accuracy of accrual calculations around year-end.
B)   Looking at earnings trends to assess whether reported income is in line with similar periods in prior years.
C)   a and b.
D)   None of the above.E) C) and D)
F) None of the above

Question 7

In assessing the client's relationship with its employees, the auditor will consider:

Accepted Answer

A)   The level of unionization among the workforce.
B)   The attitude of staff to their employer.
C)   How well a client pays its employees.
D)   All of the above.E) B) and C)
F) None of the above

Question 8

During the planning stage of a grocery chain, Seren Dagdeviren tried to determine which procedures would be appropriate. Which of these procedures, if any, would you use in the
Planning phase of the audit?

Accepted Answer

A)   observation and inspection
B)   analytical procedures
C)   both a and b
D)   none of the aboveE) B) and D)
F) B) and C)

Question 9

Preliminary risk identification can be affected by:

Accepted Answer

A)   fraud risk.
B)   corporate governance.
C)   Both a and b
D)   None of the above.E) B) and C)
F) All of the above

Question 10

Checking the accuracy of accrual calculations around year-end is an example of how auditors can assess the adequacy of their client's closing procedures.

Accepted Answer

A)   risk identification and strategy
B)   understanding the client
C)   risk and materiality assessment
D)   all of the aboveE) C) and D)
F) None of the above

Question 11

Wilfred Dominic was meeting with his manager to plan audit strategy in order to determine the amount of time to spend testing the client's internal controls and conducting detailed testing
Of transactions and account balances. Determining the audit strategy occurs during which phase
Of the audit?

Accepted Answer

A)   client acceptance stage
B)   planning stage
C)   performing stage
D)   reporting stageE) A) and D)
F) C) and D)

Question 12

When assessing fraud risk, an auditor will adopt an attitude of:

Accepted Answer

A)   Confidentiality.
B)   Professional scepticism.
C)   Belief in management.
D)   None of the above.E) A) and D)
F) B) and D) B

Question 13

Claudia Martel knows that financial reporting fraud transactions require disclosure. However, she is not sure whether related party transactions require disclosure. You advise her
That related party transactions require

Accepted Answer

A)   disclosure.
B)   no disclosure.
C)   disclosure only if there is risk of fraud.
D)   auditor judgment.E) B) and C)
F) A) and B)

Question 14

What should auditors do if there are risk factors that indicate that the going concern assumption is at risk?

Accepted Answer

If the auditor identifies risk factors t...

Question 15

A client's corporate governance structure is assessed when planning an audit.

Accepted Answer

A) True 
 B)False  True

Question 16

If auditors believe there is a risk that expenses incurred before year-end will be excluded from the current year's expenses, they will:

Accepted Answer

A)   Send out confirmation requests to a sample of the client's debtors.
B)   Trace transactions recorded close to year-end to source documentation.
C)   Perform analytical review analysis on the client's statement of financial position.
D)   None of the above.E) None of the above
F) A) and B)

Question 17

Indicate whether you agree or disagree with the following statements and explain your reasoning.
a) Related party transactions require proper identification and consideration when considering risk. However, there is no requirement to disclose related party transactions unless they have an impact on material misstatements.
b) When assessing fraud risk, auditors should adopt an attitude of professional scepticism to ensure that any indicator of a potential fraud is properly investigated.
c) The responsibility for preventing and detecting fraud rests with those charged with governance at the client as well as the auditors.
d) The auditor should not ask management and those charged with governance if they are aware of a known fraud or suspect there has been fraud.
e) Elvie Lee explained to her friend how application controls work: "Application controls are designed to prevent and detect a material misstatement in the financial statements."

Accepted Answer

a) Disagree. It is the responsibility of...

Question 18

The planning stage of an audit involves the performance of detailed tests of controls and
substantive testing of transactions and accounts.

Accepted Answer

A) True 
 B)False

Question 19

The more competitive an audit client's industry, the less pressure is placed on the client's
profits.

Accepted Answer

A) True 
 B)False  False

Question 20

Corporate governance means:

Accepted Answer

A)   the viability of a company to remain in business for the foreseeable future.
B)   the rules, systems and processes within companies used to guide and control them.
C)   an intentional act through the use of deception to obtain an unjust or illegal advantage.
D)   the processes used by a client when finalizing the accounts for an accounting period.E) None of the above
F) A) and D)

Exam 3: Audit Planning I

When Sheila Copes, CPA audited a new client she asked questions about what the client does, how the client functions, the ownership structure of the client and its sources of financing. She was getting an understanding of the client at the

Correct Answer
verified

When gaining an understanding of their client, at which level do auditors not usually consider the relevant issues?

Correct Answer
verified

Which of the following is an example of information used by auditors in gaining an understanding of a client at the entity level?

Correct Answer
verified

If auditors identify risk factors that indicate that the going concern assumption is in doubt, they will:

Correct Answer
verified

The execution stage of an audit involves:

Correct Answer
verified

Auditors can assess the adequacy of their client's closing procedures by:

Correct Answer
verified

In assessing the client's relationship with its employees, the auditor will consider:

Correct Answer
verified

During the planning stage of a grocery chain, Seren Dagdeviren tried to determine which procedures would be appropriate. Which of these procedures, if any, would you use in the Planning phase of the audit?

Correct Answer
verified

Preliminary risk identification can be affected by:

Correct Answer
verified

Checking the accuracy of accrual calculations around year-end is an example of how auditors can assess the adequacy of their client's closing procedures.

Correct Answer
verified

Wilfred Dominic was meeting with his manager to plan audit strategy in order to determine the amount of time to spend testing the client's internal controls and conducting detailed testing Of transactions and account balances. Determining the audit strategy occurs during which phase Of the audit?

Correct Answer
verified

When assessing fraud risk, an auditor will adopt an attitude of:

Correct Answer
verified
B

Claudia Martel knows that financial reporting fraud transactions require disclosure. However, she is not sure whether related party transactions require disclosure. You advise her That related party transactions require

Correct Answer
verified

What should auditors do if there are risk factors that indicate that the going concern assumption is at risk?

Correct Answer
verified
If the auditor identifies risk factors t...
View Answer

A client's corporate governance structure is assessed when planning an audit.

Correct Answer
verified
True

If auditors believe there is a risk that expenses incurred before year-end will be excluded from the current year's expenses, they will:

Correct Answer
verified

Correct Answer
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a) Disagree. It is the responsibility of...
View Answer

The planning stage of an audit involves the performance of detailed tests of controls and substantive testing of transactions and accounts.

Correct Answer
verified

The more competitive an audit client's industry, the less pressure is placed on the client's profits.

Correct Answer
verified
False

Corporate governance means:

Correct Answer
verified

Exam 3: Audit Planning I

When Sheila Copes, CPA audited a new client she asked questions about what the client does, how the client functions, the ownership structure of the client and its sources of financing. She was getting an understanding of the client at the

Correct AnswerverifiedShow Answer

When gaining an understanding of their client, at which level do auditors not usually consider the relevant issues?

Correct AnswerverifiedShow Answer

Which of the following is an example of information used by auditors in gaining an understanding of a client at the entity level?

Correct AnswerverifiedShow Answer

If auditors identify risk factors that indicate that the going concern assumption is in doubt, they will:

Correct AnswerverifiedShow Answer

The execution stage of an audit involves:

Correct AnswerverifiedShow Answer

Auditors can assess the adequacy of their client's closing procedures by:

Correct AnswerverifiedShow Answer

In assessing the client's relationship with its employees, the auditor will consider:

Correct AnswerverifiedShow Answer

During the planning stage of a grocery chain, Seren Dagdeviren tried to determine which procedures would be appropriate. Which of these procedures, if any, would you use in the Planning phase of the audit?

Correct AnswerverifiedShow Answer

Preliminary risk identification can be affected by:

Correct AnswerverifiedShow Answer

Checking the accuracy of accrual calculations around year-end is an example of how auditors can assess the adequacy of their client's closing procedures.

Correct AnswerverifiedShow Answer

Wilfred Dominic was meeting with his manager to plan audit strategy in order to determine the amount of time to spend testing the client's internal controls and conducting detailed testing Of transactions and account balances. Determining the audit strategy occurs during which phase Of the audit?

Correct AnswerverifiedShow Answer

When assessing fraud risk, an auditor will adopt an attitude of:

Correct AnswerverifiedB

Claudia Martel knows that financial reporting fraud transactions require disclosure. However, she is not sure whether related party transactions require disclosure. You advise her That related party transactions require

Correct AnswerverifiedShow Answer

What should auditors do if there are risk factors that indicate that the going concern assumption is at risk?

Correct AnswerverifiedIf the auditor identifies risk factors t...View AnswerShow Answer

A client's corporate governance structure is assessed when planning an audit.

Correct AnswerverifiedTrue

If auditors believe there is a risk that expenses incurred before year-end will be excluded from the current year's expenses, they will:

Correct AnswerverifiedShow Answer

Correct Answerverifieda) Disagree. It is the responsibility of...View AnswerShow Answer

The planning stage of an audit involves the performance of detailed tests of controls and substantive testing of transactions and accounts.

Correct AnswerverifiedShow Answer

The more competitive an audit client's industry, the less pressure is placed on the client's profits.

Correct AnswerverifiedFalse

Corporate governance means:

Correct AnswerverifiedShow Answer

Correct Answer
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B

Correct Answer
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If the auditor identifies risk factors t...
View Answer

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True

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a) Disagree. It is the responsibility of...
View Answer

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False

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