Inherent and control risk | My Assignment Tutor

QUESTION 1 A walkthrough is: a brief tour of a client’s office, warehouses, manufacturing and other operating facilities consists of the auditor following one or more transactions through the entire accounting process normally used to obtain substantive evidence as to whether an account is fairly presented performed near the end of the audit to be satisfied that all relevant assertions have been tested QUESTION 2 Substantive tests: are procedures designed to test for monetary misstatements in financial statement accounts and disclosures are used to determine whether transaction-related audit objectives have been satisfied for each class of transactions are used to determine whether ending balances and disclosures in the financial statements are correct and in compliance with the stated accounting framework (e.g., GAAP) all of the above QUESTION 3 The auditor observed whether personnel responsible for handling cash have no accounting responsibilities. This procedure is most likely: a test of controls a substantive test an analytical procedure a test of details of cash balances QUESTION 4 Audit data analytics can be used in each of the five types of audit tests True False QUESTION 5 Substantive tests of transactions usually include which of the following types of tests? confirmation observation inspection all of the above QUESTION 6 Which of the following factors affect the auditor’s decisions regarding the mix of audit evidence to be obtained in the audit? the nature and effectiveness of the client’s internal control the level of assessed inherent risk the results of testing during the audit all of the above QUESTION 7 The relationship between audit assurance obtained from substantive tests and tests of controls is best described as follows: the auditor can obtain almost all of the assurance needed in an audit by performing tests of controls performing tests of controls may reduce the amount of assurance needed from substantive tests even when it is more efficient to perform substantive tests, the auditor must rely, at least to some degree, on controls there is no relationship between the amounts of assurance required by substantive tests and tests of controls QUESTION 8 Which of the following affect the design of the auditor’s tests of details of balances? performance materiality assessed level of control risk evidence obtained from substantive analytical procedures all of the above QUESTION 9 Auditing standards require the auditor to use a written audit program. True False QUESTION 10 If the auditor identifies a significant risk due to either error or fraud, the auditor should: identify controls that mitigate the risk design and perform substantive tests to determine whether misstatements occurred incorporate knowledge of the significant risk in the evaluation of inherent and control risk all of the above

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