Auditing & Attestation Mini Exam 11 — AUD — Auditing & Attestation Mini Exams

Questions in this quiz (10)

1. In assessing the risk of material misstatement for a client’s inventory valuation, which factor would most likely increase inherent risk?

   • The client uses standardized costing methods
   • The client operates in a stable pricing environment
   • The client deals with complex and subjective valuation estimates
   • The client performs regular inventory counts

2. Which of the following is a key consideration when selecting audit procedures for a specific assertion?

   • The auditor’s preference for certain procedures
   • The relevance and reliability of audit evidence
   • The cost of performing procedures
   • The client’s request

3. An auditor is performing a walkthrough of the purchasing cycle and observes that purchase orders must be approved before being issued. This approval is an example of which type of control?

   • Preventive control
   • Detective control
   • Corrective control
   • Monitoring control

4. Which of the following best describes the auditor’s responsibility regarding compliance with laws and regulations?

   • Detect all instances of noncompliance
   • Design procedures to detect material noncompliance
   • Report all violations to regulators
   • Ensure compliance by the entity

5. In audit planning, which factor would most likely lead to a lower assessment of control risk?

   • Frequent internal control failures
   • Lack of segregation of duties
   • Strong internal audit function testing controls regularly
   • Rapid changes in accounting systems

6. Which of the following best describes the difference between audit strategy and audit plan?

   • The audit strategy is detailed; the audit plan is high-level
   • The audit strategy outlines overall scope; the audit plan details procedures
   • The audit strategy is prepared after the audit plan
   • The audit plan is optional

7. An auditor is assessing the risk of material misstatement for a client’s cash accounts. Frequent unreconciled differences in bank reconciliations most directly impact which component of audit risk?

   • Inherent risk
   • Control risk
   • Detection risk
   • Engagement risk

8. Which of the following is NOT a typical audit procedure for testing the completeness assertion for liabilities?

   • Reviewing subsequent cash disbursements
   • Searching for unrecorded liabilities
   • Confirming vendor balances
   • Tracing recorded payables to supporting invoices

9. During an internal control walkthrough, the auditor notes that the same employee is responsible for recording cash receipts and reconciling the bank account. This is an example of which type of control deficiency?

   • Lack of segregation of duties
   • Inadequate documentation
   • Failure to perform reconciliations
   • Insufficient supervision

10. Which of the following best describes the auditor’s approach when inherent risk is assessed as high?

    • Reduce substantive testing
    • Rely more on controls
    • Increase the extent of substantive procedures
    • Eliminate analytical procedures