Auditing & Attestation Mini Exam 13 — AUD — Auditing & Attestation Mini Exams

Questions in this quiz (10)

1. In assessing the risk of material misstatement for accounts receivable, which of the following would most likely increase control risk?

   • Strong credit approval policies
   • Regular independent reconciliations
   • Frequent turnover in billing personnel
   • Automated invoicing systems

2. Which of the following is a key difference between audit planning and audit execution?

   • Planning focuses on identifying risks, execution focuses on performing procedures
   • Planning is optional, execution is mandatory
   • Planning is performed after execution
   • Execution is performed by management

3. An auditor is evaluating the design of internal controls over cash disbursements. Which of the following would be considered a weakness?

   • Requiring dual authorization for large payments
   • Using prenumbered checks
   • Allowing one employee to approve and process payments
   • Performing monthly bank reconciliations

4. Which of the following best describes professional skepticism in auditing?

   • Assuming management is dishonest
   • Maintaining a questioning mind and critically evaluating evidence
   • Relying on prior audit results
   • Focusing only on fraud detection

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

   • Frequent valuation adjustments
   • Complex costing methods
   • Stable product pricing and demand
   • High volume of obsolete inventory

6. Which of the following is a key consideration when determining the timing of audit procedures?

   • The auditor’s personal availability
   • The client’s reporting deadlines and risk assessment
   • The audit fee
   • The client’s preference

7. An auditor is assessing the risk of material misstatement for a client’s revenue account. A history of revenue restatements most directly affects which component of audit risk?

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

8. Which of the following would most likely indicate a lower control risk in accounts payable?

   • Lack of approval controls
   • Frequent errors in vendor payments
   • Strong segregation of duties and regular reconciliations
   • High turnover in accounting staff

9. Which of the following is NOT a typical audit procedure for testing the valuation assertion for inventory?

   • Testing lower of cost or market calculations
   • Reviewing inventory aging reports
   • Confirming inventory quantities with warehouses
   • Evaluating management’s assumptions in valuation

10. During an internal control walkthrough, the auditor notes that the same employee records cash receipts and updates customer balances. This is an example of which type of control deficiency?

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