Auditing & Attestation Mini Exam 16 — AUD — Auditing & Attestation Mini Exams

Questions in this quiz (10)

1. During the audit of operating expenses, the auditor uses analytical procedures. This approach is most appropriate when:

   • Expenses are unpredictable
   • Controls are weak
   • Relationships among data are stable and predictable
   • There is high fraud risk

2. Which of the following is a key factor when evaluating audit sampling results?

   • The client’s explanation of misstatements
   • The projected misstatement in the population
   • The auditor’s personal preference
   • The cost of testing

3. An auditor performs analytical procedures and notes an unexpected fluctuation in gross margin. What is the most appropriate next step?

   • Conclude financials are misstated
   • Investigate the fluctuation further
   • Accept management’s explanation
   • Ignore if within expectations

4. In substantive testing, which procedure is most effective for testing the rights and obligations assertion for inventory?

   • Observing inventory count
   • Reviewing purchase invoices
   • Examining ownership documents and consignment agreements
   • Recalculating inventory balances

5. Which of the following is a limitation of substantive analytical procedures?

   • They provide conclusive evidence
   • They depend on the reliability of underlying data
   • They can only be used in the final review stage
   • They eliminate the need for tests of details

6. An auditor selects a sample of expense transactions and identifies several misstatements. What is the most appropriate next step?

   • Conclude the financial statements are misstated
   • Project the misstatements to the population
   • Ignore the misstatements if individually immaterial
   • Immediately issue a qualified opinion

7. Which of the following best describes non-statistical sampling?

   • Sampling based on probability theory
   • Sampling that eliminates sampling risk
   • Sampling based on auditor judgment
   • Sampling only used for small populations

8. When testing accounts payable for completeness, which procedure is most effective?

   • Vouching recorded payables to invoices
   • Tracing receiving reports to recorded payables
   • Confirming balances with vendors
   • Reviewing accounts payable turnover ratios

9. An auditor finds that the deviation rate in a test of controls exceeds the tolerable rate. What should the auditor do?

   • Conclude the control is effective
   • Increase reliance on the control
   • Reassess control risk and modify audit procedures
   • Ignore the deviation if sample size is small

10. Which of the following is most important when designing substantive analytical procedures?

    • The auditor’s experience level
    • The predictability of relationships among data
    • The size of the audit firm
    • The client’s preference for procedures