SOLVED

5) Tests of controls and substantive tests of transactions are an important determinant of the extent of the auditor’s use of tests of details of balances. Which of the following is true? A) They are likely to be performed prior to the clients end of the fiscal year. B) They are likely to eliminate the need for tests of details of balances. C) They are likely to have no impact on the planned tests of details of balances. D) They are likely to be used only in the audit of internal control. 6) When the auditor has completed the tests of details of balances and enters phase 4 of the audit process, she must still perform audit procedures for which of the following? A) contingent liabilities and employee compensation B) contingent liabilities and subsequent events C) subsequent events and contractual commitments D) subsequent events and unrecorded liabilities 7) Which of the following audit tests would be regarded as a test of controls? A) Comparison of the inventory pricing to vendors’ invoices. B) Tests of the signatures on canceled checks to board of directors’ authorizations. C) Tests of the additions to property, plant, and equipment by physical inspections. D) Review of the specific items making up the balance in a given general ledger account. 8) Which of the following audit tests form the basis for an auditor’s report on internal control over financial reporting? A) Analytical procedures B) Tests of transactions C) Tests of controls D) Tests of details of balances 9) After finishing the review phase of the study and evaluation of internal control in an audit, the auditor should perform tests of controls on: A) those controls that the auditor wants and plans to rely upon. B) those controls in which material weaknesses were identified. C) those controls that have a material effect upon the financial statement balances. D) a random sample of the controls that were reviewed. 10) At what point in the audit process are tests of details most appropriately designed? A) plan and design audit approach B) perform audit tests for controls and transactions C) perform analytical procedures and tests of balances D) complete the audit and issue the audit report 11) Which of the following is/are performed in an audit of internal control over financial reporting? A) Procedures to obtain an understanding of internal control Test of details of balances Analytical Procedures Yes Yes No B) Procedures to obtain an understanding of internal control Test of details of balances Analytical Procedures Yes No No C) Procedures to obtain an understanding of internal control Test of details of balances Analytical Procedures No Yes Yes D) Procedures to obtain an understanding of internal control Test of details of balances Analytical Procedures No No Yes 12) Which of the following ultimately determines the specific audit procedures necessary to provide an independent auditor with a reasonable basis for the expression of an opinion? A) the audit program B) the auditor’s judgment C) generally accepted auditing standards D) the auditor’s working papers