Auditing Theory Test Bank

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6. An effective internal control
a) Cannot be circumvented by management
b) Can reduce the cost of an external audit
c) Can prevent collusion among employees
d) Eliminates risks and potential loss to the organization
b) Can reduce the cost of an external audit
7. In auditing through a computer, the test data method is used by auditors to test the
a) Accuracy of input data
b) Validity of the output
c) Procedures contained within the program
d) Normalcy of distribution of test data
c) Procedures contained within the program
8. An auditor's working papers will generally be least likely to include documentation
showing how the
a) Client's schedules were prepared
b) Engagement had been planned
c) Client's system of internal control had been reviewed and evaluated
d) Unusual matters were resolved
a) Client's schedules were prepared
9. Which of the following sampling methods would be most appropriate in performing tests
of controls
over authorization of cash disbursements
a) Attributes
b) Variables
c) Ratio
d) Stratified
a) Attributes
10. Analytical procedures used in the overall review stage of an audit generally include
a) Considering unusual or unexpected account balances that were not previously identified
b) Performing test of transactions to corroborate management's financial statement
assertions
c) Gathering evidence concerning account balances that have not changed from the prior
year
d) Re-testing control procedures that appeared to be ineffective during the assessment of
control risk
a) Considering unusual or unexpected account balances that were not previously
identified