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Dayao, Roleen Mikee Auditing Theory

FAT43 Prof. Alexis F. Aguilar

ASSIGNMENT 4 (MCQ)

1. A. Audit planning
2. C.YES YES YES
3. C. YES NO YES YES
4. C. schedule engagement staff and audit specialists
5. A. Obtain understanding of the client's business and industry
6. D. A more efficient examination to be planned
7. C. The amount of estimated audit fee
8. D. The kind of opinion that is likely to be expressed
9. A. Acceptable if the client and the predecessor auditor agree to it
10. D. Obtain a knowledge of matters that relate to the nature of the entity's
business
11. A. An understanding of the client's internal control system for financial reporting
12. D. Assess the level of control risk
13. D. Performing test of control
14. A. Perform tests of details of transactions and balances
15. D. For continuing engagements, the auditor may no longer obtain knowledge
about the client's business anymore
16. A. Yes yes yes
17. D. That the prior period financial statements were audited by an independent
CPA
18. D. Inversely
19. C. Material to the financial statement
20. A. Yes yes
21. B. Accumulate less evidence than if a lower level had been set
22. B. An auditor considers materiality for planning purposes in terms of the largest
aggregate level of misstatement that could be material to any one of the
financial statement
23. C. rely primarily on professional judgment to determine the materiality level
24. D. Smallest aggregate level
25. D. The financial statement level and the account balance level.
26. B. Account balance level
27. D. Increase
28. B. 200,000
29. B. The entity's annualized interim financial statements.
30. D. All of the above
31. D. Requires the auditor to make judgments as to whether misstatements affect
the fairness of the financial statements.
32. C. Inversely
33. B. The level of materiality for planning purposes to be smaller
34. A. YES, YES
35. D. The client's management
36. C. Require
37. C. I and II
38. A. Materiality is a relative rather than an absolute concept
39. A. Materiality
40. C. I and II
41. C. Acceptable audit risk
42. B. Acceptable audit risk
43. A. Inherent risk
44. D. The susceptibility of a financial statement assertion to a material misstatement
assuming there are no related controls
45. B. Control risk
46. D. Detection risk
47. D. Audit risk
48. D. Inherent risk
49. B. Substantive risk
50. B. Controls will not detect a material misstatement that occurs
51. B. The auditor will fail to detect material misstatement that exist
52. A. The auditor will reject a correct account balance as incorrect
53. D. Under no circumstances
54. A. YES, YES
55. B. Set the risk level between 5% to 10%
56. A. For planning purposes in determining how much evidence to accumulate
57. C. The combination of inherent risk and control risk
58. D. Increase or decrease depending on materiality level
59. B. can be assessed in quantitative and non-quantitative item
60. B. are inversely related to detection risk
61. C. exist independently of the financial statement audit
62. A. detection risk cannot be changed at the auditors discretion
63. D. risk of failing to discover material misstatements
64. C. inverse
65. A. internal control over cash receipts is excellent
66. D. susceptibility of defalcation
67. D. determine the acceptable level of detection risk for financial statements
68. A. 1.0 and 1.0
69. C.10
70. D. IR of 70% and CR of 30%
71. B. internal control over shipping, billing and recording
72. C. extent of substantive tests as using larger sample size
73. B. nature of substantive tests from a less effective to a more effective procedure
74. D. lower the asses level of control risk
75. D. inversely, directly
76. C. decrease detection risk
77. B. less evidence is accumulated
78. A. inherent risk is inversely related to the amount of audit evidence whereas
detection risk is directly related to the amount of audit evidence
79. D. The auditors assessment of inherent risk is influenced by the condition of the
clients accounting and internal control systems
80. A. YE S YES
81. A. audit strategy
82. C. tests of detail of balances
83. D. Reperformance of clients procedure
84. A. determine the risk of material misstatement in the financial statements
85. B. confirmation of ending accounts receivable
86. C. detection material misstatements at the assertion level
87. D. to finalize the control risk assessment
88. A. determine the type of opinion to express
89. C. analytical procedures
90. B. identify unusual circumstances that the auditor may need to investigate
further
91. A. identifying areas that may represent specific risks
92. C. the study of financial ratios is an acceptable alternative
93. C. unusual transactions
94. D. audit investigation
95. B. analytical procedures are required to be done during the testing phase of the
audit
96. D. to evaluate the effectiveness of the clients internal control
97. A. yes no yes
98. D. areas that may represent specific risk relevant to the audit
99. A. enhancing the auditors understanding of the clients business
100. D. study the relationships of financial data with relevant non financial data
101. A. financial information with similar information regarding the industry in which
the entity operates
102. C. comparisons of recorded amounts
103. A. Accuracy of nonfinancial data
104. D. Analytical view
105. D. audit risk model
106. A. financial statement level and Account balance level
107. A. consideration of the entity internal control has been completed
108. B. inherent risk is assessed at a sufficient low level
109. D, financial statement assertions
110. C. the audit procedures selected will achieve specific audit objectives
111. A. detect and eliminate fraud
112. A. the audit plan and related program should no longer be changed once the
audit restarted
113. A. specific procedures that will be performed