AUDITING FINAL EXAM 2024 WITH CORRECT SOLUTIONS GRADED A
5 views 0 purchase
Course
AUDITING
Institution
AUDITING
When are analytical procedures required on an audit? What is the primary purpose of analytical procedures during each phase of the audit?
A. Analytical procedures are required during the completion phase, as a final review for material misstatements or financial problems.
B. Analytical...
auditing final exam 2024 with correct solutions gr
when are analytical procedures required on an aud
Written for
AUDITING
AUDITING
AUDITING
All documents for this subject (142)
Seller
Follow
HARVARDGURU
Reviews received
Content preview
AUDITING FINAL EXAM 2024 WITH CORRECT
SOLUTIONS GRADED A
When are analytical procedures required on an audit? What is the primary purpose of analytical
procedures during each phase of the audit?
A. Analytical procedures are required during the completion phase, as a final review for material
misstatements or financial problems.
B. Analytical procedures are required during the planning phase to assist the auditor in determining the
nature, extent, and timing of work to be performed.
C. Analytical procedures help the auditor identify accounts and classes of transactions where
misstatements are likely.
D. Both A and B
E. Both B and C
F. None of the above ✔✔✔ - D. Both A and B
Identify the most important reasons for performing analytical procedures. (Select all that apply.)
A. Understanding the client's business and industry.
B. To identify fraud that may be occurring in the client's organization.
C. Reduction of detailed audit tests.
D. Increase in detailed audit tests required.
E. Reduction in lawsuits against CPAs
F. Assessment of the entity's ability to continue as a going concern.
G. Indication of the presence of possible misstatements in the financial statements. ✔✔✔ - A.
Understanding the client's business and industry.
C. Reduction of detailed audit tests.
F. Assessment of the entity's ability to continue as a going concern.
G. Indication of the presence of possible misstatements in the financial statements.
,What is the primary purpose of analytical procedures performed during the completion phase of the
audit?
A. Analytical procedures performed during the completion phase serve as a final review for material
misstatements or financial problems.
B. Analytical procedures performed during the completion phase are to assist the auditor in
understanding the client's business and industry and to assist in determining the nature, extent, and
timing of work to be performed.
C. Analytical procedures are required during the completion phase to reduce or eliminate detailed
substantive tests.
D. Both A and B
E. Both B and C
F. None of the above ✔✔✔ - A. Analytical procedures performed during the completion phase serve
as a final review for material misstatements or financial problems.
Why is it important that an auditor develop an expectation of the account balance when performing
substantive analytical procedures about the reasonableness of an account balance? (Select all that
apply.) ✔✔✔ - A. Without a precise expectation of what the account balance should be in relation to
other accounts, non-financial data, or historical trends, the auditor is unable to recognize whether the
result of the analytical procedure suggests that a potential misstatement in the account balance exists.
C. The assurance provided by an analytical procedure performed as part of substantive testing depends
on the precision of the relationship of the account balance to other accounts or non-financial
information.
D. The assurance provided by an analytical procedure performed as part of substantive testing depends
on the precision of the auditor's expectation of the account balance and the reliability of the data used
to develop the expectation.
What are the audit documentation requirements when performing a substantive analytical procedure?
A. There are no audit documentation requirements when performing substantive analytical procedures
since they are not part of the audit report.
B. Auditing standards require the auditor to document in the working papers the auditor's expectation
and factors considered in its development.
C. Auditing standards require management to document in the accounting records the factors
,considered in creating the current year estimates.
D. Auditing standards require the auditor to document a summary of the substantive analytical
procedures performed in the current period's audit report. ✔✔✔ - B. Auditing standards require the
auditor to document in the working papers the auditor's expectation and factors considered in its
development.
Describe the three broad objectives management has when designing effective internal control. (Select
the three correct choices.)
A. Reasonable assurance.
B. Inherent limitations.
C. Efficiency and effectiveness of operations.
D. Reliability of financial reporting.
E. Compliance with laws and regulations.
F. Design of internal control.
G. Operating effectiveness of controls. ✔✔✔ - C. Efficiency and effectiveness of operations. Controls
within a company encourage efficient and effective use of its resources to optimize the company's goals.
An important objective of these controls is accurate financial and nonfinancial information about the
company's operations for decision making.
D. Reliability of financial reporting. Management is responsible for preparing statements for investors,
creditors, and other users. Management has both a legal and professional responsibility to be sure that
the information is fairly presented in accordance with reporting requirements of accounting frameworks
such as GAAP and IFRS. The objective of effective internal control over financial reporting is to fulfill
these financial reporting responsibilities.
E. Compliance with laws and regulations. Section 404 requires management of all public companies to
issue a report about the operating effectiveness of internal control over financial reporting. In addition to
the legal provisions of Section 404, public, nonpublic, and not-for-profit organizations are required to
follow many laws and regulations. Some relate to accounting only indirectly, such as environmental
protection and civil rights laws. Others are closely related to accounting, such as income tax regulations
and anti-fraud regulations such as the Foreign Corrupt Practices Act of 1977 and certain provisions of the
Sarbanes-Oxley Act.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) internal control
components include the following:
, A. (1) Control environment, (2) risk assessment, (3) control activities, (4) information and
communication, (5) monitoring
B. (1) Control environment, (2) integrity and ethical values, (3) risk assessment, (4) information and
communication, (5) monitoring
C. (1) Control activities, (2) information and communication, (3) separation of duties, (4) control
environment, (5) risk assessment
D. (1) Risk assessment, (2) control activities, (3) information and communication, (4) commitment to
competence, (5) control environment ✔✔✔ - A. (1) Control environment, (2) risk assessment, (3)
control activities, (4) information and communication, (5) monitoring
Which best describes the relationship among the five components of internal control in the COSO
internal control framework.
A. Of the five components, the control environment is the broadest and deals primarily with the way
management implements its attitude about internal controls.
B. Of the five components, monitoring activities is the most important component.
C. The five components of internal control all work together to determine if key controls are absent in
the design of internal control over financial reporting.
D. Of the five components, risk assessment is the most important component. ✔✔✔ - A. Of the five
components, the control environment is the broadest and deals primarily with the way management
implements its attitude about internal controls. The other four components are closely related to the
control environment. Risk assessment is management's identification and analysis of risks relevant to the
preparation of financial statements. Management implements control activities and creates the
accounting information and communication system in response to risks identified as part of its risk
assessment. Finally, management monitors the quality of internal control performance by determining if
controls are operating as intended and that they are modified if needed.
Management designs systems of internal control to accomplish three categories of objectives: (assess
acceptable risk, financial reporting, or set materiality), (assess audit risk, assess fraud risks, or
operations),
and (assess business risk, assess control risk, or compliance with laws and regulations).
The auditor's focus in both the audit of financial statements and the audit of internal controls is on those
controls related to (assessing acceptable risk
the reliability of financial reporting, or setting materiality) plus those controls related to (assessing audit
risk, assessing fraud risks, or operations) and to (assess business risk, assessing control risk, or
compliance with laws and regulations) objectives that could (adversely, materially, slightly) affect
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller HARVARDGURU. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.80. You're not tied to anything after your purchase.
