ACCT 555 Week 3 Homework
6-19 (Objective 6-1) The following questions concern the reasons auditors do audits. Choose the best response.
- Which of the following best describes the reason why an independent auditor reports on financial statements?
- Because of the risk of material misstatement, an audit should be planned and performed with an attitude of
- The major reason an independent auditor gathers audit evidence is t
6-20 (Objective 6-3) The following questions deal with errors and fraud. Choose the best response.
- An independent auditor has the responsibility to design the audit to provide reasonable assurance of detecting errors and fraud that might have a material effect on the financial statements. Which of the following, if material, is a fraud as defined in auditing standards?
- What assurance does the auditor provide that errors, fraud, and direct-effect illegal acts that are material to the financial statements will be detected?
- Which of the following statements describes why a properly designed and executed audit may not detect a material misstatement in the financial statements resulting from fraud?
6-27 (Objectives 6-6, 6-7) The following are specific transaction-related audit objectives applied to the audit of cash disbursement transactions (a through f), management assertions about classes of transactions (1 through 5), and general transaction-related audit objectives (6 through 11).
- Recorded cash disbursement transactions are for the amount of goods or services received and are correctly recorded.
- Cash disbursement transactions are properly included in the accounts payable master file and are correctly summarized.
- Recorded cash disbursements are for goods and services actually received.
- Cash disbursement transactions are properly classified.
- Existing cash disbursement transactions are recorded.
- Cash disbursement transactions are recorded on the correct dates.
7-25 (Objectives 7-3, 7-4) The following questions concern persuasiveness of evidence. Choose the best response.
- Which of the following types of documentary evidence should the auditor consider to be the most reliable?
- Which of the following statements concerning audit evidence is true?
- Audit evidence can come in different forms with different degrees of persuasiveness. Which of the following is the least persuasive type of evidence?
- Which of the following presumptions is correct about the reliability of audit evidence?
7-26 (Objectives 7-5, 7-6) The following questions concern audit documentation. Choose the best response.
- Which of the following is not a primary purpose of audit documentation?
- During an audit engagement, pertinent data are compiled and included in the audit files. The audit files primarily are considered to be
- Although the quantity, type, and content of audit documentation will vary with the circumstances, audit documentation generally will include the
- The permanent file of an auditor’s working papers most likely would include copies of the
7-27 (Objective 7-4) The following are examples of documentation typically obtained by auditors:
- Classify each of the preceding items according to type of documentation: (1) internal or (2) external.
- Explain why external evidence is more reliable than internal evidence.
7-28 (Objective 7-4) The following are examples of audit procedures:
- Review the accounts receivable with the credit manager to evaluate their collectability.
- Compare a duplicate sales invoice with the sales journal for customer name and amount.
- Add the sales journal entries to determine whether they were correctly totaled.
8-25 (Objectives 8-1, 8-3) The following questions concern the planning of the engagement. Select the best response.
- Which of the following is an effective audit planning procedure that helps prevent misunderstandings and inefficient use of audit personnel?
- When auditing related party transactions, an auditor places primary emphasis on
- Which of the following will most likely indicate the existence of related parties?
- Which of the following is least likely to be included in the auditor’s engagement letter?
8-28 (Objectives 8-2, 8-3, 8-4, 8-5) The following are various activities an auditor does during audit planning.
- Send an engagement letter to the client.
- Tour the client’s plant and offices.
- Compare key ratios for the company to industry competitors.