Question

1.An auditor has just prepared and sent a letter to management detailing weaknesses in internal control. A copy of this letter should be ________.

-placed in the temporary file, and removed when the client corrects the deficiencies

-filed with the Securities and Exchange Commission

-sent to the client’s attorney

-placed in the permanent file

2.What do auditors consider when determining the extent to which the internal auditors’ work will affect the auditors’ procedures?

-The materiality of the account balance or transaction, the risk of material misstatement of the assertions, and the amount of subjectivity involved in evaluating the evidence gathered.

-Only the amount of subjectivity involved in evaluating the evidence gathered.

-Only the risk of material misstatement of the assertions related to the account balance, transaction, or disclosure and the amount of subjectivity involved in evaluating evidence gathered.

3.Positive confirmations ask recipients to reply ________.

-only if they disagree with the information provided. If a response cannot be obtained, auditors assume that the receivable does not exist

-only if they disagree with the information provided. If a recipient does not respond, it is assumed that he/she agrees with the information provided

-in all circumstances. If a recipient does not respond, it is assumed that he/she agrees with the information provided

-in all circumstances. If a response cannot be obtained, auditors must obtain alternative evidence to determine if the balance exists.

-Only the materiality of the account balance or transaction and the risk of material misstatement of the assertions.

4.Which of the following provides evidence for the occurrence assertion?

-Vouching

-Visualization

-Tests of controls

-Tracing

5.An auditors’ evaluation of financial information by studying plausible relationships among both financial and non-financial data ________.

-is referred to as substantive testing

-is known as reperformance

-is known as recalculation

-is referred to as analytical procedures

Answer 1

1. placed in the temporary file, and removed when the client corrects the deficiencies

2. The materiality of the account balance or transaction, the risk of material misstatement of the assertions, and the amount of subjectivity involved in evaluating the evidence gathered.

3. in all circumstances. If a recipient does not respond, it is assumed that he/she agrees with the information provided

4. Vouching

5. is referred to as analytical procedures