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The auditor tests the quantity of materials charged to work-in-process by tracing these quantities to: A.perpetual inventory records. B.cost ledgers. C.material requisition forms. D.receiving reports. For dollar-unit sampling, the number of individual accounts tested is always: A.greater than the sample […]

The physical count of inventory of a retailer was higher than shown by the perpetual records. Which of the following could explain the difference? A.Credit memos for several items returned by customers had not been recorded. B.Inventory items had been […]

Which of the following is not a medium that can normally be used by an auditor to record information concerning a client’s internal control? A.Narrative memorandum B.Procedures manual C.Flowchart D.Decision table Which of the following best describes an audit report […]

The weakest form of audit evidence among the following is: A.a letter of representation from management. B.confirmation of an inter-company receivable from a related company. C.a letter of representation from the client’s solicitors. D.a bank statement. Time budgets are used […]

Which of the following forms of advertising is permissible? A.Advertising that indicates the auditor’s educational and professional attainments. B.Advertising that implies the ability to influence a court. C.Advertising that claims to be able to save the taxpayer 20 per cent […]

The auditor notices significant fluctuations in key elements of the company’s financial report. If management is unable to provide an acceptable explanation, the auditor should: A.consider the matter a scope limitation. B.perform additional audit procedures to investigate the matter further. […]

After the auditor has prepared a flowchart of the accounting system and control procedures surrounding sales, and assessed the design of the system, the auditor would perform tests of controls for all control procedures: A.documented in the flowchart. B.considered to […]

The essence of a financial report audit is to: A.examine individual transactions so that the auditor may certify as to their validity. B.detect fraud. C.assure the consistent application of correct accounting procedures. D.determine whether the client’s financial reports are fairly […]

In a compliance audit, which of the following matters is the auditor primarily concerned about? A.Whether the financial report is fairly presented in accordance with the identified financial reporting framework. B.Whether the entity has achieved its stated objectives. C.Whether the […]

The auditor of Shakey Ltd has serious doubts that the entity will continue as a going concern. There is adequate disclosure of this significant uncertainty in the notes to the financial report. The uncertainty is the result of a single […]

In reporting performance audit findings, why does an auditor evaluate evidence against criteria? A.To ensure reasonable criteria have been established. B.To develop conclusions relative to the audit objectives. C.To develop the audit scope. D.To determine risk. The financial report of […]

One of the major problems in an IT system is that incompatible functions may be performed by the same individual. One compensating control for this is the use of: A.a tape library. B.a self-checking digit system. C.computer-generated hash totals. D.a […]

When the audited financial report of the prior year is presented together with those of the current year, the continuing auditor’s report covers: A.only the current year. B.both years. C.only the current year, but the prior year’s report should be […]

An auditor decides that it is important and necessary to observe a client’s distribution of payroll cheques on a particular audit. The client organisation is so large that the auditor cannot conveniently observe the distribution of the entire payroll. In […]

The auditor accepted an engagement to audit the 20X0 financial report of Mountain Ltd and began the fieldwork on 30 September 20X0. Mountain Ltd gave the auditor the 20X0 financial report on 17 January 20X1. The auditor completed the fieldwork […]

The auditor’s best course of action with respect to ‘other financial information’ included in an annual report containing the auditor’s report is to: A.consider whether the ‘other financial information’ is accurate by performing a review engagement. B.indicate in the auditor’s […]

An auditor is selecting a random sample of cash disbursements. One of the corresponding source documents for a selected random number is a voided cheque. The auditor should: A.treat the cheque as a deviation. B.reduce the sample size by one. […]

In a manufacturing company, which one of the following audit procedures would give the least assurance of the valuation and allocation assertion for inventory at the audit date? A.Examining paid vendors’ invoices. B.Testing the computation of standard overhead rates. C.Obtaining […]

A company policy should clearly indicate that defective merchandise returned by customers is to be delivered to the: A.sales clerk. B.receiving clerk. C.inventory control clerk. D.accounts receivable clerk. Selecting a sample of quantities of inventory in the warehouse and tracing […]

Which of the following is intended to detect deviations from prescribed Accounting Department procedures? A.Substantive tests specified by a standardised audit program. B.Tests of controls designed specifically for the client. C.Analytical tests as designed in the industry audit guide. D.Computerised […]

Robert Judd has audited the financial report of Hurricane Pty Ltd for several years and had always been paid promptly for services rendered. Last year’s audit invoices have not been paid because Hurricane is experiencing cash flow difficulties, and the […]

Which of the following auditing procedures most likely would provide assurance about a manufacturing entity’s assertion at risk of valuation and allocation of inventory? A.Testing the entity’s computation of standard overhead rates. B.Obtaining confirmation of inventories pledged under loan agreements. […]