Practice Exam – 10 Points
Multiple Choice – Highlight the best answer
Point Value: .25 each
Which one of the following is among the three components of audit risk? a.
The Hochfelder Case is important because it limited auditor liability under:
the 1933 Securities Act.
the 1934 Securities Exchange Act.
Which of the following is an INCORRECT statement concerning one of the field work standards? a.
Audit planning includes the development of audit strategies.
Audit planning is aimed primarily at effectiveness, with little effect on efficiency. c.
Understanding of the internal control structure is necessary in order to plan the audit. d.
The auditor must have a reasonable basis, in the form of gathered evidence, for expressing an opinion.
An auditor would be most likely to issue a “summary of findings” in connection with which one of the following types of services? a.
a financial statement audit
an operational audit
Making sure that the detail of and accounts receivable file agrees with the general ledger before the file is used to produce confirmations is an example of which of the following audit procedures?
The auditor has some control over:
the assessed level of inherent risk.
the actual level of inherent risk.
both the actual level and the assessed levels of inherent risk. d.
neither the actual level nor the assessed level of inherent risk.
Concerning such matters as the integrity of management, errors, and illegal acts, the auditor should plan the audit with an attitude of: a.
Incompatible duties are those that allow an irregularity to be perpetrated: a.
and concealed by a single employee.
and concealed through collusive actions.
by a single employee.
by accounting personnel.
In making judgments about materiality at the account balance level, the auditor must consider the relationship between it and financial statement materiality. This should lead the auditor to plan the audit to detect misstatements that: a.
are individually material to the statements taken as a whole. b.
are individually immaterial to the statements taken as a whole. c.
may be immaterial individually, but may aggregate with misstatements in other accounts to a material level. d.
bring the cumulative total of known misstatements to the level of materiality established by management.
Which one of the following is NOT an inherent limitation in an entity’s internal controls? a.
mistakes in judgment
cost versus market
Use of auditor judgment or of a risk matrix is necessary in revising planned detection risk whenever: a.
risk assessments are not quantified.
assessed control risk at the account balance level does not support the planned level of control risk. c.
control risk is assessed above the minimum.
control risk is assessed below the maximum.
The auditor has decided to use PPS sampling in the confirmation of individual sales transactions with customers. The population and the logical sampling unit are most likely to be, respectively: a.
all customer accounts and the individual dollars in the accounts. b.
customer accounts with debit balances and individual dollars in the accounts. c.
the sales invoice file and the individual dollars on the invoices. d.
all recorded sales during the year and individual sales invoices.
Which of the following is NOT considered an access control? a.
the use of a librarian
management review of computer utilization reports
the use of passwords
Which of the following is NOT an element...
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