Question

1 - The most appropriate procedure an auditor can use to ensure integrity of the sales and collection cycle is to:

a) Confirm accounts receivables balances.

b)Ensure the bank reconciliations are prepared by one who also handles sales returns so missing items can be accounted for timely.

c)Recalculate the sales list price of all products in the computer files that are accessed by sale personnel.

2 - When performing audit procedures, which of the follow must be set prior to testing a sample?

a)Achieved upper precision limit

b) Computed error rate

c) Tolerable error rate

3 - When auditing the inventory cycle the auditor should do all of the following EXCEPT:

a)Adjust the balance in the inventory account to reflect the perpetual inventory counts

b)Assess the value of obsolete or damaged inventory

c)Review the procedures for the count of physical inventory.

4 - Tests of controls for the acquisition and payment cycle are usually done by:

a)Inquires and documentation of management's representation.

b)Recalculating sales tax amounts

c)Sending out confirmations for amounts under $10,000

5 - Cash is the most desirable asset for people to misappropriate, when determining risk as part of the audit process, cash would have a higher:

a) Control risk

b)Detection risk

c) Inherent risk

6 - When an auditor looks at a report with over 500 purchases and decides to review all of the purchase over $1,000,000 this is an example of what type of sampling:

a)Judgmental sampling

b)Statistical sampling

c)This is not sampling

7 - Upon review of your audit findings your discover cash receipts from sales on account have been misappropriate. Which of the following internal controls may have prevented this:

a)Ensuring the same person that receives the payments from customers does not enter transactions into the journal and post to the ledger

b) Do a background check on all accounts payable personnel before they are hired

c)Verify that the person who receives the payments does not also write the checks

8 - Upon review of your audit findings you not weak internal control system that allows a department supervisor to "clock in" for a fictitious employee and then approve the employee's time card at the end of the pay period. This fraud would be detected if other controls were in place, such as having an independent party:

a)Compare the date of the recorded check in the payroll journal with the date on the canceled checks and time cards

b)Distribute paychecks

c)Recompute hours worked from time cards

9 - Different professional standards apply to different types of services offered by a CPA. Assurance services performed by a CPA would include:

a)Audits of financial statements

b)Bookkeeping and accounting system consulting services

c)Tax service

10 - A CPA may perform all of the following services for different clients EXCEPT:

a)Audits

b)Legal advice relating to accounting ethics violations

c)Tax preparation

11 - If an auditor discovers material misstatement after the audit report is issued the auditor's first step should be notify

a)The audit firm's legal council

b)The audit committee of the client

c) The client

Answer 1

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