Which of the following procedures would an auditor most likely perform in searching unrecorded liabilities?

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of

A CPA is engaged to examine an entity's financial forecast. The CPA believes that several significant assumptions do not provide a reasonable basis for the forecast. Under these circumstances, the CPA should issue a(an)

The objective of tests of details of transactions performed as substantive tests is to:
a) Comply with generally accepted auditing standards.
b) Attain assurance about the reliability of the accounting system.
c) Detect material misstatements in the financial statements.
d) Evaluate whether management's policies and procedures operated effectively.

C) Detect material misstatements in the financial statements.

Which of the following procedures would an auditor least likely perform before the balance sheet date? a) Confirmation of accounts payable. b) Observation of merchandise inventory. c) Assessment of control risk. d) Identification of related parties.

A) Confirmation of accounts payable.

An auditor confirmed AR as of an interim date, and all confirmations were returned and appeared reasonable. Which of the following additional procedures most likely should be performed at year-end? a) Send confirmations for all new customer balances incurred from the interim date to year-end. b) Resend confirmations for any significant customer balances remaining at year-end. c) Review supporting documents for new large balances occurring after the interim date, and evaluate any significant changes in balances at year-end. d) Review cash collections subsequent to the interim date and the year-end.

C) Review supporting documents for new large balances occurring after the interim date, and evaluate any significant changes in balances at year-end.

An auditor plans to apply substantive tests to the details of asset and liability accounts as of an interim date rather than as of the balance sheet date. The auditor should be aware that this practice: a) Eliminates the use of certain statistical sampling methods that would otherwise be available. b) Presumes that the auditor will reperform the tests as of the balance sheet date. c) Should be especially considered when there are rapidly changing economic conditions. d) Potentially increases the risk that errors that exist at the balance sheet date will not be detected.

D) Potentially increases the risk that errors that exist at the balance sheet date will not be detected.

Which of the following procedures would an auditor most likely perform in obtaining evidence about subsequent events: a) Determine that changes in employee pay rates after year-end were properly authorized. b) Recompute depreciation charges for plant assets sold after year-end. c) Investigate changes in long-term debt occurring after year-end. d) Inquire about payroll checks that were recorded before year-end but cashed after year-end.

C) Investigate changes in long-term debt occurring after year-end.

An auditor compared the current year gross margin with the prior year gross margin to determine if cost of sales is reasonable. What type of audit procedure was performed? a) Test of transactions b) Analytical procedures c) Test of controls d) Test of details

Which of the following procedures would an auditor most likely perform in auditing the statement of cash flows?

a. Vouch all bank transfers for the last week of the year and first week of the subsequent year.
b. Reconcile the cutoff bank statements to verify the accuracy of the year-end bank balances.
c. Compare the amounts included in the statement of cash flows to similar amounts in the prior year's statement of cash flows.
d. Reconcile the amounts included in the statement of cash flows to the other financial statements' balances and amounts

d. Reconcile the amounts included in the statement of cash flows to the other financial statements' balances and amounts

In testing the existence assertion for an asset, an auditor ordinarily works from the a) Financial statements to the potentially unrecorded items. b) Potentially unrecorded items to the financial statements. c) Accounting records to the supporting evidence. d) Supporting evidence to the accounting records.

C) Accounting records to the supporting evidence.

In determining whether transactions have been recorded, the direction of the audit testing should be from the a) General ledger balances b) Adjusted trial balance c) Original source documents d) General journal entries

C) Original source documents

Tracing copies of computer-prepared sales invoices to copies of the corresponding computer-prepared shipping documents provides evidence that a) Shipments to customers were properly billed b) Entries in the AR subsidiary ledger were for sales actually shipped c) Sales billed to customers were actually shipped d) No duplicate shipments to customers were made

C) Sales billed to customers were actually shipped.

In which of the following circumstances is substantive testing of AR before the balance sheet date most appropriate a) The client has a new sales incentive program in place b) Internal controls during the remaining period are effective c) There is a high turnover of senior management d) It is a first engagement of a new client

B) Internal controls during the remaining period are effective

Before applying principal substantive tests to an entity's AR at an interim date, an auditor should a) Consider the likelihood of assessing the risk of incorrect rejection too low b) Project sampling risk at the maximum for tests covering the remaining period c) Ascertain that AR are immaterial to the financial statements d) Assess the difficulty in controlling the incremental audit risk

D) Assess the difficulty in controlling the incremental audit risk

Which of the following procedures would an auditor most likely perform prior to the balance sheet date a) Review subsequent events b) Perform search for unrecorded liabilities c) Send inquiry letter to clients legal counsel d) Review detail and test significant travel and entertainment expenses

D) Review detail and test significant travel and entertainment expenses

On receiving a clients bank cutoff statement, an auditor most likely would trace a) Prior year checks listed in the cutoff statement to the year-end outstanding checks b) Deposits in transit listed in the cutoff statement to the year-end bank reconciliation c) Checks dated after year-end listed in the cutoff statement to the year-end outstanding checks d) Deposits recorded in the cash receipts jounal after year-end to the cutoff statement

A) Prior year checks listed in the cutoff statement to the year-end outstanding checks

The usefulness of the standard bank confirmation request may be limited because the bank employee who completes the form may a) Not believe that the bank is obligated to verify confidential information to a third party b) Sign and return the form without inspecting the accuracy of the clients bank reconciliation c) Not have access to the clients cutoff bank statement d) Be unaware of all the financial relationships that the bank has with the client

D) Be unaware of all the financial relationships that the bank has with the client

Which of the following characteristics is most likely indicative of check kiting?
A. High turnover of employees who have access to cash B. Many large checks that are recorded on Mondays C. Low average balance compared with high level of deposits D. Frequent ATM checking account withdrawals.

C. Low Average balance compared with high level of deposits. 

The primary purpose of sending a standard confirmation request to financial institutions with which the client has done business during the year is to a) Detect kiting activities that may otherwise not be discovered b) Corroborate info regarding deposit and loan balances c) Provide the data necessary to prepare a proof of cash d) Request info about contingent liabilities and secured transactions

B) Corroborate information regarding deposit and loan balances

Which of the following cash transfers results in a misstatement of cash at 12/31/2011?

D. Disbursement recorded after year-end but receipt is recorded before

An auditor most likely would limit substantive audit tests of sales transactions when control risk is assessed as low for the occurrence assertion concerning sales transactions and the auditor has already gathered evidence supporting a) Opening and closing inventory balances b) Cash receipts and AR c) Shipping and receiving activities d) Cutoffs of sales and purchases

B) Cash receipts and accounts receivable

An auditor observed that a client mails monthly statements to customers. Subsequently, the auditor reviewed evidence of follow-up on the errors reported by the customers . This test of controls most likely was performed to support management's financial statement assertion(s) of a. Classification and understandability, & Rights and Obligations b. Classification and understandability c. Rights and Obligations d. None of these

c. Rights and Obligations

Which of the following internal control procedures most likely would deter lapping of collections from customers a) Independent internal verification of dates of entry in the cash receipts journal with dates of daily cash summaries b) Authorization of write-offs of uncollectible accounts by a supervisor independent of credit approval c) Segregation of duties between receiving cash and posting the AR ledger d) Supervisory comparison of the daily cash summary with the sum of the cash receipts journal entries

C) Segregation of duties between receiving cash and posting the AR ledger

An auditor suspects that a clients cashier is misappropriating cash receipts for personal use by lapping customer checks received in the mail. In attempting to uncover this embezzlement scheme, the auditor most likely would compare the a) Dates checks are deposited per bank statements with the dates remittance credits are recorded b) Daily cash summaries with the sums of the cash receipts journal entries c) Individual bank deposit slips with the details of the monthly bank statements d) Dates uncollectible accounts are authorized to be written off with the dates the write-offs are actually recorded

A) Dates checks are deposited per bank statements with the dates remittance credits are recorded

In evaluating the adequacy of the allowance for doubtful accounts, an auditor most likely reviews the entity's aging of receivables to support management's financial statement assertion of a) Existence b) Valuation and allocation c) Completeness d) Rights and obligations

B) Valuation and allocation

An auditor discovered that a clients AR turnover is substantially lower for the current year than for the prior year. This may indicate a) Fictitious credit sales have been recorded during the year b) Employees have stolen inventory just before the year-end c) The client recently tightened its credit-granting policies d) An employee has been lapping receivables in both years

A) Fictitious credit sales have been recorded during the year

Which of the following most likely would be detected by an auditors review of a clients sales cutoff a) Shipments lacking sales invoices and shipping documents b) Excessive write-offs of AR c) Unrecorded sales at year-end d) Lapping of year-end AR

C) Unrecorded sales at year-end

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This test is performed to satisfy the audit objective of a) Accuracy b) Completeness c) Existence d) Control

An auditor most likely would review an entitys periodic accounting for the numerical sequence of shipping documents and invoices to support managements financial statement assertion of a) Occurrence b) Rights and obligations c) Valuation and allocation d) Completeness

Which of the following audit procedures would an auditor most likely perform to test controls relating to managements assertion concerning the completeness of sales transactions a) Verify that extensions and footings on the entitys sales invoices and monthly customer statements have been recomputed b) Inspect the entitys reports of prenumbered shipping documents that havce not been recorded in the sales journal c) Compmare the invoiced prices on prenumbered sales invoices to the entitys authorized price list d) Inquire about the entitys credit granting policies and the consistent application of credit checks

B) Inspect the entitys reports of prenumbered shipping documents that have not been recorded in the sales journal

An auditors purpose in reviewing credit ratings of customers with delinquent AR most likely is to obtain evidence concerning managements assertions about a) Valuation and allocation b) Classification and understandability c) Existence d) Rights and obligations

A) Valuation and allocation

If the objective of an auditors test of details is to detect a possible understatement of sales, the auditor most likely would trace transactions from the a) Sales invoices to the shipping documents b) Cash receipts journal to the sales journal c) Shipping documents to the sales invoices d) Sales journal to the cash receipts journal

C) Shipping documents to the sales invoice

Under which of the following circumstances would the use of the blank form of confirmations of AR most likely be preferable to positive confirmations a) The recipients are likely to sign the confirmations without devoting proper attention to them b) Subsequent cash receipts are unusually difficult to verify c) Analytical procedures indicate that few exceptions are expected d) The combined assessed level of inherent risk and control risk is low

A) The recipients are likely to sign the confirmations without devoting proper attention to them

When an auditor does not receive replies to positive requests for year-end AR confirmations, the auditor most likely would a) Inspect the allowance account to verify whether the accounts were subsequently written off b) Increase the assessed level of detection risk for the valuation and completeness assertions c) Ask the client to contact the customers to request that the confirmations be returned d) Increase the assessed level of inherent risk for the revenue cycle

C) Ask the client to contact the customers to request that the confirmations be returned

Which of the following statements would an auditor most likely add to the negative form of confirmation of accounts receivable to encourage timely consideration by the recipients? a. "This is not a request for payment; remittances should not be sent to our auditors in the enclosed envelope" b. "Report any differences on the enclosed statement directly to our auditors; no reply is necessary if this amount agrees with your records" c. "If you do not report any differences within 15 days, it will be assumed that this statement is correct" d. "The following invoices have been selected for confirmation and represent amounts that are overdue"

c. "If you do not report any differences within 15 days, it will be assumed that this statement is correct"

Which of the following strategies most likely could improve the response rate of the confirmation of accounts receivable? a. Including a list of items or invoices that constitute the account balance b. Restricting the selection of accounts to be confirmed to those customers with relatively large balances c. Requesting customers to respond to the confirmation requests directly to the auditor by fax or e-mail d. Notifying the recipients that second requests will be mailed if they fail to respond in a timely manner

a. Including a list of items or invoices that constitute the account balance

In confirming accounts receivable, an auditor decided to confirm customers' account balances rather than individual invoices. Which of the following most likely would be included with the client's confirmation letter? a. An auditor-prepared letter explaining that a non response may cause an inference that the account balance is correct b. A client-prepared letter reminding the customer that a non response will cause a second request to be sent c. An auditor-prepared letter requesting that the customer to supply the missing and incorrect information directly to the auditor d. A client-prepared statement of account showing the details of the customer's account balance

d. A client-prepared statement of account showing the details of the customer's account balance

In auditing accounts receivable, the negative form of confirmation request most likely would be used when: a. The total recorded amount of accounts receivable is immaterial to the financial statements taken as a whole b. Response rates in prior years to properly designed positive confirmation requests were inadequate c. Recipients are likely to return positive confirmation requests without verifying the accuracy of the information d. The combined assessed level of inherent risk and control risk is relative to accounts receivable is low

d. The combined assessed level of inherent risk and control risk is relative to accounts receivable is low

An independent auditor asked a client's internal auditor to assist in preparing a standard financial institution confirmation request for a payroll account that had been closed during the year under audit. After the internal auditor prepared the form, the controller signed it and mailed it to the bank. What was the major flaw in this procedure? a. The internal auditor did not sign the form b. The form was mailed by the controller c. The form was prepared by the internal auditor d. The account was closed, so the balance was zero

b. The form was mailed by the controller

To reduce the risks associated with accepting e-mail responses to requests for confirmation of AR, an auditor most likely would a) Request the senders to mail the original forms to the auditor b) Examine subsequent cash receipts for the accounts in question c) Consider the e-mail responses to the confirmations to be exceptions d) Mail second requests to the e-mail respondents

A) Request the senders to mail the original forms to the auditor

Hemp, CPA, is auditing the financial statements of a small rural municipality. The receivable balances represent residents' delinquent real estate taxes. Internal control at the municipality is weak. To determine the existence of the accounts receivable balances at the balance sheet date, Hemp would most likely a. Send positive confirmation requests b. Send negative confirmation requests c. Inspect the internal records such as copies of the tax invoices that were mailed to the residents d. Examine evidence of subsequent cash receipts

a. Send positive confirmation requests

An auditor decides to use the blank form of accounts receivable confirmation rather than the positive. The auditor should be award that the blank form may be less efficient because:
a. Subsequent cash receipts need to be verified b. Statistical sampling may not be used c. A higher assessed level of detection risk is required d. More non responses are likely to occur

d. More non responses are likely to occur

The confirmation of customers' accounts receivable rarely provides reliable evidence about the completeness assertion because: a. Many customers merely sign and return the confirmation without verifying its details b. Recipients usually respond only if they disagree with the information on the request c. Customers may not be inclined to report understatement errors in their accounts d. Auditors typically select many accounts with low recorded balances to be confirmed

c. Customers may not be inclined to report understatement errors in their accounts

Which of the following statements is correct concerning the use of negative confirmation requests?
a.    Unreturned negative confirmation requests rarely provide significant explicit evidence.
b.    Negative confirmation requests are effective when detection risk is low.
c.    Unreturned negative confirmation requests indicate that alternative procedures are necessary.
d.    Negative confirmation requests are effective when understatements of account balances are suspected.
Term

a.    Unreturned negative confirmation requests rarely provide significant explicit evidence.

Which of the following strategies most likely could improve the response rate of the confirmations of accounts receivable? a. Restrict the selection of accounts to be confirmed to those customers with large balances b. Include a list of items or invoices that constitute the customers' account balances c. Explain to customers that discrepancies will be investigated by an independent third party d. Ask customers to respond to the confirmation requests directly to the auditor by fax

b. Include a list of items or invoices that constitute the customers' account balances

The blank form of AR confirmations may be less efficient than the positive form because a) Shipping documents need to be inspected b) Recipients may sign the forms without proper investigation c) More nonresponses to the requests are likely to occur d) Subsequent cash receipts need to be verified

C) More nonresponses to the requests are likely to occur

During the confirmation of accounts receivable an auditor receives a confirmation via the client's fax machine. which of the following actions should the auditor take? a. not accept the confirmation and select another customer's balance to confirm b. not accept the confirmation and treat it as an exception c. accept the confirmation and file it in the working papers d. accept the confirmation but verify the source and content through a telephone call to the respondent

d. accept the confirmation but verify the source and content through a telephone call to the respondent

When an auditor decides to confirm accounts receivable balances rather than individual invoices, it most likely would be beneficial to include with the confirmations:

a.Copies of the customers' purchase orders that support the account balances.
b.Lists of the customers' recent payments that the client has already recorded.
c.Client-prepared statements of account that show the details of the account balances.
d.Copies of the client's shipping documents that support the account balances.

c.Client-prepared statements of account that show the details of the account balances.

To measure how effectively an entity employs its resources, an auditor calculates inventory turnover by dividing average inventory into a. Net sales b. COGS c. Operating Income d. Gross Sales

While observing a client's annual physical inventory, an auditor recorded test counts for several items and noticed that certain test counts were higher than the recorded quantities in the client's perpetual records. This situation could be the result of the client's failure to record a. Purchase discounts b. Purchase returns c. Sales d. Sales returns

When auditing inventories, an auditor would least likely verify that
a. The financial statement presentation of inventories is appropriate.
b. Damaged goods and obsolete items have been properly accounted for.
c. All inventory owned by the client is on hand at the time of the count.
d. The client has used proper inventory pricing.

c. All inventory owned by the client is on hand at the time of the count.

An auditor most likely would inspect loan agreements under which an entity's inventories are pledged to support management's financial statement assertion of a. Completeness of disclosures b. Valuation of inventory c. Existence of inventory d. Completeness of inventory

a. Completeness of disclosures

A client maintains perpetual inventory records in both quantities and dollars. If the assessed level of control risk is high, an auditor would probably a. Increase the extent of tests of controls of the inventory cycle b. Request the client to schedule the physical inventory count at the end of the year c. Insist that the client perform physical counts of inventory items several times during the year d. Apply gross profit tests to ascertain the reasonableness of they physical counts

b. Request the client to schedule the physical inventory count at the end of the year

Which of the following auditing procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories? a. Trace test counts noted during the entity's physical count to the entity's summarization of qualities b. Inspect agreements to determine whether any inventory is pledged as collateral of subject to any liens c. Selected the last few shipping documents used before the physical count and determine whether the shipments were recorded as sales d. Inspect the open purchase order file for significant commitments that should be considered disclosure

b. Inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens

Which of the following auditing procedures most likely would provide assurance about a manufacturing entity's inventory valuation? a. Testing the entity's computation of standard overhead rates b. Obtaining confirmation of inventories pledged under loan agreements c. Reviewing shipping and receiving cutoff procedures for inventories d. Tracing test counts to the entity's inventory listing

a. Testing the entity's computation of standard overhead rates

To gain assurance that all inventory items in a client's inventory listing schedule are valid, an auditor most likely would trace:

a. Items listed in receiving reports and vendors' invoices to the inventory-listing schedule.
b. Inventory tags noted during the auditor's observation to items listed in the inventory-listing schedule.
c. Inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoices.
d. Items listed in the inventory-listing schedule to inventory tags and the auditor's recorded count sheets.

d. Items listed in the inventory-listing schedule to inventory tags and the auditor's recorded count sheets.

An auditor selected items for test counts while observing a client's physical inventory. The auditor then traced the test counts to the client's inventory listing. This protection most likely obtained evidence concerning management's assertion of a. Rights and obligations b. Completeness c. Existence d. Valuation

Which of the following procedures would an auditor most likely perform to obtain assurance that slow moving and obsolete items included in inventories are properly identified? a. Testing shipping and receiving cutoff procedures b. Confirming inventories at locations outside the entity's premises c. Examining an analysis of inventory turnover d. Tracing inventory observation test counts to perpetual listings

c. Examining an analysis of inventory turnover

In auditing a manufacturing entity, which of the following procedures would an auditor least likely perform to determine whether slow-moving, defective, and obsolete items included in inventory are properly identified? a. Test the computation of standard overhead rates b. Tour the manufacturing plant or production facility c. Compare inventory balances to anticipated sales volumes d. Review inventory experience and trends

a. Test the computation of standard overhead rates

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement assertion of a. Valuation and allocation b. Rights and obligations c. Existence d. Classification and understandability

a. Valuation and allocation

To obtain assurance that all inventory items in a client's inventory listing are valid, an auditor most likely would trace a. Inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoices b. Items listed in receiving reports and vendors' invoices to the inventory listing c. Inventory tags noted during the auditor's observation to items in the inventory listing d. Items in the inventory listing to inventory tags and the auditor's recorded count sheets

d. Items in the inventory listing to inventory tags and the auditor's recorded count sheets

As part of the process of observing a client's physical inventories, an auditor should be alert to a. The inclusion of any obsolete or damaged goods b. Any change in the method of pricing from prior years c. The existence of outstanding purchase confirmations d. The verification of inventory values assigned to goods in process

a. The inclusion of any obsolete or damaged goods

Under which of the following conditions may an auditor's observation procedure for inventory be performed during or after the end of the period under audit?

a. When total inventory has not varied more than 5% in the last five years.
b. When well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts.
c. When the client maintains periodic inventory records.
d. When the auditor finds minimal variations in client records and test counts in prior periods

b. When well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts.

Which of the following procedures would be most appropriate for testing the completeness assertion as it applies to inventory? a. Scanning perpetual inventory, production, and purchasing records b. Examining paid vendor invoices c. Tracing inventory items from the tag listing back to the physical inventory quantities d. Performing cutoff procedures for shipping and receiving

d. Performing cutoff procedures for shipping and receiving

The purpose of tracing a sample of inventory tags to a client's computerized listing of inventory items is to determine whether the inventory items:

a. Represented by tags were reduced to the lower of cost or market.
b. Included on the listing were properly counted.
c. Included in the listing were properly valued.
d. Represented by tags were included on the listing.

d. Represented by tags were included on the listing.

A portion of a client's inventory is in public warehouses. Evidence of the existence of this merchandise can most efficiently be acquired through which of the following methods? a. Observation b. Confirmation c. Calculation d. Inspection

Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?
A. Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file.
B. Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance.
C. Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.
D. Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions.

C. Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive procedure most likely was to
A. Identify unusually large purchases that should be investigated further.
B. Verify that cash disbursements were for goods actually received.
C. Determine that purchases were properly recorded.
D. Test whether payments were for goods actually ordered.

C. Determine that purchases were properly recorded.

Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable? a. Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for b. Receiving the client's mail, unopened, for a reasonable period of time after the year-end to search for unrecorded vendor's invoices c. Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports d. Confirming accounts payable balances with known suppliers who have zero balances

c. Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports

An auditor suspects that certain client employees are ordering merchandise for themselves over the internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and the related vouchers. In gathering evidence regarding fraud, the auditor most likely would select items for testing from the file of all a. Cash disbursements b. Approved vouchers c. Receiving reports d. Vendors' invoices

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all a. Payment vouchers b. Receiving Reports c. Purchase Inquisitions d. Vendor's invoices

In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of a. Existence b. Classification and understandability c. Completeness d. Valuation and allocation

Cooper, CPA, performs a test to determine whether all merchandise for which the client was billed was received. The population for this test consists of all a. Merchandise received b. Vendors' invoices c. Receiving Reports d. Canceled checks

Which of the following procedures would best detect a liability omission by management?

a. Inquiry of senior support staff and recently departed employees.
b. Review and check mathematical accuracy of financial statements.
c. Review articles of incorporation and corporate bylaws.
d. Review purchase contracts and other legal documents.

d. Review purchase contracts and other legal documents.

Which of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated? a. Examining reported purchase returns that appear too low b. Examining vendor statements for amounts not recorded as purchases c. Searching for customer-returned goods that were not reported as returns d. Reviewing bank transfers recorded as cash received from customers

b. Examining vendor statements for amounts not recorded as purchases

An auditor most likely would extend substantive tests of payroll when a. Payroll is extensively audited by the state government b. Payroll expense is substantially higher than in the prior year c. Overpayments are discovered in performing tests of details d. Employees complain to management about too much overtime

c. Overpayments are discovered in performing tests of details

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that a. Payments to employees are computed at authorized rates b. Employees work the number of hours for which they are paid c. Segregation of duties exists between the preparation and distribution of the payroll d. Internal controls relating to unclaimed payroll checks are operating effectively

b. Employees work the number of hours for which they are paid

When control risk is assessed as low for assertions related to payroll, substantive tests of payroll balances most likely would be limited to applying analytical procedures and a. Observing the distribution of paychecks b. Footing and cross-footing the payroll register c. Inspecting payroll tax returns d. Recalculating payroll accruals

d. Recalculating payroll accruals

An auditor reviews the reconciliation of payroll tax forms that a client is responsible for filing in order to a. Verify that payroll taxes are deducted from employees' gross pay b. Determine whether internal control activities are operating effectively c. Uncover fictitious employees who are receiving payroll checks d. Identify potential liabilities for unpaid payroll taxes

d. Identify potential liabilities for unpaid payroll taxes

Which of the following payroll control activities wold most effectively ensure that payment is made only for work performed? a. Require all employees to record arrival and departure by using a time clock b. Have a payroll clerk recalculate all time cards c. Require all employees to sign their time cards d. Require employees to have their direct supervisors approve their time cards

d. Require employees to have their direct supervisors approve their time cards

Which of the following types of audit evidence provides the least assurance of reliability? a. Receivable confirmations received from the client's customers b. Prenumbered receiving reports completed by the client's employees c. Prior months bank statements obtained from the client d. Municipal property tax bills prepared in the client's name

b. Prenumbered receiving reports completed by the client's employees

Subsequent to issuing a report on audited financial statements, a CPA discovers that the accounts receivable confirmation process omitted a number of accounts that are material, in the aggregate. Which of the following actions should the CPA take immediately? a. Bring the matter to the attention of the board of directors or audit committee b. Withdraw the auditor's report from those person currently relying on it c. Perform alternative procedures to verify account balances d. Discuss the potential financial statement adjustments with client management

c. Perform alternative procedures to verify account balances

Which of the following is a management assertion regarding account balances at the period end? a. Transactions and events that have been recorded have occurred and pertain to the entity b. Transactions and events have been recorded in the proper accounts c. The entity holds or controls the rights to assets, and liabilities are obligations of the entity d. Amounts and other data related to transactions and events have been recorded appropriately

c. The entity holds or controls the rights to assets, and liabilities are obligations of the entity

While performing interim audit procedures of accounts receivable, numerous unexpected errors are found resulting in a change of risk assessment. Which of the following audit responses would be most appropriate? a. Move detailed analytical procedures from year end to interim b. Increase the dollar threshold of vouching customer invoices c. Send negative accounts receivable confirmations instead of positive accounts receivable confirmations d. Use more experienced audit team members to perform year-end testing

d. Use more experienced audit team members to perform year-end testing

Which of the following types of risk increases when an auditor performs substantive analytical audit procedures for financial statement accounts at an interim date? a. Inherent b. Control c. Detection d. Sampling

Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities quizlet?

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables group of answer choices?

How does an auditor perform search for unrecorded liabilities?

Which of the following is the most efficient audit procedure for the detection of unrecorded liabilities?