External Auditing : Key Information - External Auditing - Lecture Notes

3555 words - 15 pages

School of Business
CGA Partnership and Applied Degree Program
ACCT 495 External Auditing
Midterm Examination
Instructor: Patricia Dahm, CA

QUESTION 1 (20 marks 1.5 marks each)
Select the best answer for each of the following multiple-choice questions. Answer each of these items on the lined paper provided by giving the letter of your choice. For example, if (a) is the best answer for multiple-choice question number (1), write (1) (a) on the lined paper. Do not answer any of the multiple choice questions on the test paper. If more than one answer is given for an item, then that item will not be marked. Incorrect answers will be marked as zero. No account will be taken for any explanations you offer.
1. The relevance and reliability of audit evidence refers to which of the following concepts:
a) Sufficiency
b) Appropriateness
c) Quantity
d) Professional skepticism
2. A decrease in the desired level of detection risk:
a) Would be associated with a decrease in substantive work performed.
b) Would be associated with an increase in substantive work performed.
c) Would have no impact on the amount of substantive work performed.
d) Would likely be associated with a decrease in both inherent risk and control risk.
3. The auditor is required to perform analytical procedures:
a) At substantial completion of the audit for the purpose of attention directing.
b) At the planning stage of the audit to assist in designing the nature, extent, and timing of other auditing procedures.
c) As a substantive procedure to obtain audit evidence.
d) Analytical procedure is only used in review engagements.
4. Which of the following risks would be reduced by an audit of the financial statements according to Canadian Auditing Standards (CAS)?
a) The clients business risk.
b) Information risk.
c) Control system risk.
d) Inherent risk.
5. Which of the following types of audit evidence is the least persuasive?
a) Auditors observation of tangible assets.
b) The clients oral representation.
c) Lawyers letter about claims and possible claims.
d) Suppliers statement retained by the client.
6. Which of the following statements best describes the auditor's business risk?
a) The risk the auditor provides an audit report with a modified opinion and the financial statements are not materially misstated.
b) The risk the auditor provides a standard auditor's report and the financial statements are materially misstated
c) The risk the auditor will fail to detect a material misstatement in the financial statements.
d) The risk the auditor will be sued after completing a financial statement audit in accordance with Canadian auditing standards.
7. The control objective intended to reduce the probability that a customer is billed and the sale is recorded in the wrong amount because the quantity shipped and the quantity billed are not the same is:
a)
Completeness
b)
Classification
c)
Validity
d)
Accuracy
8. Negligence is the failure to perf...

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