Analytical procedures issued in the planning stage of an audit, generally

Related Mcqs:

1. Analytical procedures issued in the planning stage of an audit, generally?

   A. helps to determine the nature, timing and extent of other audit procedures
   B. directs attention to potential risk areas
   C. indicates important aspects of business
   D. All of the above

2. What is the primary objective of analytical procedures used in the overall review stage of an audit?

   A. To help to corroborate the conclusions drawn from individual components of financial statements
   B. To reduce specific detection risk
   C. To direct attention to potential risk areas
   D. To satisfy doubts when questions arise about a client’s ability to continue

3. In an audit of financial statements, substantive tests are audit procedures that __________?

   A. May be eliminated for an account balance under certain conditions
   B. Are designed to discover significant subsequent events
   C. Will increase proportionately when the auditor decreases the assessed level of control risk
   D. May be test of transactions, test of balance and analytical procedures

4. What are analytical procedures?

   A. Substantive tests designed to assess control risk
   B. Substantive tests designed to evaluate the validity of management’s representation letter
   C. Substantive tests designed to study relationships between financial and non­financial
   D. All of the above

5. The basic assumption underlying the use of analytical procedures is:____________?

   A. It helps the auditor to study relationship among elements of financial information
   B. Relationship among data exist and continue in the absence of known condition to the contrary
   C. Analytical procedures will not be able to detect unusual relationships
   D. None of the above.

6. When applying analytical procedures, an auditor could develop independent estimate of an account balance to compare it to­___________?

   A. client’s unedited account balance
   B. client’s unedited account balance adjusted for trends in the industry
   C. Prior year audited balance
   D. Prior year audited balance adjusted for trends in the industry

7. Which of the following would you not use as a benchmark for comparison when undertaking analytical procedures?

   A. Other audit clients
   B. Previous years
   C. Other companies in the same industry
   D. Budget

8. ______the audit risks_______the materiality and_________the audit effort.

   A. Lower, Higher, Lower
   B. Lower, Lower, Higher
   C. Higher, Lower, Lower
   D. Lower, Higher, Higher

9. For what minimum period should audit working papers be retained by audit firm?

   A. For the time period the entity remains a client of the audit firm.
   B. For a period of ten years
   C. For a period auditor opines them to be useful in servicing the client
   D. For the period the audit firm is in existence.

10. _______the audit risk,_______the materiality and _______the audit effort?

    A. Lower, Higher, Lower
    B. Lower, Lower, Higher
    C. Higher, Lower, Lower
    D. Lower, Higher, Higher