The nature, timing and extent of substantive procedures is related to assessed level of control risk

Related Mcqs:

1. 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

2. What would most appropriately describe the risk of incorrect rejection in terms of substantive testing?

   A. The auditor concludes balance is materially correct when in actual fact it is not
   B. The auditor concludes that the balance is materially misstated when in actual fact it not
   C. The auditor has rejected an item for sample which was material
   D. None of the above

3. What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?

   A. The auditor has ascertained that the balance is materially correct when in actual fact it is not
   B. The auditor concludes the balance is materially misstated when in actual fact is not
   C. The auditor has rejected an item from sample which was not supported by documentary evidence
   D. He applies random sampling on data which is inaccurate and inconsistent

4. Which of the following statements is most closely associated with analytical procedure applied at substantive stage?

   A. It helps to study relationship among balance sheet accounts
   B. It helps to discover material misstatements in the financial statements
   C. It helps to identify possible oversights
   D. It helps to accumulate evidence supporting the validity of a specific account balance

5. Which of the following statements is most closely associated with analytical procedure applied at substantive stage?

   A. It helps to study relationship among balance sheet accounts
   B. It helps to discover material misstatements in the financial statements
   C. It helps to identify possible oversights
   D. It helps to accumulate evidence supporting the validity of a specific account balance

6. 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

7. 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

8. 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

9. 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.

10. 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